Western European News Digest
Survival of Euro Questioned
June 8 (EIRNS)The head of research for the Inter-Alpha Group's Royal Bank of Scotland, David Simons, speaking before a business group in Singapore recently, expressed doubts that, even with the huge bailout of Greece's creditors, the euro will survive. "Maybe we reach the point where this herculean effort works and enough policy stimulus is provided so countries can fly again," Simons said, according to Bloomberg. "However, I do not subscribe to this view, because one cannot treat a debt-fueled overconsumption problem with a lot more debt." He revealed that the combined exposure to Portugal, Spain, and Greece is more than EU2 trillion, EU500 billion of which is held by French and German banks, while fully half of the EU2 trillion is held by European banks.
In an article posted on the Cato Institute website on May 26, Czech President Vaclav Klaus examined the possibility that the Eurozone could eventually come undone. (The Czech Republic is not a member.) He noted that the Eurozone is divided into two regionsone with a low inflation rate, and one with a higher rate that includes Greece, Spain, and Portugal. "The global financial and economic crisis only escalated and exposed all economic problems in the Eurozoneit did not cause them," wrote Klaus. He went on to note that since the establishment of the Eurozone, economic growth for many member-states has actually slowed in comparison with previous decades. But since so much political energy has been invested by the European governments into the euro project, they will try to keep it at any costand the cost will be immense. Klaus added that, for the Czechs, it was no mistake that they did not join the euro.
Crisis of Euro Creates Paralyzed Governments
June 14 (EIRNS)After the three elections in the Netherlands and Belgium (early national elections) and in Germany's most populous state North Rhine-Westphalia (NRW), a sizeable section of the Eurozone is faced with a dramatic loss of voter confidence in the establishment partiesespecially the Christian Democrats in the three countries. This has created a very complicated political situation that makes the formation of a new government almost impossible.
In NRW, five weeks after the state parliament elections, all options for government coalitions have collapsed, and the old coalition of Christian and Free Democrats will remain in place for the time being, without having a majority in the Landtag (the state parliament). This is a bad omen for scenarios that one reads about these days, such as for splitting the Eurozone up into a northern zone, led by Germany, and a southern one led by France. The northern zone, portrayed as allegedly "stable" as opposed to the "less stable" southern one, would not be stable at all, given the situation in NRW, and including the neighboring states Belgium and the Netherlands among its core members.
The situation of the national German government is not stable, either. The ungovernability in NRW adds to the many other problems that Chancellor Angela Merkel's government coalition already faces; it is deeply split over many aspects of the EU bailout policy, such as drastic tax increases and additional budget cuts, but is also split over Merkel's planned expanded ban on short sales of speculative paper. A favorable ruling of the Constitutional Court, even if only in part, for the plaintiffs against the EU bailout package, would deal another severe blow against the government, maybe before the Summer recess, as would the failure of Merkel's candidate for Federal President, Christian Wulff, in the June 30 vote. Should Wulff lose, today's London Financial Times wrote, it "might be enough to cause Ms. Merkel's ruling coalition to fall apart."
European Labor Leader Warns: Austerity Leading 'Back into 1930s'
June 14 (EIRNS)The chief of the European Trades Union Federation (ETUC), John Monks, has warned that the austerity packages being imposed across the EU will inevitably send the continent "back to the 1930s." He reported that European Commission President José Manuel Barroso also fears that member states will turn their back on democracybut for the opposite reason.
"This is extremely dangerous. This is 1931; we're heading back to the 1930s, with the Great Depression and we ended up with militarist dictatorship," the general secretary of the ETUC told the EUobserver. "I'm not saying we're there yet, but it's potentially very serious, not just economically, but politically as well."
Monks reported that Barroso believes, on the contrary, that the austerity packages will save Europe from returning to the darkest days of the last century. "I had a discussion with Barroso last Friday about what can be done for Greece, Spain, Portugal and the rest and his message was blunt: 'Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies. They've got no choice, this is it.'
"He's very, very worried. He shocked us with an apocalyptic vision of democracies in Europe collapsing because of the state of indebtedness."
Danes Demonstrate in Copenhagen Against Austerity
June 8 (EIRNS)Around 40,000 people showed up in front of the Danish Parliament to protest the government's new austerity plan, which will cut in half unemployment benefits, spending for schools, universities, children's subsidies, hospitals, and more. All trade unions were involved in mobilizing for the demonstration. People came in buses from all over the country.
The Schiller Institute distributed nearly 5,000 of its campaign newspaper, with articles on the need for a Glass-Steagall law, investments in infrastructure, the campaign of the LaRouche movement in the U.S., and the transcript of Lyndon LaRouche's May 8 webcast.
For many Danes, this is the first time they have come to a demonstration, because they are beginning to see how serious the collapse really is. The potential for mass-strike ferment is beginning to develop in Denmark.