WESTERN EUROPEAN NEWS DIGEST
Italian Economics Minister: We Need a New Deal
Italian Economics Minister Giulio Tremonti gave a long interview to the daily Corriere della Sera Oct. 27 on the issue of the international economic crisis and the economic policy of the Italian government. Towards the end of the interview, after defending the tax-reduction policy of the government, Tremonti said, "If the recovery does not come, I believe we should implement a Europe-wide New Deal." Question: "You mean a European investment plan in public works, promoted by governments and financed off budget?" Tremonti: "I do not say one word more." Question: "Will you talk about it at the European Financial Ministers' meeting at the beginning of November?" Tremonti: "I do not think so."
The figure internationally who is most closely associated with calling for a return to Franklin Roosevelt's economic and social approach is, of course, Lyndon LaRouche, the author of the New Bretton Woods proposal, which was recently in effect in endorsed by a resolution passed by the Italian Parliament.
Chirac and Blair Go to WarWith Each Other
French President Jacques Chirac came close to flatting British Prime Minister Tony Blair, in a "direct and absolutely extraordinary attack on the Prime Minister," as one British diplomat put it, according to a front-page Financial Times Oct. 28. The row between Chirac and Blair occurred the previous at the European Union summit in Brussels, as British-French tensions peaked over issues including Iraq and European farm subsidies.
The Times gave the following account: "The French President is understood to have walked up to Mr. Blair, and launched a direct personal attack, in the presence of EU heads of government and officials: 'You have been very rude, and I have never been spoken to like this before.' " Blair, said the Times, "is reported to have been shocked by the attack." The paper further comments, that "the encounter came amid signs of a resurgence of the relationship between Paris and Berlin."
The political war escalated when the British press revealed Oct. 27 that an "enraged Chirac" followed up his outburst by cancelling the next Anglo-French summit, planned for December. Later press reports said the summit had been rescheduled, grudgingly, for January.
Blair's 10 Downing Street has admitted that there were "vigorous exchanges" between Chirac and Blair in Brussels.
A highly informed British source told EIR, "The friction was not really because of the agricultural subsidies, as most of the media is reporting. It was over Iraq, and France's stubborn opposition to the Anglo-American resolution in the Security Council."
Franco-German Compromise on EU Agricultural Subsidies
The Franco-German deal pavaes the way for a European Union compromise on funds for agricultural payments, including after the EU's expansion eastward, with the accession of new Eastern European nations to membership. At their Brussels special summit on the expansion of the European Union to Eastern Europe, the leaders of the 15 member countries made a compromise based on the Franco-German proposal worked out on Oct. 14, between President Chirac and Chancellor Gerhard Schroeder.
The proposal is to leave the total volume of agricultural payments to the member-states untouched until 2006, and then keep it frozen at the 2006 level until 2013, with an annual inflation adjustment of 1.5% added, from 2007 on. Potential opposition from British Prime Minister Blair was deterred by Chirac's threat (backed by Schroeder) to set aside the 1984 agreement on special EU rebates to Britainwhich were 7.5 billion euros in 2001 alone. In was in this context that the very, very tense encounter took place between Chirac and Blair.
Payments will be available also to the new EU members in East Europe, from 2004 on, with the perspective of increases in annual installments. These payments will be made from the extra inflation adjustment of 1.5%.
This protects French farming interests (France is the biggest single receiver of EU agro-funds) for the next few years, and blocks a further increase of payments, which would mostly have affected Germany as the biggest single payer into the EU budget. The compromise formula removes a longtime roadblock between Paris and Berlin, and opens the door to a revival of Franco-German initiatives on the European level. It is up to Paris and Berlin now to work out a future-oriented, real design for the expanded European Unionincluding, of course, a revision of Maastricht.
German Chancellor: Need Exemptions from Maastricht Criteria
German Chancellor Gerhard Schroeder reiterated his emphasis on the need for exemptions from the Maastricht budgetary criteria, in order to make it possible to promote investments. (Maastricht is the treaty which founded and governs the single-currency European Union.) In his first official government declaration after his recent reelection, Schroeder said that "a protracted uncertainty on the raw material and energy markets, caused by the explosive situation in the Near and Middle East, provides little basis for hope in a short-term improvement of the world [economic] situation. The classic instruments of stimulating consumption and investment through state subsidies and financial injections, are no longer available" under the Maastricht constraints.
Schroeder said that among the government's planned steps, the "restoration and modernization of infrastructure in the eastern states through an emphasis on public sector investment" is prominent, and that in order to gain maneuvering room to achieve that, "the Maastricht Stability Pact should and must be interpreted in a more flexible way." Without going into further detail, the Chancellor called for a mix of "growth-promoting investments by the state, intelligent budget cuts, and more honest and just taxation."
He added that there "is no reasonable and responsible alternative. He who in a volatile crisis calls for even deeper budget cuts by the state, risks damage being done to the interests of the citizens." His government, Schroeder said, does "not want an impoverished state that is incapable of acting. Such a state could be afforded only by the powerful and the privileged. But society has a right to a state that promotes the common good, offers opportunities, and organizes justice. For justice is more than the demand that everybody has to make sacrifices."
Schroeder called on the Germans for a national "partnership of responsibility," to master these challenges. It remains to be seen what concrete steps the government will take.
German Banks in DenialFrantically So
The Britain-based Independent newspaper of Oct. 30, in the first sentence of an article entitled, "Are Germany's Banks About To Go the Same Way as Their Japanese Rivals?," reported that "Disappointing results and a recent surge of profit warnings has heightened speculation about the collapse of one of Germany's big four banks, sparking fears of a banking crisis in Europe's largest economy." The paper reported, "The slew of warnings from Germany's largest banks has shifted attention to Europe, with commentators warning of disturbing echoes of the banking crisis in Japan." Germany's big four banks, in order of asset size, are Deutsche Bank, Hypovereinsbank, Commerzbank, and Allianz/Dresdner Bank.
In response, German bankers are frantically denying reality. Ernst Welteke, head of the Bundesbank, said, according to the Independent, that "it was 'dishonest' to speak of a banking crisis ... Welteke acknowledged that Germany's banks are having a rough time, due to the stagnant state of its economy and the sickliness of some of its largest companies. But, he said, German's banks would emerge 'strengthened rather than weakened' " from the crisis. "Commerzbank's chairman Klaus-Peter Muller," stated the Independent, "inisted that despite the bank's warning on Monday it might suffer a loss this year, it was not in the middle of a full-blown banking crisis."
This echoes the delusions of JP Morgan Chase chairman William Harrison, who has insisted that Morgan Chase is stronger than ever, even as it enters a death seizure similar to that of Enron in 2001, before it was forced to file for bankruptcy. The banking systems of the world's three major economies, the United States, Japan, and Germany, representing among them between two-fifths and two-thirds of the assets of the world's banking system, are in a simultaneous meltdown.
Massive Russian Pressure on Denmark Leads to Arrest of Chechen Leader
After the protests by Russian President Vladimir Putin against the Danes for allowing the World Chechen Conference to be held in Copenhagen, the vice chairman of the Duma Foreign Policy Committee, Vladimir Lukin, announced the Duma would promote a severing of ties between Russia and Denmark. In an interview to Politiken, reported by IRNA, Lukin said: "The Danish government and the Parliament's foreign policy committee are, in effect, supporters of the individuals responsible for the hostage-taking of hundreds of innocent people in Moscow. I therefore intend to push a proposed resolution in the Duma for Russia to break any and all contact with the Danish Parliament until Russia receives an official apology from Denmark."
On Oct. 28, Putin cancelled his trip to Denmark, and the Danish government decided to change the venue of the EU-Russia summit to Brussels. On Oct. 30, the Danish police arrested Ahmed Zakayev, an envoy of Chechen President Aslan Maskhadov, and Deputy Prime Minister. He had been attending the Chechen conference in Copenhagen. Danish TV said he is suspected of involvement in the hostage-taking in Moscow.
The Danish government was asked Oct. 30 by Moscow to extradite Zakayev to stand trial in Russia, which the Danish Ambassador to Russia, Lars Vissing, said they will not do because they do not have an extradition treaty and Russia has not outlawed the death penalty. Nonetheless, Russian Justice Minister Yury Chaika said he was confident the Chechen envoy will be extradited from Denmark.
The London Times reports Russia is also pressuring Britain to crack down on Chechen terrorist networks. Russia is to bring up the matter at the upcoming Anglo-Russian security summit.
White House Supports Putin's Handling of Hostage Crisis
Although the U.S. Ambassador to Russia made comments critical of aspects of the handling of the recent Moscow hostage crisis by Russian authorities, White House spokesman Ari Fleischer was very careful this past week not to criticize President Putin's handling of the crisisdespite reporters determined to goad him into doing so.
"As for the President and his thinking about all this, the President feels very strongly that the responsibility for this rests with the terrorists, who took these people hostage and put them in harm's way in the first place," Fleischer said. "That's where the President believes the fault lies."
When a reporter persisted, asking whether the President thinks "it was okay to use gas" to storm the terrorist-held theater, Fleischer answered that "...the President makes no mistake about who is to blame for this. The people who put people in harm's way are the terrorists.... The President understands that in this circumstance you had terrorists who had proven that they were going to kill; who had already killed; who were deadly serious about killing more; who had 700 hostages; who had the theater booby-trapped and were prepared to take mass quantities of life. The President views this entire matter as a tragic one. But it's a tragedy that was brought on as result of the terrorists who put people in [harm's] way...."
|