Eurozone in turmoilby Farooque Chowdhury
EUROZONE is in turmoil. Protests in different forms, from election verdict to marches, against bankers are razing countries in Europe while an indefinite Greece is making euroscape scene blurred.
Bankers are uncertain with the Euro-situation as they train the continent appearing sick. There is voters rejecting bankers, there is near-unprecedented police protest questioning profit, there is politics of people standing opposed to politics of bankers. It is like a torch alighted with the Parthenon Marbles in Greece and being relayed to Britain while the bankers yet don’t know the equation of politics with debt and austerity. The Euro-financial crisis and Euro-political problems are reacting with each other.
People in France and Greece have rejected austerity measures in national elections, local election in Italy has conveyed the same message, Greece is nourishing its democracy in a political deadlock, people including police in Britain have demonstrated opposing austerity measures, Indignados are marching in Spain shadowed by banking crisis, a government in the Netherlands has collapsed, financial measures in Ireland and Portugal are being questioned, French economy is ailing. This is the reality in the continent.
Each political move and whisper, people’s each expression in Europe is making London’s FTSE 100 index, New York’s Dow Jones Industrial Average, Germany’s blue chip DAX index, the Paris stock market, the European EuroStoxx, Asian markets, Greece’s exchange jump or dance or sleep. None of these likes the political developments in France and Greece. Uncertainty dominates the continent.
Klaas Knot, governing council member of the European Central Bank, said the risk of a double-dip recession had become reality in Europe. De Nederlandsche Bank, the Dutch central bank, in its latest semi-annual risk report on the Dutch financial sector has warned that with an unresolved eurozone crisis Europe faces a lost decade: a longer period of stagnation. Weak economic growth, lower consumer spending, inadequate investment could create the scene. Countries in the periphery are turning vulnerable with weak public finance and economic performance, and frail banking sector. The Bank of France in its latest economic forecasts has warned that the French economy is part-way through a six-month period of stagnation.
Citing a poll, Bloomberg reported that 57 per cent of its 1,253 investors, analysts and traders assumed that at least one country will abandon the euro by yearend. However, a Reuters poll found 35 of the polled 65 economists hoping that Greece will be in the euro at the end of 2013.
But the Greek-eurozone situation is near-hopeless. Public and politics often nullify pundits.
Concern over the Greece stalemate has been expressed by the Institute of International Finance. The IIF represented Greece’s creditors in its debt deal. If Greece were to quit the euro, the IIF members would be hit with huge losses. French bank BNP Paribas has calculated the impact of a Greek exit on its economy: an assumed Greexit would wipe out 20 per cent of Greek GDP, push up inflation by 40-50 per cent, and send the country’s debt/GDP ratio jumping to over 200 per cent. A Greexit would be bluster to the Euro banking sector.
Now, it seems, Europe’s central bankers are preparing for exit of Greece from the eurozone. German central bank chief Jens Weidmann has warned: No new aid to Greece if bailout commitments are not kept by Athens. The Irish central bank chief Patrick Honohan doesn’t consider a Greexit would be fatal to the euro. EU Economic and Monetary Commissioner Olli Rehn is confident: Europe is ‘more resilient’ to a possible Greexit.
Greece: people against creditors
THE verdict of the Greek people suffering under creditors’ command has been proclaimed in the last elections: reject the arrangement of making bankers richer.
But, the mainstream politicians, mostly rejected by the people, are united in opposing the people’s verdict: reject creditors’ conditions — austerity. Under warnings from the International Monetary Fund, the German chancellor and the European Commission, these politicians are exhausting their energy to form a coalition that would toe to the creditors. The deadline is May 17. Karolos Papoulias, the Greek president, is now striving to forge a coalition so that an immediate election can be avoided. This exercise — overturn the people’s verdict — is the bourgeois democratic practice. Already three bigger parties — the centre-right New Democracy, far-left bloc Syriza and socialist Pasok — have failed to form a government.
A fresh poll, almost inevitable, is expected to be held by June 17 at the latest. A second election would change the Greek political dynamic that in turn would react in bankers’ headquarters.
Creditors in no phase of human history have been concerned with the plight of common persons. Greece is losing 922 jobs a day. The unemployment rate rose to 21.7 per cent in February. In terms of number, it was more than a million. In the 15-24 age group, the rate was a record high: 54 per cent. In February 2010, it was 15.2 per cent. This forms a mirror of bailout-austerity measures imposed by creditors, and one of the central issues shaping politics in the country.
The European Financial Stability Facility, the €700bn bailout fund, has agreed to pay out the scheduled €5.2bn to Greece. As part of the bailout deal more than half of it will effectively be returned to the European Central Bank and other eurozone central banks within a week. Athens also lacks cash for salaries. As first instalment, €4.2bn will be delivered and the fate of the rest will actually be decided by political development in Greece, a warning to the people: behave as the creditors command, otherwise, salaries and wages will be withheld.
Creditor-created panic is driving the actors in the ongoing political drama in Athens. But the people have defied the EU-IMF lordship. Aleka Papariga, the Communist Party general secretary, has called for new elections ‘to put an end to the mockery of’ forming coalitions. While reiterating her party’s position to stay out of any government that might be formed she accused Syriza of irresponsibility and of undergoing continuous mutations. She added: ‘Under a leftist disguise it attempts to convince the people that workers and capitalists can coexist and prosper.’ Syriza avoids taking a clear stance on NATO membership and major foreign policy issues, said Aleka. Adventurism sometimes is a powerful attraction.
Coming days will intensify political turbulence in Greece that will be nervously monitored in Brussels, and in eurozone capitals.
France: aspiration will be compromised
COMPROMISE will be the political mantra of Francois Hollande, the new socialist avatar of France. His jubilant supporters around the Palace de la Bastille thought history was in the making as he once declared the world of finance was his ‘real enemy’. But the reality under capital’s command is different.
Hollande will make his promised visit to Berlin within hours of his swearing-in for talks with Angela Merkel, the German chancellor. Merkel is ready to welcome the moderate socialist with ‘open arms’. She said Franco-German cooperation was ‘essential for Europe’. The French leader also perceives the reality. Bank interest will enforce a compromise. Agenda of the Berlin meeting is nothing new: the old eurozone crisis and reaffirmation of the Franco-German partnership, which will flow along the undercurrent of competition.
Hollande adhering to status quo will turn Merkel’s competitor-ally. His election promise was: renegotiate the eurozone’s fiscal pact, the Merkel-Sarkozy brainchild. But the German leader is stubborn: no reopening of the pact. Hollande favours joint EU investment in major projects while Merkel’s choice is structural adjustments to labour markets and pensions. Hollande prefers boosting growth with more funds to the European Investment Bank. Volition of the stronger economy shall prevail.
However, bankers are going to consider the issue of growth along with their loved austerity. Voters have alerted the bankers.
European Council president Herman Van Rompuy has invited EU leaders to a special summit on growth this month. It will be followed by a ‘growth pact’ to be adopted at the EU summit in June. Merkel and Hollande will join together. It’s not only a compromise of the two leaders; it’s also a compromise with reality. It’s a lesson all bosses everywhere decline to learn; but, reality isn’t obedient to bosses’ dictates.
With the electoral promise to ‘change the destiny of France’, Hollande now faces an ailing economy at home: faltering growth, coiling public debt, sick industries, record unemployment. The French voters rejected rightist policies. It was their protest. The French socialist’s electoral promises include creating 60,000 new jobs in education, tax those earning over €1million euros a year with a 75 per cent rate. But he will have to encounter obstacles difficult to circumvent.
Britain: for public, not for profit
IN ENGLAND and Wales, police officers held one of the biggest demonstrations in recent times. Their demand: halt cuts and privatisation of the service, and full industrial rights. There banners proclaimed: ‘Police for public, not for profit.’ Their number: more than 30,000, claimed the Police Federation. Family members also joined the marchers.
Citing the participants, the British press said: There is anger as the rank and file officers face cuts to their pay, pensions and changes to their working conditions. A press report quoted one detective constable: ‘Our problem is we don’t have a union, so this march is the strongest action we can take. I think there are a lot of us wanting full industrial rights, and the right to strike.’
The incident is significant as it shows the way anger accumulates, fault-line appears, expression gets organised, and expression refuses to get subdued. It’s a process within society. It’s not that Lenin was there, and he sent Bolshevik agitators there. Rather, there is an incident, now exposed, of ‘love’ and betrayal — police officer infiltrating environment movement, etc acting as falling into love with activists and continuing with following phases, provoking novice activists, then, betraying, and, then, getting exposed, then, at last, finding himself abandoned by all his loved, and, standing before a court of law. Elites and their lackeys in all lands are incapable to learn from incidents of ‘love’ and betrayal, incapable to learn from struggle of the masses, which is not dependent on individual’s wishes.
There in Britain the emerging issues are, as one writes, mammoth wealth, the forgotten section of society, ‘growing gap’, ‘democratic deficit’, ‘the cabinet stands accused of being divorced from normal people’, ‘fractures run deeper’, ‘the worsening plight of swaths of our society [flying] under the national radar’, eroding support for the homeless, victims of domestic violence, those with mental health problems, the elderly and alone, children in broken homes, ‘the spectre of a forgotten Britain becoming reality’. Serious questions shall emerge if one adds the way a section of media played with public mind by hacking telephones, by collaborating with powerful politicians, the way it made money and propagated its ideology. A careful scrutiny of the incident may impress upon that Lenin told very little about shameless, corrupt bourgeois press. But the revolutionary told brute facts now being confirmed by the incidents in Murdoch’s empire.
These incidents are influencing the British society, influencing the common people’s perception; but the bankers are training their might for further plundering, for further cuts.
Spain: Indignados again
INDIGNADOS are again on the march. Their slogan: ‘We need to take back all the wealth and redistribute it fairly.’ They are in tens of thousands. Scores of cities across Spain are holding protests against politicians and bankers. It is one-year anniversary of the movement.
There is government crackdown on the protest. The police are not going to tolerate encampments of the protesters. The time period for protest has already been dictated by the authorities. One shouldn’t forget: it’s bourgeois democracy.
With youth unemployment at 50 per cent in Spain the movement’s call for social justice, wealth distribution, human rights and peace is universal. Stop proposed budget cuts in health and education is one of the major demands of the Indignados. The demand has deeper root in society. But, bankers and their political friends decline to recognise the root.
People in Portugal, Italy, Belgium, Germany, the UK are also participating in the movement.
However, the Spanish elites have their agenda. Promoting the collaboration between bankers, real estate lords and state further Bankia, the country’s fourth largest bank, has partly been nationalised. Most shares of Bankia were once sold to ordinary persons. Now, the ordinary share holders face large losses. Spain’s banks have already consumed about €16bn of public funds. Within the next few months they will hopefully consume another €50bn. It’s bankers’ boon.
It’s not a footnote: Nazis in Greece
NEAR-ECONOMIC-DISASTER, common persons’ desperate condition, servitude by mainstream political leadership, sale out of democratic principles, weakness in political education, are fuelling rise of Nazis in Greek politics.
History says capital, at times, needs help of Nazis, and capital embraces the help. At times of crisis, capital takes draconian steps. Nazis/fascists act as capital’s obedient tool to impose these steps. The Nazis create an environment of fear. They threat press as a step of muzzling down freedom of expression. At times, Nazis are taken casually, are considered tactical ally, and are appeased, only to get annihilated by the Nazis.
With 21 seats and 7 per cent of the votes the Greek neo-Nazi party Golden Dawn is now threatening journalists, demanding that journalists should stand up when its leader enters a press conference, wanting to seal Greek borders with landmines, and promising to ‘rid the country of their stench’ — immigrant workers. The neo-Nazi leader Mihaloliakos praises Hitler while his followers use an ancient symbol resembling the swastika as its logo, learn from books on Aryan supremacy, and are linked to racist attacks on immigrants. Greek journalist Xenia Kounalaki wrote that Greeks should ignore the Golden Dawn. She has been threatened: she should ‘watch her back’. The mayor of Nemea Vangelis Andrianakos has also received threats from the Golden Dawn.
But, all these are not the concluding parts of the incidents in the continent as capital there still occupies space for manipulation. A lot of dramas still are to be staged there as contradictions are yet to sharpen further.
One of the books edited by Farooque Chowdhury is The Great Financial Crisis, What Next?
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