WESTERN EUROPEAN NEWS DIGEST
Germany's Third-Largest City Close to Default
According to German press sources July 25, Munich, Germany's third-largest city, is close to declaring default. The municipal administration of Munich has decreed a total budget freeze, affecting all budgeting positions and payments from August on. This will hit hospitals, day-care centers, theaters, and the like.
Munich is forced to reimburse Hypovereinsbank (HVB) 120 million euros, because the bank declared losses in the recent months of such a range that HVB's taxes, which the bank pre-paid, are lower than what it paid the city already. Of the reimbursement, 90 million must be repaid instantly. As Munich, which is already operating on an extreme austerity budget, does not have a surplus of 120 million, it has to make new, deep budget cuts.
The crisis will rapidly worsen, as the disaster in the IT sector, which has wiped out many tax-paying companies in Munich (with its high concentration of "New Economy" firms), is leading to more drastic shortfalls in tax revenues. From last June to this June, unemployment in Munich climbed by 31%, and unemployment among workers under age 25 by 66%, which makes the citythe capital of the state of Bavariathe one with the worst labor market of large German cities.
In Germany overall, the German Finance Ministry has revealed a drastic drop in tax revenues. In the first two quarters of this year, the inflow of taxes to the state ran 5.2% below the level of the first two quarters of last year. From January to May, the difference was "only" 3.6%, but in June, a drop by 10.8% was reported. All in all, the state received almost 10 billion euros less than "expected"a stark contrast to repeated remarks by German Chancellor Gerhard Schroeder that the "economic data are sound, actually."
Dr. Rowan Williams Named 104th Archbishop of Canterbury
Dr. Rowan Williams has been named the 104th Archbishop of Canterbury, the leader of 70 million members of the Anglican Communion worldwide.
Dr. Williams, previously Archbishop of Wales (and the first Welshman to head the Church of England), has criticized Western policy since Sept. 11, including calling the ongoing war against Afghanistan "morally tainted." He has insisted that the bombing of that country is morally equivalent to the terrorism it sought to defeat.
He has also opposed any invasion of Iraq, on the grounds that this would not be a just war, and he has signed an ecumenical letter expressing this view.
Dr. Williams is sympathetic to the proposal that the Church of England should end its established status, and enter on an equal footing with other Christian churches. Williams has also condemned the "corruption and premature sexualization of young children" in a consumerist society, and also criticized "Disney" productions and computer games for fostering the consumer society, and wrecking the younger generation.
The Archbishop today said of his appointment: "If there's one thing I long for above all else, it's that the years to come may see Christianity in this country able again to capture the imagination of our culture, to draw the strongest energies of our thinking and feeling."
British Labour Party Will Split in Case of Iraq War
Massive splits will break out in the British Labour Party structure if and when a war on Iraq begins, wrote former Fabian Society insider Stephen Pollard, in the Daily Telegraph July 23. Prime Minister Tony Blair's main internal worry, is not intra-Labour fights over trade-union strikes, or certain economic issues, writes Pollard. Those, Blair can ride out. But Iraq is a different matter. Blair himself, "when America goes into action against Iraq, ... will be as steadfast in support as ever." But then, "we will really see what a Labour Party split looks like.... When Americanand if Mr. Blair is really serious about his support, Britishbombers fly over Iraq, he will enter uncharted territory."
Pollard writes that leading Labour parliamentarians "will be queuing up to denounce Americaand thus, Blair. There will, I am sure, be ministerial resignations.... Mr. Blair is right to worry about the impact of [trade-union] strikes. But for real nightmares, just wait for action against Iraq."
German Business Daily Handelsblatt: Iraq War Will Bring Down World Economy
Accompanied by a full page of articles on what is known about preparations for a U.S. military operation, the Handelsblatt lead editorial July 26 noted that "an Iraq fever has broken out in Washington," which has little do with new facts on Saddam Hussein. It rather has to do with the U.S. economy: "The deeper the Dow Jones drops, and the more popularity U.S. President George W. Bush loses, the more urgent a new Gulf war seems to become."
Apart from the fact that a new Gulf war could drive the stocks on Wall Street and other markets down, that turbulence on the oil markets is certain, that new rounds of inflation are to be expected, there is a global threat: "What these uncertainties mean for the already dangerous world conjuncture, one can vividly imagine."
Bush, however, cannot be expected to act on the basis of reasonable assessments of the cost and effect, so that "in the end, American domestic policy will not only decide the fate of Iraq, but also of the world economy," Handelsblatt concluded.
Chirac Supports Putin on Kaliningrad
"The European Community's joint viewpoint on the Kaliningrad issue has cracked," wrote the Russian newspaper Vedomosti July 22. "During two-day talks with Vladimir Putin in Sochi, Russia, French President Jacques Chirac supported the Russian side, agreeing that a visa for a Russian for travelling to Kaliningrad does not make sense. Chirac clamed that 'the Kaliningrad issue is a technical issue, and there are no technical issues which could not be solved.' In turn, Vladinmir Putin emphasized that Russia appreciates support from France and relies upon it. He referred to the role of France in overcoming the division of Europe, by ruining the Berlin Wall: 'I don't think it to be useful today to erect new walls in Europe, this time around Kaliningrad Region,' he said.
"By October, the European Commission is expected to deliver its report on the Kaliningrad issue to the EU Council. Richard Wright, head of the Eurocommission's office in Russia, told Radio Echo of Moscow, after Chirac's viewpoint was made public, that he views the prospectives of a joint European-Rusian solution of this issue as optimistic. Observers interpret the results of the Putin-Chirac meeting as a 'breakthrough,' " emphasizes the paper.
Chirac Meets with UAE Officials
Straight from Russia, Jacques Chirac flew to the French residence of Sheikh Zayed bin Sultan al Nahayan of the United Arab Emirates, on July 20. Minutes before his arrival, the Sheikh finished his talk with Egypt's Hosni Mubarak, who also met with Saudi King Fahd at the King's Swiss residence. According to Kommersant, Chirac informed the Sheikh about the results of his talks with Vladimir Putin in Sochi. During the Sochi talks, as it is clear from this context, Putin agreed to support the initiative of a "well-prepared" peace conference on the Mideast problems.
In brief coverage of the preceding talks between the leaders of Egypt and Saudi Arabia, Kommersant emphasized that Egyptian President Mubarak, speaking to journalists, expressed his support for PLO Chairman Yasser Arafat, referring to the fact that he "was elected by the people, and therefore, can't be just shooed away." In several days, Mubarak will meet with Chirac in Paris, reported Kommersant's Geneva correspondent Igor Sedykh.
Poland: New Finance Minister and Central Bank Clash Over Fiscal Policies
Poland's newly installed Finance Minister Grzegorz Kolodko has proposed an "anti-crisis package," which was approved by the Cabinet on July 23, reports RFE/RL Newsline. The package foresees that the budget deficit will be increased from 40 billion zloty in 2002 to 43 billion zloty ($10.6 billion) in 2003, which are to be used to spur the economy. One of the main foci will be to ease the financial situation of heavily indebted state industries in sectors like mining, metallurgy, and arms production. These and other industries will receive an offer that their tax, customs, and other arrears to the state will be written off, if they pay 15% of the sum immediately, and pledge to restructure.
The plan caused, predictably, a sharp reaction by arch-monetarist National Bank Governor Leszek Balcerowicz, who called for a lowering of the budget deficit, in order to "ensure permanent economic growth," at a session of the Polish Sejm's (Parliament's) Public Finances Committee.
But, Kolodko's plan is being supported not only by the government, but also from the trade unions. The head of the (leftist) All-Poland Alliance of Trade Unions said he was particularly glad about Kolodko's plans to help state enterprises, while Marian Krzaklewski, leader of the Solidarity union, said he was "generaly pleased" with Kolodko's program, which he called "the most positive response from a leftwing government in a long time."
Marine Commandant Named New NATO Chief
On July 19, NATO announced the appointment of Marine Commandant General James Jones as the new Supreme Allied Commander, Europe. Jones is to replace Air Force General Joseph Ralston, who took over as SACEUR in May 2000. When rumors of Jones' impending nomination surfaced earlier this year, it was noted that the NATO post has traditionally been the province of the Army, and Ralston, being Air Force, was not that far afield. However, the Marines are an expeditionary force, designed to operate in places where there is no standing U.S. presence. Therefore, Jones' appointment as NATO commander should be seen in the context of the Bush Administration drive to transform NATO into a force capable of operating "out-of-area." AP notes that NATO is in the midst of preparing a new "military concept," where it is considering whether to operate out-of-area, and whether it could take preemptive action against potential aggressors.
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