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Posted on Sustainabilitank.info on July 17th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

Subject: The Greek Bailout

THANKS CLAUDIA FOR FORWARDING THIS TO IRITH – NOW EVERYBODY CAN HAVE AN EXAMPLE HOW THIS BAILOUT DOES MIRACLES.

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted.

Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a EU100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.
The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the EU100 note and runs next door to pay his debt to the butcher.

The butcher takes the EU100 note and runs down the street to repay his debt
to the pig farmer.

The pig farmer takes the EU100 note and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmers’ Co-op takes the EU100 note and runs to pay his drinks bill at the taverna.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.

Economics 101 . . .
It was Greek to me but
NOW I understand.

The hooker then rushes to the hotel and pays off her room bill to the hotel
owner with the EU100 note.

The hotel proprietor then places the EU100 note back on the counter so the
rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the EU100
note, states that the rooms are not satisfactory, pockets the money,
and leaves town.

No one produced anything. No one earned anything.
However, the whole village is now out of debt and looking to the future
with a lot more optimism.

And that is how the bailout package works!


===============================================

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Posted on Sustainabilitank.info on July 15th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

International Business – The New York Times

I.M.F. Demands Greece Debt Relief as Condition for Bailout

By JACK EWING JULY 14, 2015

FRANKFURT — The International Monetary Fund threatened to withdraw support for Greece’s bailout on Tuesday unless European leaders agree to substantial debt relief, an immediate challenge to the region’s plan to rescue the country.

The aggressive stance sets up a standoff with Germany and other eurozone creditors, which have been reluctant to provide additional debt relief. The I.M.F role is considered crucial for any bailout, not only to provide funding but also to supervise Greece’s compliance with the terms.

A new rescue program for Greece “would have to meet our criteria,” a senior I.M.F. official told reporters on Tuesday, speaking on the condition of anonymity. “One of those criteria is debt sustainability.”

Debt relief has been a contentious issue in the negotiations over the Greek bailout.

Athens has pushed aggressively for creditors to write down the country’s debt, which now exceeds €300 billion. Without it, Prime Minister Alexis Tsipras has argued the debt will remain a heavy weight on Greece’s troubled economy.

###

Posted on Sustainabilitank.info on July 13th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

After a marathon European summit, Greece and its creditors have reached an agreement that should allow them to negotiate a new bailout for the troubled country.

The Greek government agreed to enact deep economic reforms under close supervision by its creditors in return for up to 86 billion euros ($96 billion).
Here is the full text of the agreement, obtained by CNN’s Saskya Vandoorne:

Euro Summit Statement

Brussels, 12 July 2015

The Euro Summit stresses the crucial need to rebuild trust with the Greek authorities as a prerequisite for a possible future agreement on a new ESM programme. In this context, the ownership by the Greek authorities is key, and successful implementation should follow policy commitments.

A euro area Member State requesting financial assistance from the ESM is expected to address, wherever possible, a similar request to the IMF1.

This is a precondition for the Eurogroup to agree on a new ESM programme. Therefore Greece will request continued IMF support (monitoring and financing) from March 2016.

Given the need to rebuild trust with Greece, the Euro Summit welcomes the commitments of the Greek authorities to legislate without delay a first set of measures. These measures, taken in full prior agreement with the Institutions, will include:

by 15 July

• the streamlining of the VAT system and the broadening of the tax base to increase revenue;

• upfront measures to improve long-term sustainability of the pension system as part of a comprehensive pension reform programme;

• the safeguarding of the full legal independence of ELSTAT;

• full implementation of the relevant provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, in particular by making the Fiscal Council operational before finalizing the MoU and introducing quasi-automatic spending cuts in case of deviations from ambitious primary surplus targets after seeking advice from the Fiscal Council and subject to prior approval of the Institutions;

by 22 July

• the adoption of the Code of Civil Procedure, which is a major overhaul of procedures and arrangements for the civil justice system and can significantly accelerate the judicial process and reduce costs;

• the transposition of the BRRD with support from the European Commission.

Immediately, and only subsequent to legal implementation of the first four above-mentioned measures as well as endorsement of all the commitments included in this document by the Greek Parliament, verified by the Institutions and the Eurogroup, may a decision to mandate the Institutions to negotiate a Memorandum of Understanding (MoU) be taken. This decision would be taken subject to national procedures having been completed and if the preconditions of Article 13 of the ESM Treaty are met on the basis of the assessment referred to in Article 13.1.

In order to form the basis for a successful conclusion of the MoU, the Greek offer of reform measures needs to be seriously strengthened to take into account the strongly deteriorated economic and fiscal position of the country during the last year. The Greek government needs to formally commit to strengthening their proposals in a number of areas identified by the Institutions, with a satisfactory clear timetable for legislation and implementation, including structural benchmarks, milestones and quantitative benchmarks, to have clarity on the direction of policies over the medium-run.

They notably need, in agreement with the Institutions, to:

• carry out ambitious pension reforms and specify policies to fully compensate for the fiscal impact of the Constitutional Court ruling on the 2012 pension reform and to implement the zero deficit clause or mutually agreeable alternative measures by October 2015;

• adopt more ambitious product market reforms with a clear timetable for implementation of all OECD toolkit I recommendations, including Sunday trade, sales periods, pharmacy ownership, milk and bakeries, except over-the-counter pharmaceutical products, which will be implemented in a next step, as well as for the opening of macro-critical closed professions (e.g. ferry transportation). On the follow-up of the OECD toolkit-II, manufacturing needs to be included in the prior action;

• on energy markets, proceed with the privatisation of the electricity transmission network operator (ADMIE), unless replacement measures can be found that have equivalent effect on competition, as agreed by the Institutions;

• on labour markets, undertake rigorous reviews and modernisation of collective bargaining, industrial action and, in line with the relevant EU directive and best practice, collective dismissals, along the timetable and the approach agreed with the Institutions. On the basis of these reviews, labour market policies should be aligned with international and European best practices, and should not involve a return to past policy settings which are not compatible with the goals of promoting sustainable and inclusive growth;

• adopt the necessary steps to strengthen the financial sector, including decisive action on non-performing loans and measures to strengthen governance of the HFSF and the banks, in particular by eliminating any possibility for political interference especially in appointment processes.

On top of that, the Greek authorities shall take the following actions:

• to develop a significantly scaled up privatisation programme with improved governance; valuable Greek assets will be transferred to an independent fund that will monetize the assets through privatisations and other means. The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of EUR 50bn of which EUR 25bn will be used for the repayment of recapitalization of banks and other assets and 50 % of every remaining euro (i.e. 50% of EUR 25bn) will be used for decreasing the debt to GDP ratio and the remaining 50 % will be used for investments.

This fund would be established in Greece and be managed by the Greek authorities under the supervision of the relevant European Institutions. In agreement with Institutions and building on best international practices, a legislative framework should be adopted to ensure transparent procedures and adequate asset sale pricing, according to OECD principles and standards on the management of State Owned Enterprises (SOEs);

• in line with the Greek government ambitions, to modernise and significantly strengthen the Greek administration, and to put in place a programme, under the auspices of the European Commission, for capacity-building and de-politicizing the Greek administration. A first proposal should be provided by 20 July after discussions with the Institutions. The Greek government commits to reduce further the costs of the Greek administration, in line with a schedule agreed with the Institutions;

• to fully normalize working methods with the Institutions, including the necessary work on the ground in Athens, to improve programme implementation and monitoring. The government needs to consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament. The Euro Summit stresses again that implementation is key, and in that context welcomes the intention of the Greek authorities to request by 20 July support from the Institutions and Member States for technical assistance, and asks the European Commission to coordinate this support from Europe;

• With the exception of the humanitarian crisis bill, the Greek government will reexamine with a view to amending legislations that were introduced counter to the February 20 agreement by backtracking on previous programme commitments or identify clear compensatory equivalents for the vested rights that were subsequently created.

The above-listed commitments are minimum requirements to start the negotiations with the Greek authorities. However, the Euro Summit made it clear that the start of negotiations does not preclude any final possible agreement on a new ESM programme, which will have to be based on a decision on the whole package (including financing needs, debt sustainability and possible bridge financing).

The Euro Summit takes note of the possible programme financing needs of between EUR 82 and 86bn, as assessed by the Institutions. It invites the Institutions to explore possibilities to reduce the financing envelope, through an alternative fiscal path or higher privatisation proceeds. Restoring market access, which is an objective of any financial assistance programme, lowers the need to draw on the total financing envelope. The Euro Summit takes note of the urgent financing needs of Greece which underline the need for very swift progress in reaching a decision on a new MoU: these are estimated to amount to EUR 7bn by 20 July and an additional EUR 5bn by mid August.

The Euro Summit acknowledges the importance of ensuring that the Greek sovereign can clear its arrears to the IMF and to the Bank of Greece and honour its debt obligations in the coming weeks to create conditions which allow for an orderly conclusion of the negotiations. The risks of not concluding swiftly the negotiations remain fully with Greece. The Euro Summit invites the Eurogroup to discuss these issues as a matter of urgency.

Given the acute challenges of the Greek financial sector, the total envelope of a possible new ESM programme would have to include the establishment of a buffer of EUR 10 to 25bn for the banking sector in order to address potential bank recapitalisation needs and resolution costs, of which EUR 10bn would be made available immediately in a segregated account at the ESM.

The Euro Summit is aware that a rapid decision on a new programme is a condition to allow banks to reopen, thus avoiding an increase in the total financing envelope. The ECB/SSM will conduct a comprehensive assessment after the summer. The overall buffer will cater for possible capital shortfalls following the comprehensive assessment after the legal framework is applied.

There are serious concerns regarding the sustainability of Greek debt. This is due to the easing of policies during the last twelve months, which resulted in the recent deterioration in the domestic macroeconomic and financial environment. The Euro Summit recalls that the euro area Member States have, throughout the last few years, adopted a remarkable set of measures supporting Greece’s debt sustainability, which have smoothed Greece’s debt servicing path and reduced costs significantly.

Against this background, in the context of a possible future ESM programme, and in line with the spirit of the Eurogroup statement of November 2012, the Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level. These measures will be conditional upon full implementation of the measures to be agreed in a possible new programme and will be considered after the first positive completion of a review.

The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken.

The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and in a timely manner.

Provided that all the necessary conditions contained in this document are fulfilled, the Eurogroup and ESM Board of Governors may, in accordance with Article 13.2 of the ESM Treaty, mandate the Institutions to negotiate a new ESM programme, if the preconditions of Article 13 of the ESM Treaty are met on the basis of the assessment referred to in Article 13.1.

To help support growth and job creation in Greece (in the next 3-5 years) the Commission will work closely with the Greek authorities to mobilise up to EUR 35bn (under various EU programmes) to fund investment and economic activity, including in SMEs. As an exceptional measure and given the unique situation of Greece the Commission will propose to increase the level of pre-financing by EUR 1bn to give an immediate boost to investment to be dealt with by the EU co-legislators. The Investment Plan for Europe will also provide funding opportunities for Greece.

###

Posted on Sustainabilitank.info on July 10th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)


Uri Avnery

July 11, 2015

To be Greek

EVERYBODY HAS already voiced his (or her) opinion on the Greek crisis, whether he (or she) has an opinion or not. So I feel obliged to do the same.

The crisis is immensely complicated. However, it looks to me quite simple.

The Greeks spent more than they earned. The creditors, in their incredible impertinence, want their money back. The Greeks have no money, and anyhow, their pride does not allow them to pay.

So what to do? Every commentator, from Nobel prize-winning economists to my taxi driver in Tel Aviv, has a solution. Unfortunately, no one listens to them.

Angela Merkel and Alexis Tsipras go on fighting World War II. But the relations between the two nations played a role in my family long before that.

AS A boy, my father was a pupil in a German “humanist” high school. In these schools, pupils learned Latin and ancient Greek instead of English and French. So I heard Latin and Greek sayings before I went to school and learned Latin myself – for half a year before we fortunately left Germany for Palestine in 1933.

Educated Germans admired the Romans. The Romans were straight-minded people who made laws and obeyed them, almost like the Germans themselves.

Germans loved the ancient Greeks and despised them. As their most important poet, Wolfgang von Goethe, said: “Das Griechenvolk, es taugte nie recht viel” – the Greek people never amounted to very much.

The Greeks invented freedom, something the ancient Hebrews did not even dream of. The Greeks invented democracy. In Athens, everybody (except slaves, women, barbarians and other inferior folk) took part in public discussions and decision-making. This did not leave them much time to work.

That was the way my father looked at them, and this is the way decent Germans look at them now. Nice people to have around on vacation, but not serious people to do business with. Too lazy. Too life-loving.

I suspect that these ingrained attitudes influence the opinions of German leaders and voters now. They certainly influence the attitudes of Greek leaders and voters towards Germany. To hell with them and their obsession with law and order.

I HAVE stayed several times in Greece, and always liked the people.

My wife, Rachel, loved the island of Hydra and took me there. To find a ship to go there from Piraeus was quite an ordeal. That was of course before the internet. Every shipping agency had a timetable for its boats, but there did not exist a general timetable. That would have been too orderly, too German. (If Piraeus had been Haifa, there would have been an all-inclusive timetable in every shop window.)

I was invited to several international conferences in Athens. One was presided over by the wonderful Melina Mercouri, so intelligent and so beautiful, who served at the time as a cabinet minister. It concerned Mediterranean culture, and was mixed with a lot of good food and folk dances. I once helped to host Mikis Theodorakis in Tel Aviv.

So I have no prejudices against the Greeks. On the contrary. Before the last Greek elections I received an e-mail message from a person I did not know, asking me to sign an international statement of support for the Syriza party. After reading the material, I did. I sympathize with their heroic fight now.

I am reminded of the “Sailors’ Revolt” in Israel in the early 1950s. It was an uprising against the governing bureaucracy. I supported it with all my heart and was even arrested for a few hours. When it all ended in a glorious defeat, I met a famous leftist general and expected to be lauded. He said: “Only fools start a struggle they cannot win!”

It boils down to this: the Greeks owe a lot of money. A huge lot of money. It is now immaterial how this huge debt came about, and who is to blame. Europe (the very name is Greek) has no chance of getting the billions back. But they’ll be damned if they will pour more money into this bottomless pit. How can Greece survive without more money?

I don’t know. I strongly suspect that no one else does, either. Including the Nobel Prize laureates.

FOR ME, the most important aspect of the disaster is the future of the two great experiments: the European Union and the Euro currency.

When the European idea gained ground on the continent after the fratricidal World War II, there was a great debate about its future contours. Some proposed something like the United States of Europe, a federal union on the lines of the USA. Charles de Gaulle, a very influential voice at the time, objected strenuously and proposed l’Europe des Nations, a much more loose confederation.

Much the same debate took place in America before the final decision to create the United States, and again at the time of the civil war. In the end, the federalists won, and the confederate flags are being burned even now.

In Europe, de Gaulle’s idea won. There was no strong will to create a united European state. National governments were ready, after some years, to create a union of independent states, which grudgingly transferred some sovereign powers to the super-government in Brussels.

(Why Brussels? Because Belgium is a small country. Neither Germany nor France was ready to allow the union’s capital to be located in either of them. It reminds one of the Biblical King David, who moved his capital to Jerusalem, which belonged to no tribe, so as to avoid the jealousy between the powerful tribes of Judah and Ephraim.)

The Brussels bureaucracy seems to be heartily hated by all, but its power is inexorably growing. Modern reality favors larger and larger units. No future for small states.

This brings us to the Euro. The European idea led to the formation of a huge bloc, in which a common currency could flow freely. To a layman like me, it seemed like a wonderful idea. I don’t remember a single prominent economist warning against it.

Today it is easy to say that the Euro bloc was flawed from the beginning. Even I understand that you cannot have a single currency when each member state shapes its national budget according to its own whims and political interests.

That is the fundamental difference between a federation and a confederation. How would the USA operate if each of its 50 member states ran its own economy independently of the other 49?

As the economists teach us now, something like the Euro crisis cannot happen in the US. If the state of Alabama is in bad financial shape, all the other states step in automatically. The central bank (or Federal Reserve) simply shuffles money around. No problem.

The Greek crisis arises from the fact that the Euro is not based on such a federation. The Greek economic breakdown would have been stopped by the European central bank long before it had reached the present point. Money would have flowed from Brussels to Athens without anybody even noticing. Tsipras could have embraced Merkel in her chancellery and happily announced “Ich bin ein Berliner!” (I can’t really imagine Merkel going to Athens and proclaiming “Ich bin eine Griechin!”)

The first lesson of the crisis is that the creation of a currency union presupposes a readiness of all member states to give up their economic independence. A country that is not prepared to do so cannot join such a union. Each country can keep its precious football team, and even its sacred flag, but its national budget must be subject to the joint economic super-government.

Today that is quite clear. Unfortunately, it was not clear to the founders of the Euro bloc.

In this respect, a giant nation like China has a huge advantage. It is not even a federation, but in practice a unitary state, with a unitary currency.

Small states, like Israel, lack the economic security of belonging to a large union, but enjoy the advantage of being able to maneuver freely, and to fix our currency, the Shekel, according to our interests. If export prices are too high, you just devalue. As long as your credit rating is high enough, you can do what you want.

Fortunately, nobody invited us to join the Euro bloc. The temptation would have been too strong.

THIS BEING so, we can follow the Greek crisis with some equanimity.

But for those of us who believe that after achieving peace with the Palestinian people and the entire Arab world, Israel must become a part of some kind of a regional confederation, this is an instructive lesson.

I wrote about this even before the State of Israel was born, calling for a “Semitic Union”. It probably won’t happen while I am still around, but I am fairly sure that it will come about before the end of this century.

It cannot happen while the economic gap between Israel and the Arab countries is as immense as it is now – with per capita income 25 times higher in Israel than in Palestine and many Arab countries. But once the Arab world overcomes its present turmoil, they can hope for rapid progress, as is happening in Turkey and Muslim countries in East Asia.

Sometime in the not too remote future, in historical terms, the world will consist of large economic units striving to create a working economic world order, with a joint currency.

It may seem silly to think about this in the present situation. But it’s never too early to think.

Always remembering what Socrates said: “The only true wisdom is in knowing that you know nothing.”

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Posted on Sustainabilitank.info on July 8th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

Why is it that just about only two true liberal economists – Nobel Prize Winners Joseph Stiglitz and Paul Krugmann – seem to have it right on Greece vs. the German dominance of Europe?

With so much in the media – most of it telling about the writer – not the subject – we did not find it interesting to enter the fray. Looking up the subject in the SustainabiliTank.info memory – we found only one article to-date. It is: the January 26, 2015 article: “Can Bolivia Chart a Sustainable Path Away From Capitalism? Will Greece try to come up with a Pachamama and an ALBA Charge? In this Globalized economy can a State honestly drop out and isolate itself?”
 www.sustainabilitank.info/wp/wp-a…

I posted some excerpts of a very interesting and long article I picked up from Truthout – this with my thinking of the latest changes in Greece and wondering if rhetoric is true change – and how can Greece fare in a capitalist world with management outside its borders, but vested interests residing also in the country itself. Will there be a Greek Pachamama in Europe’s future? Will the Tsipris Greece be the Morales of an ALBA Charge of anti-capitalist rhetoric in Europe? The article I was looking at the time did not deal with Greece but with countries in Latin America that did shake off impositions from the globalization of capitalism.

The true problem in Europe seems to be that Ms. Angela Merkel just does not have the knowledge of European history. Having grown up under the Communism of East Germany, then liberated by the reunification process, she transferred the communist zeal into a capitalist zeal that basically says – all is well if you make money of it. What she does not understand is that the First World War caused the Second World War by imposing debt on the losing side Germany, but then after the Second World War, a Democratic Administration in the US, having learned from the previous experience, made sure that the rebirth of Europe, and Germany being a main ingredient of Europe, will be made possible by avoiding the sort of debt situation that the Treaty of Versailles allowed.

Besides finally annulling the German debt from WWI eventually in 1953 the European debtors of a reborn West Germany, including Greece, decided on writing off the major part of the new debt.

Sustainability is thus based on writing off debt, rather then in puritanical insistence on repayment. This is not just a matter of an uninformed Ms. Angela Merkel, but also of a large part of US politics – the present Republican party of all its streams.

We find today that my question of January 2015 is becoming very relevant in the European negotiations of July 2015, and the two above Professors seem to have reached some very similar conclusions. It just makes better sense for Greece to bail out from a system full of directives and regain their independence by printing their own money, and running their own country by themselves – and for themselves.

The problem with all those conservative-puritanical blind a-National capitalism adherents that were trained also in blind Business Administration – they have no feelings for social issues, and the understanding that good income for the lower classes creates the customers for the goods that are produced in the country that finds employment for its citizens. Making profits overseas and not paying taxes at home – just does not lead to sustainability of a Nation.

Providing fake “bail-outs” by providing money to pay for the interest on old loans, is only an illusion of help and leads only to further decline of the debtor Nation. The Greeks were totally right in voting OXI over NAI. Now Ms. Merkel wants to charm them back into submission – but only Debt forgiveness provides a path to a solution.

In absence of such an approach, the Greeks are advised by the above two professors to leave the EURO, create a NEW DRACHMA, devalue it to the point it hurts – but it promisses a better future for their children – something that is in their hands to achieve and not decided for them from outside by a non-Union that only rules but does not tend to their social needs.

We wish the best luck to Prime Minister Tsipras. He already sacrificed his finance Minister Yanis Varoufakis and brought in a milder speaking Euclid Tsakalotos, but the EU has not yet reciprocated by retiring Ms. Merkel. What Germany needs is a leader not afraid, or mentally opposed, to tackle their Bank Managers who on their own will never make the needed decisions.
Such decisions will have to be made with SUSTAINABILITY and the social needs of all 29 States of the EU with an eventual push for the creation of a true Union even if it is deemed to base it in a Federal System – something like the USE – the Unitted States of Europe. If not – the EURO has no place in their deliberations, and Tsipras might as well declare his admiration for the Bolivian Morales.

The Official debt of Greece is to:

Germany 68.2 bn EURO
France 43.8 bn
Italy 38.4 bn
Spain 25.0 bn

IMF 21.4 bn
ECB 18.1 bn

US 11.3 bn

UK 10.8 bn

Belgium 7.5 bn
Austria 5.9 bn
Finland 3.7 bn

Of these EU countries, Italy and Spain, are themselves heavily indebted and might very soon be in need of bailouts.

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Posted on Sustainabilitank.info on May 23rd, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

From pro-American to pro-Russian? Nikola Gruevski as a political chameleon.
Vassilis Petsinis, 22 May 2015, openDemocracy, London

A former staunch ally of the US-led War on Terror, Macedonia PM Nikola Gruevski has gradually turned his country away from the west towards Russia – all the while keeping his neoconservative ideology intact.

Following the unrest in Kumanovo and the massive anti-government protests, FYR Macedonia has captivated the interest of the international press. The most recent mobilization has been the peak of a wave of discontent that commenced with the countrywide student protests some weeks ago. In the domestic front, opposition circles have issued a series of charges against the government led by the conservative VMRO-DPMNE such as: promotion of nepotism, unwillingness to combat corruption, illegitimate surveillance of political opponents and, on top of all, growing authoritarianism.

Meanwhile, political analysts have detected a certain rift in the relations between Skopje and the West which has resulted in the Macedonian government’s more decisive reorientation towards Moscow.

Russia has pledged its political support to Nikola Gruevski’s and the two sides have extended their cooperation in energy issues and other areas of economic concern. Without neglecting the crucial impact of shifting geopolitics, this brief piece mostly concentrates on VMRO-DPMNE’s, predominantly, neoconservative agenda under the leadership of Nikola Gruevski. It also sets in a comparative context how this neoconservative platform has remained intact despite the gradual readjustment of the state’s foreign policy from Euro-Atlantic institutions towards Moscow’s orbit of influence.

From one neocon to another:

In 2003, Nikola Gruevski succeeded Ljub?o Georgievski in the party’s leadership. An ambitious young politician back then, Gruevski’s main ambition was to centralize decision-making within VMRO-DPMNE and modernize the party’s structures.

The latter objective was achieved via the recruitment of a younger pool of cadres. Following a widespread trend all over Southeast Europe (e.g. Albania’s Edi Rama and Serbia’s Vuk Jeremi?), the party’s central committee and later the Cabinet of Ministers consisted of young, aspiring and, often, Western-educated individuals (e.g. the Foreign Minister between 2006 and 2011, Antonio Milošoski). Moreover, Gruevski maintained the central aspects of Georgievski’s strategy of rapprochement vis-à-vis the ethnic Albanian community.

Despite this, Gruevski’s term in office has been marked by the emphatic endorsement of Neo-Macedonism to the detriment of the modernist narratives over the Macedonian ethno-genesis in the nineteenth century. The adoption of Neo-Macedonism became further institutionalized through the endorsement of grandiose architectural projects, largely inspired by classical antiquity, which commenced in 2010.

On the domestic front, the Socialists/SDSM and other opposition circles accused the government of investing a disproportional percentage of the state’s budget on these projects. In foreign policy, the emphasis on Neo-Macedonism further complicated relations with the southern neighbour, Greece.

Since the early days of Nikola Gruevski’s term in office, the ‘new’ VMRO-DPMNE drew inspiration from the rather influential trend of neoconservatism among policymaking circles in the US. As it was the case with various other statesmen in Central and Southeast Europe (e.g. Romania’s Traian B?sescu), Nikola Gruevski underlined his firm commitment to Euro-Atlantic institutions and opted for the rapid liberalization of the economy along post-Keynesian lines.

Meanwhile, Gruevski constantly stressed his deep faith in God and highlighted the significance of Eastern Orthodoxy and its system of moral values as a fundamental pillar of the state’s identity. In the field of foreign policy, Nikola Gruevski soon emerged as a staunch supporter of George W. Bush’s policy-doctrine on the Middle East. Throughout the 2000s, FYR Macedonia had dispatched military personnel to Afghanistan and Iraq under the auspices of the US-led ‘Coalition of the Willing’.

The NATO summit in Bucharest (April 2-4, 2008) was a landmark. As a gesture of gratitude to its small Balkan ally, the US delegation elaborated possible ways to include FYR Macedonia in the NATO enlargement round irrespective of the state’s dispute with Greece. However, the Greek PM, Kostas Karamanlis, vetoed this proposal on the basis that any outstanding issues with the northern neighbour must be previously resolved in order for Greece to grant its assent.

The Greek veto was met with discontent in Washington and infuriated Skopje. Especially in the light of Karamanlis’ opening to Russia, Skopje-based policymakers and think-tanks did not simply charge Athens with ‘parochial and introverted nationalism’. They went a step further and accused Greece of acting as a ‘Trojan horse’ in Moscow’s service with the aim to destabilize NATO and sabotage its enlargement in Southeast Europe.

The pendulum shifts: Fluctuating geopolitics and disillusionment with the West

Barack Obama, who succeeded G.W. Bush to the US Presidency in 2009, watered down various aspects of his predecessor’s ‘hawkish’ foreign policy. Instead, the new administration in the White House opted for a doctrine of appeasement in regards to their regional competitors (e.g. Russia and Iran).

Meanwhile, the simultaneous advent of the economic crisis made European policymakers more introverted and reluctant to the prospects of the EU’s wider enlargement. With specific regard to FYR Macedonia, European policymakers and political analysts soon stroke a critical stance towards Nikola Gruevski and his apparatus. The main areas of concern were symptoms of nepotism and authoritarianism as well as accusations over the relentless propagation of ‘ethno-kitsch’.

This shifting landscape in global and regional politics had direct ramifications on the government circles in Skopje. Several commentators have argued that delaying the state’s accession to Euro-Atlantic institutions runs detrimental to FYR Macedonia’s stateness and it is largely to account for Skopje’s disillusionment with the West. From a more ‘ideological’ angle, though, the change of guard in the White House and the subsequent adoption of a new US foreign policy doctrine are not to be overlooked either.

In other words, Nikola Gruevski’s government has lost much of the patronage that it enjoyed during George W. Bush’s tenure in office. Moreover, we are currently experiencing the transition from a unipolar to a multipolar world order. The last few years have witnessed the consolidation of semi-authoritarian models of governance among emerging regional actors (e.g. Recep Tayyip Erdo?an in Turkey and Vladimir Putin in Russia). The latter development has encouraged the, if only subtle, admiration of certain statesmen throughout Central and Southeast Europe towards the above-mentioned models.

For instance, Hungary’s Viktor Orbán recently coined the concept of illiberal democracy. According to the Hungarian PM, ‘it is not an imperative that contemporary democracy must be structured along the ideological frame of Liberalism…there can be numerous other models of democracy in Europe, nowadays’. Moreover, Viktor Orbán has also positioned Hungary’s foreign policy more solidly within Russia’s orbit of influence.

In particular, both FIDESZ and VMRO-DPMNE converge along a common axis. Both are post-Communist parties that commenced their engagement in politics as, anti-establishment, umbrella-initiatives that hosted a wide range of conservative as well as liberal standpoints. However, in the long run, local adaptations of neoconservatism evolved into the dominant intra-party trend.

Nikola Gruevski and/or Viktor Orbán are not merely unhappy with the outlook(s) of Euro-Atlantic institutions on their respective states or the way(s) that their rule has been portrayed in the Western press. They have also isolated specific elements in Vladimir Putin’s leadership which they deem rather akin to their brand(s) of neoconservatism. These are, namely, Russia’s leader-centred and strong government, the promotion of national and Christian values, and the safeguarding of ‘naturally ascribed’ gender-roles.

Especially in the light of a multipolar international system, one might contend that the neoconservative, ideological, core in parties such as VMRO-DPMNE and/or FIDESZ has remained intact despite the, apparent, foreign policy readjustment towards Moscow.
What next? Skopje amidst political polarization and fears of ethnic radicalization

In addition to the decline of popular confidence, the government in Skopje may also have to face the challenge of resurgent ethnic radicalization. During the last couple of weeks, a militant group, allegedly consisting of ethnic Albanians, became active in the northern town of Kumanovo. The apparent resurgence of militant Albanian ethno-nationalism triggered a series of conspiracy theories.

Pro-government circles have hinted at the involvement of ‘foreign decision-making centres’ who are not particularly content with the bilateral cooperation between Russia and FYR Macedonia. In the other end of the spectrum, opposition circles have suspected the government of engineering the Kumanovo troubles in an attempt to play the card of ‘national unity’ as a last resort. A third assumption that has not been examined to an adequate extent is the possibility of a peculiar, yet amorphous, blend between Albanian ethno-nationalism and elements of Islamic fundamentalism along the lines of the ‘Chechen precedent’.

Russia, on its part, has been quick to point the finger for both the Kumanovo incidents and the anti-government mobilization at the West. The US and the EU have been accused of orchestrating one more ‘Maidan-style’ coup with the aim to destabilize the government and obstruct cooperation with Russia in energy issues.

Russia Today and other pro-Kremlin media outlets dedicated considerable time to the coverage of pro-government demonstrations where Russian flags also featured among the crowd. Quite a few Western political analysts have expressed the wishful thinking that Nikola Gruevski may be forced to resign under popular pressure and be replaced by a coalition government with a Euro-Atlantic orientation.

Setting regional geopolitics aside, Nikola Gruevski’s opening to Russia reveals an additional pathology of Post-communist politics. Even back at the time when parties such as VMRO-DPMNE and FIDESZ had adjusted their foreign policy more firmly towards the West, their political activity and decision-making had been shaped by local adaptations of the neoconservative narrative. Within the context of their political development, such parties replaced their admiration for certain aspects of American neoconservatism with the endorsement of selected elements found in Vladimir Putin’s semi-authoritarianism while their (neoconservative) ideological core remained intact.

Apart from nominally right-wing parties, centre-left statesmen in the region have also detected, albeit more subtly, some ‘positive’ aspects in Vladimir Putin’s pattern of governance (e.g. the Bulgarian Socialist Party/BSP and Slovakia’s SMER). Therefore, in order to grasp such chameleonic mutations more adequately, one should also pay close attention to political culture among post-Communist parties in Central and Southeast Europe and its evolution.

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Dr Vassilis Petsinis is a Visiting Researcher at the Herder Institute (Marburg, Germany). His main areas of specialization are European Politics and Ethnopolitics with a regional focus on Central and Southeast Europe. His academia.edu profile can be found here.

WE SUGGEST TO THINK ALSO THROUGH THE ELECTION RESULTS IN THE UK WHEN READING ABOVE ARTICLE – THIS SO THAT THE MAKINGS OF A EUROPEAN UNION ARE CONSIDERED WHEN LOOKING AT CENTRIPETAL MOVEMENTS LIKE THOSE APPEARING IN CENTRAL AND SOUTH EASTERN EUROPE.
ALSO, PLEASE DP NOT FORGET THE GREECE/MACEDONIA NAME DISPUTE AND EUROPE’S INCAPABILITY TO TELL THE GREEKS OFF IN THIS MATTER. WHAT A SHAME!

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Macedonia

Related Articles: The deep roots of Macedonia’s current turmoil – and the way forward – Heather Grabbe -the same source.


The deep roots of Macedonia’s current turmoil – and the way forward.

Heather Grabbe 13 May 2015, openDemocracy, London

The country must avoid just replacing the driver in the seat of a captured state machinery – by increasing inclusion and pluralism in governance. This will be impossible without EU and NATO assistance.

For nearly two decades, Macedonia has been a pressure cooker of public anger at corruption, deteriorating governance and chronic unemployment. Now the valve has blown. This year, union-organised strikes were followed by student protests against flawed education reforms. Then the opposition party released recordings of conversations that exposed government wire-tapping of more than 20,000 citizens. Quickly dubbed “bombs”, these recordings were released over the last three months by the main opposition party leader at press conferences. On them appear the voices of Prime Minister Nikola Gruevski, senior officials, journalists, judges and security officials conspiring in electoral and judicial fraud, and organising systemic corruption. On the latest, released on 4 May, the prime minister discusses with interior ministry officials a cover-up of the murder in June 2011 by one of his bodyguards of 21-year old Martin Neshkovski, a student who supported the ruling party.

These revelations have led to a new wave of protests, led by grassroots networks of civil society rather than the opposition party. The young activists have become more radical in their demands under sustained attacks by riot police and government infiltrators, who provoked the protestors for five nights in a row. Last Friday, they pledged to come back to demand the resignation of the prime minister. Then the population awoke on Saturday morning to news of what the government called a “terrorist attack” in an ethnically mixed neighbourhood in Kumanovo, a town near the Serbia/Kosovo border. The results were the deaths of police officers and arrests of alleged terrorists. The government-controlled media called for unquestioning support for the government, and labelled as a traitor anyone who disputed the official interpretation of events. What is going on? Is this a security crisis or a consolidation of power by the ruling party in the face of mounting opposition?

High stakes – but for security or politics?

The shootings in Kumanovo have woken up the rest of the world because they are reminiscent of the security crisis fifteen years ago, when ethnic Albanians took to the hills with their guns to demand rights, representation and jobs. The country narrowly escaped a full-blown civil war thanks to the Ohrid Agreement, which gave the Albanians greater political and economic inclusion, including quotas for public-sector jobs and parliamentary seats.

It was NATO and the EU that took responsibility for Macedonia’s security in 2001, with Javier Solana, as EU High Representative for Foreign Policy at the time, and George Robertson, then NATO Secretary-General, as the main negotiators at Ohrid. But the current crisis is not primarily driven by ethnic tensions. The security framing by the government obscures a much deeper crisis in the body politic, and a looming one for the economy.

After 24 years of independence, Macedonia’s model is crumbling. The ruling party has held onto power by controlling the state and media, and borrowing on international markets to keep the economy going. This has undermined the country’s fragile democracy – despite the promises made at Ohrid, which are still not fully implemented – and failed to build rule of law and a sustainable economy. Prime Minister Gruevski won power nearly a decade ago on promises of clean government and economic development. But he then perfected the system of clientelism and state capture begun by Branko Crvenkovski, his predecessor as opposition leader and prime minister, and later president. Gruevski has used snap elections twice to keep his party in power, and his leadership has become increasingly coercive. The wiretap recordings have confirmed that his VMRO-DPMNE party has captured all vital areas of the economy and established complete control over media, even imprisoning critical journalists. Macedonia’s ranking has fallen from 36 to 136 in the freedom of media index produced by Reporters Without Borders.

The government dispensed with parliamentary debate at the end of 2013. Faced with a short deadline to approve the next loan to pay pensions before the Christmas and New Year holidays, they forcibly expelled the opposition and media from the parliament during a debate over the state budget rather than find an agreement.

The public is scared. More than half of Macedonians believe they cannot freely express their opinions. A staggering 81 percent believe that fear of consequences for them and their families prevent them and others from speaking out. Their political fears are heightened by their economic vulnerability.

The chronic economic malaise underlying acute political crisis.

The Macedonian economy appears to be financially stable. The government nurtures an image of business promoter and responsible borrower. Until recently, it was the region’s poster child for the International Monetary Fund and the World Bank. European banks were happy to earn good returns on Macedonian state bonds. Macedonia’s average GDP growth of 3% in the last three years is the highest in the region, completing this picture of prosperity.

But the economy is not sustainable. The government has used debt financing to invest in grandiose infrastructure projects, including the flagship “Skopje 2014” project, which erected statues and faux-classical buildings in the capital at a cost of over 600 million euro. Between 2008 and 2014, Macedonia’s public debt quadrupled, rising from 23% of GDP in 2008 to around 46% in 2014. Debt is projected to reach the 60% ceiling prescribed by the international financial institutions by 2019. The state budget increased by a third over the same period (from roughly 2 to 3 billion euro). Inflows of foreign direct investment averaged only 2.8% of GDP per year between 2009 and 2014, low even by regional standards.

Life for citizens has become more precarious. Around a third of the workforce is unemployed, the second highest rate in Europe after Kosovo. Without the heavy borrowing, the fragile economy could not sustain more than 300,000 pensioners, who rely on the state budget for half of their needs. Nor could it afford to pay the huge number of state employees. The last official number was 140,000 in 2008, and latest estimates range from 200,000 to 255,000. The total number of people employed in Macedonia is 700,000 – meaning that the state employs nearly a third of the workforce. No wonder people are leaving to seek better prospects abroad. A census has been postponed by the government, but Gallup estimates that more than 300,000 people have left the country. According to Deutsche Welle, most of the 120,000 Macedonians who acquired Bulgarian passports have already emigrated to the EU or elsewhere. Macedonia seems to have more registered voters (at 1,780,128) than residents.

VMRO-DPMNE has kept its hold on power in this unhappy state by resorting to strident nationalism and intimidation of its opponents, increasing the divisions in a multi-ethnic country. Ethnic Macedonians are understandably aggrieved by the lack of a solution to the dispute with Greece over the country’s name, which already blocked entry to NATO – and Gruevski has adroitly used the issue to rally nationalism in support of the government. Meanwhile, the ethnic Albanian political parties have been co-opted by their share in the spoils of mis-governance, even though their people remain even more alienated and poorer than the rest of the population.

The divisions are deepening right across society. Three-quarters of ethnic Albanians still firmly believe in EU and NATO accession as the way to a better future, but by now over 62 percent of other Macedonians think badly of joining the EU. Three-quarters of the ruling party’s supporters see the name dispute with Greece as the key reason for Macedonia’s now bleak EU accession prospects; but only 20% of opposition supporters agree. The biggest divide is between rich and poor, especially along party lines. The poor are undoubtedly getting poorer: resources available to the poorest fifth of citizens fell by 38% between 2008 and 2012. But business profits have grown by almost two and a half times since the year 2000. Nearly 80% of all Macedonians believe it is unfair that employment in state institutions and general prosperity is based on political party membership.
The way forward: a unity government with EU and NATO support

Macedonia is once again becoming a security threat on the EU’s borders. But this time it’s different: a non-partisan civic movement has taken to the streets for the first time to change the country. There is a real opportunity to use this energy to build democracy and a market economy in this multi-ethnic state.

No party is doing well in Macedonia: the secret recordings have lost the government all credibility, but the public has little faith in the leaders of the opposition and ethnic Albanian parties either. The immediate solution lies in collective action first by all those who have created the problem.

Now that three of the prime minister’s key allies have tendered their resignations, Macedonia should turn again to the solution that averted the civil war in 2001: a unity government composed of the four main parties. To foster the necessary compromises and offer a fresh start. it would not include the current prime minister, public prosecutor or speaker of the parliament – but opposition parties must be involved in open and credible oversight of the intelligence agencies, and take responsibility for the discredited interior ministry.

The most promising scenario is a government of national unity that lasts for 12-18 months, to prepare the country for free and fair elections, and create an independent commission to investigate all the events since the opposition was violently ejected from the parliament in 2013. And it should agree on a common negotiating platform on the name dispute with Greece. Macedonia’s newly reinvigorated civil society should also contribute to the work of the parliamentary commissions and monitor the new government’s progress in restoring the accountability of public institutions. The country must avoid just replacing the driver in the seat of the captured state machinery, by increasing inclusion and pluralism in governance.

As so often in the Balkans, such a scenario will be impossible without EU and NATO assistance. The default position among EU foreign ministers is to expect sovereign countries to sort out their own political problems through democratic institutions. But after a decade of unconsolidated democracy and state capture, Macedonia does not possess those institutions. Therefore, other levers of influence are needed. NATO could offer a tangible incentive to all parties by offering a possibility to re-open membership talks. EU accession negotiations are far off because so much time has been lost on necessary reforms, but the enlargement process is vital to offer hope, especially to the ethnic Albanians, and guidance to reformers who are seeking to take back captured parts of the state. The support of EU institutions, member-states and banks is vital for the country’s macroeconomic stability. Neighbouring governments could also exert more pressure, as their own security is at stake. Bulgarian Prime Minister Borisov was the first to request Gruevski to step down.

The EU can no longer afford to indulge a model of governance in Macedonia that has been far more aggressive in its authoritarian zeal than nearby Montenegro or Turkey. The European People’s Party has a particular responsibility to get involved, having accepted and protected VMRO-DPMNE as a sister party for all these years. Now it must act to uphold the standards of democracy on which it was founded, by putting pressure on VMRO-DPMNE to relinquish its grip on power and join a unity government. The time to move is now, as the costs of inaction will continue to rise.

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Posted on Sustainabilitank.info on April 28th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

from:  kurtbayer.wordpress.com/2015/04/…

Kurt Bayer’s Commentary
April 28, 2015 · —

Form Beats Substance: Media as the Dismal Estate!

The international media rejoice in the fact that Greek Prime Minister Tsipras has removed finance minister Varoufakis from his role as the main negotiator with the EU authorities about the completion of the second bail-out program, which should release another 7.2 bill € to the Greek government.

During the past two months, much more attention was given to Varoufakis’ outfits, his mode of transport, his style, his eccentricities than to the substance of the Greek negotiating position. Admittedly, Varoufakis’ personal style must have been infuriating to his ECOFIN colleagues whom he lectured on how wrong their anti-crisis economic policy was.

True, his interventions were longer on generalities than on detail, because in order to argue that Eurozone policy had failed, detailed program assessments were not necessary: the fact that Eurozone output is still below its pre-crisis Peak (-24% for Greece), unemployment more than one third higher (25% for Greece), the combined debt Ratio 15 percentage points higher (now nearly 180% for Greece) should – in a rational discussion atmosphere – suffice to make a point. However, Varoufakis massively misjudged the Eurozone ministers’ readiness to engage in a constructive, very principled dialogue about the direction of Eurozone economic policy with a tiny Eurozone Country which had massively underperformed for decades, and needed help. While such a discussion would be more than called for, Varoufakis’ presumption that the dismal Greek case was the moment and opportunity to do this, was wrong: his ministerial colleagues would not have this, period!

What is truly disappointing to the outside observer is the fact that both traditional and electronic media talked more about the “pop-economist”, about his motorcycle, his upturned collar, the shouting matches and his enervating style than about substance.


Repeated reports that the Greeks did not produce any program changes, notwithstanding the fact that a few weeks ago Greece produced a 26-page paper describing their program, that Greece refused to engage in “structural reforms” and do “their homework”, dominated media reports. And this is not only true of superficial tabloids, but also of the Financial Times, Neue Zürcher Zeitung, The Guardian, BBC, CNN, ORF, ZDF – and so on.

Not one of the mainstream papers or media reported on the conflicts in substance between the new Greek government and the Eurozone Ministers.

Rather, the gist of the stories was “that the Greeks refused to deliver”. Very little mentioning of the fact that the disfunctionalities of the Greek economy and society were not the responsibility of the new government, but rather that of the previous government parties – which the populace had removed from government in the last election.

No mentioning that the new government is serious about tax collection, broadening the tax base, fighting corruption – in contrast to the previous governments when they had been under the watch of the infamous “Troika”.

No mentioning of the fact that the new government program puts first emphasis on (admittedly under-defined) growth strategies, instead of crippling the economy even further.

It seems that the European Mainstream media are so enthralled with the morals-based disciplinary arguments of the Eurozone Finance Ministers and heads of State (“old Agreements must be honored no matter what”) that they forget that democratic elections are the backbone of Europe, that the miserysation of large swaths of Greek population warrants rethinking of the strategy, that support from the Greek population for the anyhow very difficult recovery of the Greek economy, is crucial for the viability of an agreed program, and for the survival of the Eurozone. What is needed is to bring the Greek government to its feet.

To get the new Greek government thrown out, in order to bring the old Mainstream parties back, cannot be the consideration for driving finance ministers’ negotiations with the difficult Greeks, or can it?

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By same author – Related:

An Open Letter to the Eurogroup Meeting on Feb. 11, 2015

The Greek Crisis as a Lesson for the Eurozone – In “Crisis Response”

Laokoon and the Serpents – In “Crisis Response”

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Posted on Sustainabilitank.info on February 5th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

The so called Islamic State has shown that there is no limit to their subhuman nature. It is first for all God Fearing Muslims to act against them – and also for all Europeans that remember what happens if you accept something like the Holocaust – to rally behind decent Muslims and help them exterminate this 21st Century insanity that came into our living rooms via the sensationalism loving corporate mass media.

King Abdullah II has done the right thing terminating by hanging the life-license of convicted mass-murderers. The IS leaders that managed her wanted her release in exchange of a Jordanian pilot whom they burned alive five weeks ago and released only now a video showing that act thinking that this will frighten us to submit some more to them. Weak minded people of the West might indeed equivocate and wait uselessly for a sign from the oil-sellers that taking serious steps against this menace is allowed.

The Jordanian pilot was shot down over the city of Rakka – the capital of their Islamic State located in what used to be called Syria – on Christmas day 2014 – in an American led bombing action. The immediate reaction called for now is for Jordan to obliterate the city of sin – Rakka – and for Europe to applaud such an action. Just remember that in 1942 the US refused to save innocent people by refusing to bomb the railways leading to the extermination camps. We did not forget and the Arabs are called not to forget now that burning pilot.

Further, and we do not feel this is unrelated – we call for Europe to unite under an Angela Merkel – Merkel Plan for a strong European Union – by starting with a plan to deal with the insolvency of the Greek State by seriously reducing their debt that was instigated by irresponsible capitalism pushing money on folks they knew had no economy that would ever return those funds.

It is rather a United Europe that could back States like Jordan – to do the right thing in the face of the 21st century scourge.

Next, we need a Green Economy to repair the devastation caused by the income-inequality fossil fuel economy over the last 40 years. Justice requires the wealthy to voluntarily adopt a Maximum Income to help repay their debts to society that came from taking money from people and treasuries and transferring it to oil exporters that then used it to fuel this pseudo-Islamic fury.

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Muslim Outrage Against Islamic State after Killing of Jordanian Pilot – Liz Sly and Hugh Naylor

Declarations of outrage swept the Middle East on Wednesday as the spectacle of an Arab pilot being burned alive in a cage triggered some of the harshest reactions yet. The pan-Arab daily al-Hayat headlined its coverage: “Barbarity,” while Iyad Madani, secretary general of the Organization of Islamic Cooperation, condemned the killing as an affront to Islam. “Most of the people executed by [the Islamic State] have been foreigners, but this time it was an Arab Muslim man,” said Labib Kamhawi, a political analyst ba sed in Amman.
However, Hisham al-Hashimi, an expert on ISIS who advises the Iraqi government, said, “The Islamic State has gained more from this than it has lost.” In the Syrian city of Raqqa, the Islamic State broadcast video of the pilot’s death on giant video screens as crowds shouted, “God is Great.” (Washington Post)

See also Muslim Clerics Denounce Burning Alive of Pilot as Un-Islamic – Sami Aboudi and Suleiman Al-Khalidi

The Grand Sheikh of Al-Azhar, Ahmed al-Tayeb, Egypt’s top Muslim authority, said the killers themselves deserved to be “killed, crucified or to have their limbs amputated.” In Qatar, the International Association of Muslim Scholars, headed by Youssef al-Qaradawi and linked to the Muslim Brotherhood, called the burning of t he pilot a criminal act. (Reuters)

So what now?

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Posted on Sustainabilitank.info on January 29th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

Can Bolivia Chart a Sustainable Path Away From Capitalism?
Wednesday, 28 January 2015 on Truthout – By Chris Williams and Marcela Olivera, Truthout | News Analysis

FOR THE FULL ARTICLE PLEASE GO TO:  truth-out.org/news/item/28778-can…

I will post here some excerpts of this very interesting and long article – this with my thinking of the latest changes in Greece
and wondering if rhetoric is true change and how can Greece fare in a capitalist world with management outside its borders but vested interests residing also in the country itself. Will there be a Greek Pachamama in Europe’s future? Will the Tsipris Greece be the Morales of an ALBA Charge of anti-capitalist rhetoric in Europe?


Bolivia offers a case study on the impact of climate change, people’s resistance to exploitation and racist oppression, and the potential for genuine change from below.

The number of conflicts over natural resource extraction and refining, road building and pipeline construction, and forest and water use have all steadily grown under Morales.

Ruthless extraction of Bolivia’s bountiful natural resources has concentrated the natural and social wealth of the country in a small group at the top of society, and exposed Bolivians to an extreme degree of imperial intrigue and attempted subjugation.

In stark contrast to monoculture farming, several hundred different varieties of potato are grown in the Bolivian Andes, as a resilient subsistence food by 200,000 small-scale farmers.

With the melting of the Andean mountains ice and climate change farmers no longer know how community can grow food because “it now rains at all different times, and it’s drier for longer. This place did not used to be as hot as it is now.”

Higher average temperatures will lead to an increase in evaporation, causing soils to dry out. In turn, drier soils will increase erosion and loss of topsoil, an effect that will be compounded by two other effects of a warmer climate.

But for all of Morales’ rhetorical championing of “buen vivir,” Gudynas believes that the MAS government instead operates more along the lines of a new form of Keynesian neoliberalism, or what he calls “neo-extractivismo.”

And despite a change in official rhetoric, and some welcome redistribution of wealth, Morales’ policies are practically the same as his predecessors’ with respect to natural resource extraction.

“We have lost an opportunity for something based on our self-organization and self-management.”

“The people do not decide; the government decides. Despite the constitution guaranteeing rights for indigenous people and Mother Earth, those policies are not implemented; they are just words.”

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As through so much of its history, the small Andean nation of Bolivia sits at the center of a whirlwind of political, social and climatological questions. Arguably, no other country thus far in the 21st century raises the question of an “exit strategy” from neoliberal capitalism more concretely, and with greater possibility and hope, than Bolivia. That hope is expressed specifically in the ruling party, MAS, or Movement Toward Socialism. The country’s leader, former coca farmer and union organizer Evo Morales – South America’s first indigenous leader since pre-colonial times – was overwhelmingly elected to his third term of office in 2014. Morales has broadly popularized the Quechua term pachamama, which denotes a full commitment to ecological sustainability, and public hopes remain high that he’ll guide the country toward realizing that principle.

Bolivia has seen impressive and consistent economic growth since Morales’ first election victory in 2006, including the establishment of government programs to alleviate poverty and attain the social equity goals promised in his campaign. However, this growth has primarily rested on an expanded and intensified exploitation of the country’s natural resources, principally from fossil fuel production, mining, and the growth of large-scale, mono-crop agriculture and manufacturing.

This economic growth has also created what the Bolivian non-governmental organization CEDLA (Centro de Estudios Para el Desarrollo Laboral y Agrario) calls the rise of a new bourgeoisie comprised of Santa Cruz agriculture producers, traders from the west of the country and small mining producers. The Bolivian government also believes that a new class is emerging, and will become Bolivia’s new dominant group. Carlos Arce, researcher from CEDLA, says in an article in the Bolivian press:

A new type of entrepreneur has emerged from the popular classes. These emerging strata are mostly traders and are also present in the cooperative sectors, especially in mining. This new type of entrepreneur saves more and has a more austere mentality, in the classical Weberian sense. Within the state, representatives of this strata interface with middle-class intellectuals and other sectors of society, seeking to build alliances with small urban and rural producers that respond to the prerogatives of the market.

The so-called “plural economy” institutionalized by the government recognizes the state, communitarian, private and cooperative forms of economic organization. It also puts the state in direct control of the plans for economic development. In other words, the Bolivian people are the owners of the natural resources, but it is the state that administers and industrializes these natural resources.

In Arce’s view, the government exalts this new “emerging bourgeoisie.” The government’s program of a plural economy “facilitates the alliance of these market-driven sectors with key sectors of international capital. This opens the door to transnational corporations and makes permanent their presence.”

In December 2014, the Financial Times reported on the rise of a new indigenous bourgeoisie in El Alto, less constrained by older cultural ties of thrift, and striving for greater wealth, more ostentatious luxury buildings and opulent traditional clothing.

On the other hand, while many journalists and analysts have focused on the accomplishments of the Morales’ government, few have looked at the state of the labor force, unions and labor conditions. Research by local organizations shows that finding secure employment has become very difficult. According to the Bolivian Labor Ministry’s own data just 30 percent of the labor force in Bolivia has a secure and formal job, with almost 70 percent working in the informal sector. These workers have no employment security, which makes people more dependent on welfare protections and programs that have become more elaborate and extensive in recent years.

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Bolivia’s geography is very diverse: The verdant and tropical Amazonian lowlands give way to the austere beauty of the highlands and snow-capped peaks of the Andes that ring the capital, La Paz. Bolivian elevations range from 130 to 6,000 meters above sea level dividing the country into three distinct geographical areas: the high plateau, the Andean valleys and the eastern lowlands.

Given all of these factors, Bolivia offers a case study on the impact of climate change, people’s resistance to exploitation and racist oppression, and the potential for genuine change from below.

Much of that resistance was formed in response to centuries of relentless extraction of the country’s minerals, semi-precious and precious metals, and guano. Following the privatization of Bolivia’s public airline, train system and electric utility, in 1999, the government sold the water and sanitation system of Cochabamba to a transnational consortium. Over the following five months, mass demonstrations and violent confrontations with the police and military forced the government to cancel the contract and keep the water supply in public hands. This popular struggle for public control of water became recognized worldwide as the Cochabamba Water War.

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Marcela Olivera

Marcela Olivera is a water commons organizer based in Cochabamba, Bolivia. After graduating from the Catholic University in Cochabamba, Bolivia, Marcela worked for four years in Cochabamba as the key international liaison for the Coalition for the Defense of Water and Life, the organization that fought and defeated water privatization in Bolivia. Since 2004, she has been developing and consolidating an inter-American citizens’ network on water justice named Red VIDA.
Chris Williams

Chris Williams is an environmental activist and author of Ecology and Socialism: Solutions to Capitalist Ecological Crisis. He is chairman of the science department at Packer Collegiate Institute and adjunct professor at Pace University in the department of chemistry and physical science. His writings have appeared in Z Magazine, Green Left Weekly, Alternet, CommonDreams, ClimateandCapitalism.com, Counterpunch, The Indypendent, Dissident Voice, International Socialist Review, Truthout, Socialist Worker and ZNet. He reported from Fukushima and was a Lannan writer-in-residence in Marfa, Texas. He recently was awarded a Lannan Cultural Freedom Fellowship.

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Posted on Sustainabilitank.info on August 12th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)


Our View: ‘Historic’ MoU with Israel must be followed through with actions.

Cyprus Mail, Monday, 12th August, 2013


YESTERDAY’S signing of the memorandum of understanding on energy and water resources by Cyprus, Greece and Israel was hailed as ‘historic’ and in a sense it was. There has never before been such an agreement by the three countries and many view it as the start for greater co-operation and stronger relations.

Israel’s minister for energy and water resources, Silvan Shalom spoke this prospect on Wednesday. He said: “The fact that we are here shows that we do not only work well on (issues concerning) water, but it’s also about geopolitics, strategy and political issues among the three countries.”

President Anastasiades appeared on the same wavelength. In a speech at the opening of a fifth desalination plant, which Israeli companies had helped build, he said the common energy interests could become “the driving force for an enhanced partnership between our two countries.” He also invited Israel to commit to exporting its natural gas from Cyprus’ LNG facility, which is still at a very early planning stage.

While the good intentions exist, so far, most plans of co-operation exist in the realm of theory, nothing tangible having been decided, let alone agreed. The memorandum provides a framework for exploring the feasibility of joint projects – one envisages linking the three countries through an underwater electricity cable, a second would involve an underwater gas pipeline linking the Eastern Mediterranean to Europe via Greece and the third relates to LNG storage facilities in Cyprus. But these projects might not even be viable – feasibility studies would have to be undertaken.

There is no shortage of ideas for co-operation. During Shalom’s visit there were also reports that the Israeli Electricity Company had proposed to supply Cyprus with cheaper electricity through an underwater cable. And when Cyprus started to produce cheap electricity, the flow could be reversed with Israel buying power from the island. Such an arrangement would make the agreement for the temporary supply of natural gas, that the government is currently negotiating, unnecessary.

While plenty of proposals are floating about, it was only a memorandum of understanding that was signed yesterday. There is a very long way to go before any of the plans take shape and are implemented. When this happens, we can talk about historic agreements, geopolitics and strategy, but at present such talk seems premature. What can be said was that yesterday’s signing of the memorandum was an important first step – a declaration of intent – but the words need to be followed by actions if the ‘historic agreement’ billing is to be justified.

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We understand that Muslim held Northern Cyprus is interested as well to participate in these programs which would mean a step away from their total dependence on Turkey and perhaps a step towards normalization of relations between them and Greek Cyprus.

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Posted on Sustainabilitank.info on July 27th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)


Cyprus Oil Spill Threatens Pristine Coastline.

Posted: 25 Jul 2013 08:49 PM PDT

Cyprus Oil SpillBetter call out that airborne Mediterranean pollution surveillance crew Tafline just wrote about! Last Tuesday, an oil tanker delivering fuel to a power plant in the Turkish Cypriot-controlled north of Cyprus spilled approximately 40 tons of oil into the Mediterranean Sea.

In a separate report, officials estimated more than 100 tons of oil were spilled near pristine coastline, threatening wildlife and tourism facilities. There has been no explanation for the conflicting fuel estimates.

A spill barrier has been established but officials, anticipating additional leakage, are seeking to extend it, Turkish Cypriot Environment Minister Mehmet Harmanci told Reuters in a telephone interview. He described the risk as “ongoing”.

According to Harmanci, power plant owner Aksa Enerji pins the spill on a pressure problem or an improper connection in the pumping process. Human error has not been ruled out.

Local authorities were struggling to contain the slick which extends for 4.5 miles along the Karpasia peninsula. Clean-up materials, including oil-absorbing solvents, were ordered from Turkey but, as of this writing, delivery has been delayed.

cyprus-oil-spillThe Karpasia peninsula, which stretches approximately 50 miles, boasts unspoilt beaches and a rich variety of wildlife. The area is a recognized nature reserve that serves as a breeding ground for rare turtles, with July and August the most critical months for spawning.

It is one of the last undeveloped areas in Cyprus, in large part due to stalled development attributed to international sanctions that stunt the northern Cypriot economy. The region’s biggest tourism area, the nearby town of Bafra, is also threatened.

As reported by World Bulletin, only Turkey recognizes the Turkish Cypriot administration, while the rest of the world sees the Greek Cypriot government as the sole authority in the island. Cyprus was divided between Turkish and Greek Cypriots in1974, when Turkish forces invaded in the wake of a short-lived coup by Greek Cypriots seeking union with Greece.

Aksa said operations at the Kalecik power station were unaffected.

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Posted on Sustainabilitank.info on June 2nd, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

 

 

 

 

Are We Witnessing the Long-Awaited Turnaround in EU Economic Policy?

 

 

On May 29, the EU Commission (as well as OECD) published its assessment of the budgetary and reform programs of its member states and issued its “country-specific recommendations”  – with the exception of Portugal, Greece and Cyprus which had already received their “adjustment programs” earlier.

Media reporting focused on the extension (by 2 years) of the time by which some countries have to achieve their medium-term objectives, and on President Hollande’s rebuke of the EC’s recommendations for France.

Commission President Barroso spoke of the need to loosen the consolidation efforts and to start combating unemployment, especially for youths. 6 bill EUR should be available for this purpose. Suddenly, promoting growth is no longer a taboo. The recent Franco-German announcement of an impending
“gouvernement economique” or “verstärkter Koordinierungsmechanismus”
also give some hope.

 

Still, Barroso (and the EC) thinks that ”structural reforms” in goods and labor markets are the key to growth, and thus need to be speeded up. His (marginal) slowing down of austerity is not based on the recognition that the EU crisis strategy has proven to be a complete failure, but “only” on the lack of political acceptance by the unemployed citizens of the EU.
A turnaround in policy, a necessary change in the policy paradigm, this is not.

 

It seems to be impossible for politicians, both national and supranational ones, to admit past mistakes. But this would be the pre-requirement for a turnaround. Barroso and the others act as if everything so far had been going according to plan, had been successful, and that now one just adds another element to the heretofor successful strategy. This behavior, repression of facts, has been analyzed extensively by my late compatriot Sigmund Freud.
It prevents new insights from coming onto the radar screen, a requirement for a new direction.

 

Technically, the EC assessed the Stability Programs and the Reform Programs. In its own words, by assessing them jointly, the EC purports to assess the complete economic policy of its member states. Let us look at the Austrian assessment as a case in point.

 

Economic growth is mentioned only with respect to the Austrian forecasts which underlie the programs – which are seen as being too optimistic. The prime objective of the analysis is, as usual, the positively assessed path of budget consolidation. The medium-term objective (as structural deficit of 0.45% of GDP) should be achieved 2 years earlier than originally (2017) planned. But Austria’s public expenditure share path again is seen as too optimistic. With respect to the tax system, the EC tells the Austrians that the least growth-damaging real estate taxes are far below the EU average, and thus could be increased.

 

The most important points of criticism concern the labor market: the participation rates of females and seniors are by far too low, income differences between genders too high, the pension age for women creeps only marginally towards that of men, early retirement is still to prevalent; education achievements are under par, at the same time costs of the system too high, migrants are left behind. All this against the background of the recognition that (measured) unemployment in Austria is the lowest in the EU. The EC criticizes also inadequacies in financial market supervision between home and host countries, as well as too many barriers for professional services and for personal services in health and care sectors.

 

For all these areas, EC gives recommendations to speed up reforms. All these points are well taken (by me, not necessarily the authorities), but: their implementation alone, while important, does not generate growth. There is not enough emphasis on promoting innovation, on real problems with the tertiary education system, no mentioning at all about a positive growth expectation – which would require an increase in effective demand in Europe. The structural problems of the financial sector are largely ignored, with the exception of the possible budgetary consequences of winding down one of the nationalized banks.

 

Macropolicy is not mentioned, not in the Austrian assessment, not in the assessment of the Eurozone. There EC mentions the need to achieve an adequate policy mix by better coordination of budget consolidation and structural policies, but no word is lost on coordination between the fiscal stance of the Eurozone and ECB’s monetary policy. This shows once more that macroeconomic policy is a foreign concept to the EC, that economic policy consists of budget policy cum supply side (micro) economics. Briefly, imbalances in foreign trade are mentioned, plus its necessary “rebalancing”, but that is it. When reading the documents, one sees that the focus on individual countries’ assessment virtually crowds out the assessment of the Eurozone and the EU as a whole. They are seen as the sum of the individual countries, but not as an objective of macroeconomic policy.

 

Conclusion: Nothing much has changed in the EU’s policy orientation. While the soaring youth unemployment is – finally – seen as a major (mainly political) problem, austerity is slowed down and youth training programs are encouraged. But this is not a change in the mainly austerity-driven paradigm. It does appear that the requirements of the financial markets still drive EU economic policy, rather than the life expectations of the EU citizens. The recent news about the watering-down and delay of the Financial Transactions Tax are only one indicator of this. The objective that the EU should pursue the welfare of its populations, enshrined in the Treaty, seems to have been forgotten.

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Op-Ed Columnist – THE NEW YORK TIMES.

Prisoners of the Euro

TO its custodians and admirers, the European Union is the only force standing between its member states and the age-old perils of chauvinism, nationalism and war. That was the pointed message that the Nobel Committee sent last year, when it awarded the union a Peace Prize for its role in “the advancement of peace and reconciliation, democracy and human rights.” And it is the message hammered home relentlessly by the Continent’s politicians, who believe their citizens face a stark choice, in the words of Chancellor Angela Merkel of Germany, between continued integration and a return to “centuries of hatred and blood spill.”

But right now, the E.U. project isn’t advancing democracy, liberalism and human rights. Instead, it is subjecting its weaker member states to an extraordinary test of their resilience, and conducting an increasingly perverse experiment in seeing how much stress liberal norms can bear.

That stress takes the form of mass unemployment unseen in the history of modern Europe, and mass youth unemployment that is worse still. In the Continent’s sick-man economies, the jobless rate for those under 25 now staggers the imagination: over 40 percent in Italy, over 50 percent in Spain, and over 60 percent in Greece.

For these countries, the euro zone is now essentially an economic prison, with Germany as the jailer and the common currency as the bars. No matter what happens, they face a future of stagnation — as aging societies with expensive welfare states whose young people will sit idle for years, unable to find work, build capital or start families.

The question is whether they will face ideological upheaval as well. So far, the striking thing about the aftermath of the 2008 financial crisis, both in Europe and the United States, is how successfully the center has held. Power has passed back and forth between left and right, but truly radical movements have found little traction, and political violence has been mercifully rare.

In a sense, Francis Fukuyama’s post-cold-war declaration of the “end of history” — by which he meant the disappearance of credible alternatives to liberal democracy and mixed-economy capitalism — has held up pretty well in the last five years. Amid the worst economic disaster since the Great Depression, illiberal societies like Egypt and Syria have faced political crises, but the developed world has not. There has been no mass turn to fascism, no revival of Marxist economics, no coup d’états in Madrid or jackboots in Rome.

But you have to wonder whether the center can hold permanently, if unemployment remains so extraordinarily high. How must liberal democracy and mixed-economy capitalism look to young people in the south of Europe right now? How stable is a political and ideological settlement that requires the rising generation to go without jobs, homes and children because the European project supposedly depends on it? And for that matter, how well is the Continent’s difficult integration of Muslim immigrants likely to proceed in a world where neither natives nor immigrants can find work?

Already, the Greek electorate has been flirting with empowering a crypto-communist “coalition of the radical left,” even as a straightforwardly fascist party gains in the polls as well. Hungary’s conservative government has tiptoed toward authoritarianism. Spain has seen huge street protests whose organizers aspire to imitate the Arab Spring. And lately, Sweden, outside the euro zone but not immune to its youth unemployment problems, has been coping with unsettling, highly un-Scandinavian riots in immigrant neighborhoods.

These perturbations do not threaten democracy in Europe yet, and maybe they never will. Maybe the liberal democratic consensus is so bred into the bone that no amount of elite misgovernment can persuade Europe’s younger generation to turn against it. Maybe nothing can end the end of history.

But for the countries facing a youth unemployment crisis, that still seems like an awfully risky bet to make.

Yet there’s a Catch-22 facing Greeks and Spaniards and Italians looking for an alternative to just staying the course. As wrenching as it would be, the option that would do the most to defang extremists of the left and the right would probably be to abandon the euro immediately, with each country regaining control of its own fiscal and monetary policy and seeing what options open up. But at the moment, the only people arguing for that course are … the extremists of the left and the right!

For that to change, more of the Continent’s political elites would need to recognize that their beloved integration project may actually be threatening Europe’s long democratic peace. For now, there simply aren’t enough responsible people ready to unwind what should never have been knitted together in the first place. But with every increase in the unemployment rate, the odds get better that irresponsible and illiberal figures will end up unwinding it instead.

Readers’ Comments:   Read All Comments (15) »

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Posted on Sustainabilitank.info on April 4th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

The following is a presentation of facts that cannot be ignored anymore. Deserves close reading by those in the North that thought you can bumble your way through without creating a real union capable of calling out “it is all for one and not just one for all!” The EU is not just the fulfilling of the German dream of takeover of Europe by peaceful means. Cyprus dreaming of being the Mediterranean base of Russia? What else? Austria a bridge to the East? Yes, but only after twinning up with Finland.
The article does not mention the UK even once – we interpret this as a sign it has crystallized as the island off-shore that ought to partner with the US and stop bothering the decision making process of the continent at large.
It was the UK interest that created Cyprus in the first place by not letting it split and join Greece and Turkey. Who needed two weak Greek States in the Union? Malta? another UK invention? Slovenia was good – why not also a Catalunya or Catalonia?

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english banner othernews

A Line Of Demarcation Through The Eurozone Is Taking Shape

 
 
Wolf Richter*  

Everyone learned a lesson from the “bail-in” of the Cypriot banks: Russian account holders who’d laundered and stored their money on the sunny island; bank bondholders who’d thought they’d always get bailed out; Cypriot politicians whose names showed up on lists of loans that had been extended by the Bank of Cyprus and Laiki Bank but were then forgiven and written off. Even brand-new Finance Minister Michael Sarris who got axed because he’d been chairman of Laiki when this was going on. His lesson: when a cesspool of corruption blows up, no one is safe. And German politicians learned a lesson too: that it worked!

“With the Cyprus aid package, it was proven that countries like Germany, the Netherlands, and Finland, if they stick together, are able to push for a strict stability course,” Hans Michelbach told the Handelsblatt. The chairman of the finance committee in the German Parliament and member of the CSU, Chancellor Angela Merkel’s coalition partner, called for deeper collaboration of the triple-A countries in the Eurozone “to strengthen the confidence of citizens and investors in the common currency.”

There are still five in that euro triple-A club: Germany, Austria, the Netherlands, Finland, and Luxembourg. “It would be good if we could also convince Luxembourg to participate more strongly in this stability collaboration,” he said. It would be in the best interest of Luxembourg as major financial center, he added. A reference to Luxembourg’s precarious status, as Cyprus had learned, of being a tiny country with banks so large that it can’t bail them out by itself.

To protect the euro, the alliance of the triple-A countries must be united firmly against large euro countries like Italy and France, he said. “Strong signals of stability would be of great importance for the Eurozone,” particularly now, given the “unclear situation” in Italy, renewed doubts about Greece, and the failure of the French government in its stability policies.

Exactly what French President François Hollande needs: the euro triple-A club breathing down his neck. He’s already in trouble at home. To reverse the slide, he got on state-owned France 2 TV last Thursday to speak to the French people so that they could see how his sincerity, wisdom, and economic policies would stop the country from sinking ever deeper into a quagmire.

And a quagmire it is: double-digit unemployment, a Purchasing Managers Index just above Greece’s, new vehicle sales that plunged almost 15% so far this year, a budget deficit that refuses to be brought under control…. He has tweaked some policy measures here and there. And he dug up a new version of the 75% income-tax bracket that had been squashed by the Constitutional Court. But Jérôme Cahuzac, the Budget Minister who’d tried to get the first version through the system, went up in flames over allegations of tax fraud and “tax fraud laundering.”

Now the people have had it. After the TV appearance, his approval rating, ten months into his term, plummeted another 6 points to 31%, a low that scandal-plagued Nicolas Sarkozy took four years to reach. And only 27% approved of his economic policies. “The French simply don’t want austerity,” lamented an unnamed government insider.

France was suffering the consequences of the “socialist experiments” of its government and was becoming less and less competitive, explained Michelbach. He emphasized that France would remain an important partner of Germany. He wasn’t kidding: France buys 10% of Germany’s exports and is crucial to the German economy. But if France didn’t change course, he said, that could become a “serious problem” for the Eurozone.

As opposed to the mere hiccups of Cyprus or Greece. More banks and more countries will require bailouts­Slovenia, Spain, Italy, and Malta are on the list. And no one wants to see France on that list. Even Italy is too large to get bailed out by other countries­though it’s rich enough to bail itself out, à la Cyprus [ A "Politically Explosive" Secret: Italians Are Over Twice As Wealthy As Germans].

But in Germany, a revolt against these save-the-euro bailouts has been brewing for a while. With elections in September, it’s taking on volume and voices, and the structure of a political party, the Alternative for Germany, not unpalatable radicals but the educated bourgeoisie, and they want to stop the bailouts and dump the euro.

The government is feeling the heat. No one can afford to lose votes. Michelbach’s triple-A club, a line of demarcation in the Eurozone, is one of the reactions. Merkel might benefit from it in the elections. The other four countries might find if appealing, though it will be of dubious appeal in the rest of the Eurozone. But if efforts fail to fix the Eurozone’s problems­and the Eurozone lumbering that way­a tightly knit triple-A club could weather the storm together, more stable and more unified than the Eurozone ever was. And Michelbach had just floated a version of that idea.

Every country in the Eurozone has its own collection of big fat lies that politicians and Eurocrats have served up in order to make the euro and the subsequent bailouts or austerity measures less unappetizing. Here are some from the German point of view…. Ten Big Fat Lies To Keep The Euro Dream Alive

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    *    www.testosteronepit.com    www.amazon.com/author/wolfrichter
 twitter.com/TestosteronePit

Wolf Richter wrote also – “White House Hypocrisy And Trade Sanctions Against China.” -  Practically every car sold in the US contains Chinese-made components. But suddenly, in the middle of a heated presidential campaign, the Obama administration decided to do something about it.

Wolf Richter is a  San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience.

In www.nakedcapitalism.com/2013/03/w… he explains “Having worked a bit on international deals, and for companies operating in foreign markets, cross border transactions have an even lower success rate than domestic ones. The big reason is the one mentioned here, which is marked cultural incompatibility between the seller and buyer. Here the Chinese did less badly than they could have (they could have tried forcing Chinese practices on the German operation, which would have destroyed the value of the asset). But the logic of the transaction was unclear. Was it technology transfer? Consolidation? It appears both might have been goals, and neither happened very much.

But I find it intriguing that as lousy as the Japanese were at doing deals  (they found it hard to understand that the contract was the deal, and were too inclined to overpay), they were good at managing workers in manufacturing operations (service businesses were another kettle of fish, there they tended to drive Americans crazy).  This is a skill the Chinese will have to master, since they desperately need to re-invest their surpluses, and they are trying to acquire more real-economy assets.”    FASCINATING.

His insights in Wall Street machinations are also very good.

 

 

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Posted on Sustainabilitank.info on March 24th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

 

Russian PM lectures Barroso on Cyprus.

Medvedev: ‘The euro crisis has strengthened ideas that Europe is in decline.’

21.03.13

By Andrew Rettman
 euobserver.com/economic/119525

BRUSSELS - Russian Prime Minister Dmitry Medvedev humbled European Commission chief Jose Manuel Barroso in public remarks on Thursday (21 March) over the EU’s handling of Cyprus.

Speaking alongside Barroso at a conference in Moscow, he called the EU’s original Cypriot bailout idea “to put it mildly, surprising … absurd … preposterous.”

“The situation is unpredictable and inconsistent. It [the bailout model] has been reviewed several times. I browsed the Internet this morning and I saw another Plan B, or a Plan C or whatever,” he noted.

He upbraided EU institutions for failing to give Moscow due notice of its decision.

“The system of early warning did not work very well … that means we need to work on it,” he said.

He also quoted unnamed Russian “eurosceptics” as saying: “The euro crisis has strengthened ideas that Europe is in decline in the 21st century … that the European project has turned out to be too cumbersome.”

Earlier the same say, he told Russian newswire Interfax that he is thinking of reducing Russia’s holding of euro-denominated currency reserves.

In a sign of broader Russian upset, Leonid Grigoriev, an academic and a former Russian deputy finance minister, told a separate news conference that Russian money is no longer safe anywhere in the EU.

“The Cyprus situation has created new uncertainty in the banking sector. People have started thinking whether the same can happen elsewhere, in Spain, Portugal, Ireland?” he said.

The EU’s Plan A for Cyprus was to lend it €10 billion, but to impose a 7-to-10 percent levy on all Cypriot savers, including Russian expats, who alone stood to lose €2 billion.

It has now been scrapped.

It is unclear what new model might be found.

But the Cypriot finance minister, Michael Sarris, also in Moscow on Thursday, said he is in talks to give Russia shares in Cypriot “banks, natural gas [reserves]” in return for Russian bailout money.

For his part, Barroso told Medvedev that the EU could not have warned Russia even if it wanted to.

“Regarding the conclusions of the last Eurogroup [euro finance ministers, who drew up Plan A], Russia was not informed because the governments of Europe were not informed – let’s be completely open and honest about that issue. There was not a pre-decision before the Eurogroup meeting. The Eurogroup meeting concluded, I think, in the very early hours of Saturday and the decision was the result of a compromise,” he said.

He added: “Don’t believe in this idea of the decline of Europe … The European Union is stronger than it is today fashionable to admit.”

Leaked documents on internal EU talks seen by the Reuters news agency give substance to Russia’s criticism, however.

The notes record remarks by finance officials from euro-using countries during a panicky conference call about Cyprus held on Wednesday.

According to Reuters, a French official said Cyprus’ decision not to take part in the phone-debate is “a big problem … We have never seen this.”

A German official said Cyprus might quit the euro and there is a need to “ring-fence” other countries from contagion.

A European Central Bank official said there is a “very difficult situation” because savers might pull money from the island if banks re-open next week.

Meanwhile, Thomas Wieser, an Austrian-origin EU official who chaired the phone-meeting, described the situation as “foggy.” He added: “The economy is going to tank in Cyprus no matter what.”

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To the above we add that Turkey, its holding onto North Cyprus, and its interest in the gas fields that stretch from Cyprus to Israel and Lebanon, having first development seen by Israel, are part of the larger scope of the Cyprus potential move away from the EU. But, In effect, these other aspects might make the EU stiffen up in a bailing out effort conditioned only on reorganizing some of the Cypriot Banks – letting Russian oligarchs foot part of the bill – without selling to Russia port holdings in the Mediterranean. Seeing a Syria solution that drives out Russia from its port facilities there, may be part of the American interest in the region as well. In short – Cyprus is not Iceland – this because it is geographically located in a very complicated region of the Outer EU. Is it so that an Obama trip could help by forcing a Cyprus-Turkey reconciliation first?

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We just found out that The New York Times is catching up:

Russian Ties Put Cyprus Banking Crisis on East-West Fault Line

By ANDREW HIGGINS, The New York Times, March 24, 2013

With Cyprus’s role as a provider of financial services for Russians, what began as another episode in a familiar narrative has escalated into a drama with geopolitical implications.

 

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Also, we know that Oligarch Abramowich is overexposed in Cyprus banks, is this also the case of Mr. Berezowski who just committed suicide at his home near London? Were there politics involved and this was a Russian in-fight? The coincidence of the timing will create rumors – we say.

Russian Oligarch and Critic of Putin Dead in Britain.

Stefan Wermuth/Reuters

Boris Berezovsky in London in last year. He is said to have committed suicide on Saturday.

By
Published: March 23, 2013

MOSCOW — Boris A. Berezovsky, once the richest and most powerful of the so-called oligarchs who dominated post-Soviet Russia, and a close ally of Boris N. Yeltsin who helped install Vladimir V. Putin as president but later exiled himself to London after a bitter falling out with the Kremlin, died Saturday.

He was 67 and lived near London, where last year he lost one of the largest private lawsuits in history — an epic tug-of-war over more than $5 billion with another Russian oligarch, Roman A. Abramovich, in which legal and other costs were estimated to be about $250 million.

Mr. Berezovsky’s death was first reported in a post on Facebook by his son-in-law Egor Schuppe and was confirmed by Alexander Dobrovinsky, a lawyer who had represented him.

Mr. Dobrovinsky wrote in Russian on his Facebook page: “Just got a call from London. Boris Berezovsky has committed suicide. The man was complex. An act of desperation? Impossible to live poor? A series of blows? I am afraid that no one will know the truth.”

The Thames Valley police in Berkshire, an hour from London, said Saturday that they were investigating the “unexplained” death of a 67-year-old man, apparently Mr. Berezovsky, in Ascot.

The police statement did not name Mr. Berezovsky, but British news reports said an investigation was under way at his home. “Specially trained officers are currently at the scene, including C.B.R.N.-trained officers, who are conducting a number of searches as a precaution,” said a spokeswoman for the Thames Valley police, referring to the force’s chemical, biological, radiological and nuclear team. “This is to enable officers to carry out an investigation into the man’s death. The body of the man is still in the property at this time.”

In London, Mr. Berezovsky had adopted much the same style as an oligarch in Russia, with chauffeurs and bodyguards. But recent news reports said Mr. Berezovsky had begun to sell personal assets, including a yacht and a painting by Andy Warhol, “Red Lenin,” to pay debts related to the lawsuit.

The lawsuit, in which Mr. Berezovsky brought a claim against Mr. Abramovich in a dispute over the sale of shares in Sibneft, an oil company, and other assets, ended in a spectacular defeat.

In her ruling, the judge in the case, Elizabeth Gloster, called Mr. Berezovsky an “unimpressive and inherently unreliable witness” and at times a dishonest one. By contrast, the judge said Mr. Abramovich had been “a truthful, and on the whole reliable, witness.”

Mr. Berezovsky’s legal troubles worsened recently with a claim by his former girlfriend, Elena Gorbunova, that he owed her about $8 million from the sale of a house they owned in Surrey, England. The judge also ordered him to pay more than $53 million of Mr. Abramovich’s fees.

A friend of the tycoon, who spoke on the condition of anonymity because he was not authorized to speak to the press, said Mr. Berezovsky said he had been “extremely depressed” for at least six months since losing his case. “He was a great believer in British justice, and he felt it let him down,” the friend said.

A spokesman for Mr. Putin said Mr. Berezovsky had recently sent a letter asking President Putin for forgiveness and permission to return to Russia. “Some time ago, maybe a couple of months, Berezovsky sent Vladimir Putin a letter, written by himself, in which he admitted that he had made a lot of mistakes,” the spokesman, Dmitri S. Peskov, said on the Russia 24 television channel. “He asked Putin for forgiveness for the errors to be able to return home.”

Mr. Peskov said that he did not know Mr. Putin’s reaction, but that “news of anyone’s death, no matter what kind of person they were, cannot arouse any positive emotions.”

Mr. Berezovsky was a Soviet mathematician who after the fall of Communism went into business and figured out how to skim profits off what was then Russian’s largest state-owned carmaker. Along with spectacular wealth, he accumulated enormous political influence, becoming a close ally of Mr. Yeltsin’s.

With Mr. Yeltsin’s political career fading, Mr. Berezovsky helped engineer the rise of Mr. Putin, an obscure former K.G.B. agent and onetime aide to the mayor of St. Petersburg who became president of Russia in 2000 and last May returned to the presidency for a third term.

After his election, Mr. Putin began a campaign of tax claims against a group of rich and powerful Russians, including Mr. Berezovsky and Mikhail B. Khodorkovsky, an oil tycoon, who remains jailed in Russia.

Mr. Berezovsky fled to London, where he eventually won political asylum and at one point raised tensions by calling for a coup against Mr. Putin.

David E. Hoffman, the author of “The Oligarchs: Wealth and Power in the New Russia,” an exploration of the role of such magnates in the era after the breakup of the Soviet Union, said Mr. Berezovsky stood out for seeking not only wealth but political clout.

“Boris Berezovsky was among that wave of oligarchs who realized that great fortunes were to be made in the massive sell-off of assets in the new Russia,” Mr. Hoffman said by e-mail on Saturday. “While many of his peers also saw the opportunity, Berezovsky was more focused than most on the role that politics would play. He realized the need to co-opt those in power in order to make deals. He did it from the early days with automobiles and later with oil.”

Mr. Berezovsky had an outsize, if hardly always benevolent, role in post-Soviet Russia.

George Soros, a financier and a critic of the Russian oligarchs, had likened them to 19th-century American robber barons. But if that was an apt metaphor, the power and influence of these new tycoons was amplified by the legal and political vacuum left by the collapse of the Soviet Union.

Mr. Berezovsky amassed his fortune at first in automobiles, including a business he formed in 1993 with Aleksandr Voloshin, who would later become Mr. Yeltsin’s chief of staff. But like other oligarchs, Mr. Berezovsky’s interests spread across many sectors of the post-Soviet Russian economy, to oil; media; and Aeroflot, the Russian airline.

He survived an assassination attempt in 1994, a car bombing in which his driver was killed.  

The assassination attempt connected him to a K.G.B. officer, Alexander V. Litvinenko, who was poisoned by the radioactive isotope polonium 210 in London in November 2006.

Mr. Litvinenko, then working for the F.S.B., the domestic successor to the K.G.B., was assigned to investigate the blast, and Mr. Berezovsky became his mentor and later his employer.

Mr. Berezovsky helped Mr. Litvinenko flee Russia in 2000 before he, too, left the country to seek asylum in London.

On the day he was poisoned, Nov. 1, 2006, Mr. Litvinenko went from a meeting with several Russians at a hotel in central London to Mr. Berezovsky’s nearby office. There he met with a Chechen exile, Akhmed Zakayev, another Berezovsky protégé, and the two drove together to adjacent homes financed by Mr. Berezovsky, in North London.

After Mr. Litvinenko’s death, and with his wealth dwindling during his time in London, Mr. Berezovsky slowly withdrew his financial support for Mr. Litvinenko’s widow as she pressed for an inquest into the death, now scheduled to begin in May.

Boris Abramovich Berezovsky was born in Moscow on Jan. 23, 1946, to Abram Berezovsky, a civil engineer who worked in construction, and Anna Gelman, at a time when the Soviet Union was recovering from World War II.

He studied forestry and mathematics at the Moscow Forestry Engineering Institute. He worked as an engineer and researcher until the late 1980s.

In the mid-1990s, Mr. Berezovsky served on Russia’s security council, only to be dismissed from that post by Mr. Yeltsin in 1997.

Mr. Berezovsky and Mr. Putin had been close, and Mr. Berezovsky aided Mr. Putin’s rise to the presidency. But signs came quickly that Mr. Berezovsky had fallen out of favor. In October 2000, just 10 months after Mr. Yeltsin’s resignation, Mr. Berezovsky was ordered to vacate a spacious government country house and to return the government plates on his limousine. He left Russia for Britain that year.

In March 2003, the British authorities arrested Mr. Berezovsky and said they were beginning a process that could lead to his extradition. But he was granted political asylum later that year apparently after the British determined that Russia sought him solely on political grounds.

In 2007, he was convicted of fraud charges by a Russian court in absentia and sentenced to six years in prison, and had potentially faced prosecution in at least 10 other cases.

The sharpest blow to his wealth came from the failed lawsuit against Mr. Abramovich.

On the day last August when the court ruled against him, Mr. Berezovsky attempted an air of nonchalance. “Life is life,” he said, flanked by bodyguards, before driving off in a Mercedes.

Andrew E. Kramer contributed reporting from Moscow, Alan Cowell from Venice, and Ravi Somaiya from New York.

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Posted on Sustainabilitank.info on March 15th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

 

Uri Avnery

March 16, 2013

 

                                    To the Victor, the Spoils.

 IN THE days following the recent Israeli elections, Ya’ir Lapid, the major winner, let it be known that he wanted to be the next Foreign Minister.

 No wonder. It’s the hell of a job. You can’t lose, because the Foreign Minister is responsible for nothing. Serious foreign fiascos are always laid at the door of the Prime Minister, who determines foreign policy anyway. The Foreign Minister travels around the world, stays in luxury hotels with gourmet cuisine, has his picture taken in the company of royalty and presidents, appears almost daily on TV. Sheer paradise.

 For someone who declares publicly that he wants to become Prime Minister soon, perhaps in a year and a half, this post is very advantageous. People see you among the world’s great. You look “prime ministerial”. 

 Moreover, no experience is needed. For Lapid, who entered politics less than a year ago, this is ideal. He has all a Foreign Minister needs: good looks and a photogenic quality. After all, he made his career on TV.

 So why did he not become Foreign Minister? Why has he let himself be pushed into the Finance Ministry – a far more strenuous job, which can make or break a politician?

 Simply because the Foreign Ministry has a big sign on its door: Occupied.

 THE LAST Foreign Minister, Avigdor Lieberman, was, probably, the least suitable person for the job in the whole country. He is no Apollo. He has an air of brutality, shifty eyes and spare vocabulary. He is unpopular everywhere in the world except Russia and its satellites.  He has been avoided throughout by most of his international colleagues. Many of them consider him an outright fascist. 

 But Netanyahu is afraid of Lieberman. Without Lieberman’s parliamentary storm troopers, Likud has only 20 seats – just one more than Lapid. And within the joint party, Lieberman may well replace Netanyahu in the not too distant future.

 Lieberman has been forced out of the Foreign Office by the law that forbids an indicted person to serve in the government. For many years now, a dark judicial cloud has been hanging over his head. Investigations followed suspicions of huge bribes. In the end, the Attorney General decided to content himself with an indictment for fraud and breach of trust: a minor diplomat turned over to Lieberman a secret police dossier concerning his investigation and was awarded an ambassadorship.

 Netanyahu’s fear of Lieberman induced him to promise that the Foreign Minister’s post would remain empty until the final judgment in Lieberman’s case. If acquitted, his lofty position will be waiting for him.

 This may be a unique arrangement. After barring Lapid’s ambition to succeed him, Lieberman declared this week triumphantly: “Everyone knows that the Foreign Office belongs to the Israel Beitenu party!” 

 THAT IS an interesting statement. It may be worthwhile pondering its implications.

 How can any government office “belong” to a party?

 In feudal times, the King awarded his nobles hereditary fiefs. Each nobleman was a minor king in his domain, in theory owing allegiance to the sovereign but in practice often almost independent. Are modern ministries such fiefs “belonging” to the party chiefs?

 This is a question of principle. Ministers are supposed to serve the country and its citizens. In theory, the best man or woman suited for the job should be appointed. Party affiliation, of course, does play a role. The Prime Minister must construct a working coalition. But the uppermost consideration, even in a multi-party democratic republic, should be the suitability of the candidate for the particular office.

 Unfortunately, this is rarely the case. Though no elected Prime Minister should go to the length of Ehud Barak, who displayed an almost sadistic delight in placing each of his colleagues in the ministry he was most unsuitable for. Shlomo Ben-Ami, a gentle history professor, was put into the Ministry of Police (a.k.a. Interior Security), where he was responsible for an incident in which several Arab citizens were shot. Yossi Beilin, a genius bubbling with original political ideas, was sent to the Ministry of Justice. And so on.

 I remember meeting several of the new ministers at a diplomatic reception soon after. They were all deeply embittered and their comments were of course unprintable.

 But that was not the point. The point was that by appointing ministers quite unsuitable to the tasks entrusted to them, Barak did great damage to the interests of the state. You don’t entrust your body to a surgeon who is really a lawyer, nor do you entrust your money to a banker who is really a biologist.

 YET THE idea of political entitlement was hovering over the whole process of forming the cabinet. The awarding of the ministries more closely resembles a dispute among thieves over the spoils than a responsible process of manning or womanning the ministries which will be responsible for the security and well-being of the nation.

 The quarrel that held up the formation of the new government for several crucial days was over the Ministry of Education. Lapid wanted it for his No. 2, an orthodox (though moderate) rabbi. The incumbent, Gideon Sa’ar, desperately clung to it, organizing petitions in his favor among teachers, mayors and what not.

 This could have been a legitimate fight if it had been about questions of education. For example, Sa’ar, a fanatical Likud man, has sent the pupils to religious and nationalistic sites in Greater Eretz Israel, to imbue them with proper patriotic fervor. He is also more intent on his pupils winning international capability tests than on education as such.

 But nobody spoke about these subjects. It was a simple fight over entitlement. In medieval times, it might have been fought out with lances in a tournament. In these civilized days, both sides use political blackmail. Lapid won.

 I AM not a great admirer of Tzipi Livni and her air of a spoilt brat. But I am happy about her appointment to the Ministry of Justice.

 Her last two predecessors were intent on destroying the Supreme Court and putting an end to “judicial activism”. (This seems to be a problem in many countries nowadays. Governments want to abolish the court’s power to annul anti-democratic laws.) Tzipi can be relied on to buttress the Supreme Court, seen by many as “the last bastion of Israeli democracy”.

 Much more problematical is the appointment of Moshe Ya’alon as Minister of Defense. He inherited the job because there is just nobody around who could be appointed instead. Israelis take their defense seriously, and you cannot appoint, say, a gynecologist to this job.

 “Bogy”, as everybody calls him, is a former Chief of Staff of the Army, and a very undistinguished one. Indeed, when he finished the standard three years on the job, Prime Minister Ariel Sharon refused to grant him the almost automatic fourth year. Bogy was bitter and complained that he always had to wear high boots, because of the many snakes in the Ministry of Defense and the General Staff. He may need them again now.

 His many detractors call him a “bock” – German and Yiddish for a goat, symbolizing a lack of intelligence. He is an extreme militarist, who sees all problems through the sights of a gun. He can be sure of the allegiance of Israel’s vast army of ex-generals (or “degenerals”’ as I call them).

  THE MOST problematical appointment of all is the choice of Uri Ariel for the crucial post of Minister of Housing.

Uri Ariel is the arch-settler. He was the founder of a settlement, a leader of the settlers’ organization, the Ministry of Defense official responsible for the settlements. He was also a director of the Keren Kayemet – Jewish National Fund – a major arm of the settlement enterprise. He entered the Knesset when Rehavam Ze’evi, the leader of the extreme-extreme Right, was assassinated by a Palestinian hit squad.

Turning this Ministry over to such a person means that most of its resources will go to a frantic expansion of the settlements, each of which is a nail in the coffin of peace. Yet Lapid supported this appointment with all his new-found political clout, as part of his “brotherhood” bond with Naftali Bennett, who is now the godfather of the settler movement.

Bennet’s party also gained the all-important Knesset finance committee, which is needed to funnel the funds to the settlements. It means that the settlers have gained complete control of the state.

Lapid’s big election victory may yet be revealed as the biggest disaster for Israel.

The brotherhood pact between Lapid and Bennett made it possible for them to blackmail poor Netanyahu and get (almost) everything they longed for. Except the Foreign Ministry.

How will Lapid turn out as Minister of Finance? Difficult to say. Since he is totally innocent of any economic knowledge or experience, he will have to depend on the Prime Minister above and the ministry bureaucracy below. Treasury officials are a tough lot, with a thoroughly neo-liberal outlook. Lapid himself also adheres to this creed, which is called by many Israelis “swinish capitalism” – a term invented by Shimon Peres.

ONE of Lapid’s main election promises was to put an end to the Old Politics, held responsible for all the ills and ugliness of our political life until now. Instead, he said, there will be the New Politics, an age of shining honesty and transparency, embodied by selfless and patriotic leaders, such as the members of his new party.

 Not for nothing did he call his party There Is A Future.

Well, the Future has arrived, and it looks suspiciously like the Past. Indeed, the New Politics look very much like the Old Politics.

 Very, very old. Even the ancient Romans are supposed to have said “To the victor, the spoils!” But then, Ya’ir Lapid doesn’t know Latin.

——————————

Others, like Ari Shavit of Haaretz, look at the Obama visit, with expressed worry – something like -  The President who holds Israel’s fate in the palm of his hand: Israel has recently lost quite a bit of its ability to chart its own strategic future, and this will make Obama’s upcoming trip different than previous ones by U.S. presidents.

Above is potentially much more serious then if Ms. Merkel would pay a visit to Rome as in our second clip. There it is only about restructure and money – in Israel it is about restructure and Near East neighborhood policy.

——————————-

New York Times Editorial – March 15, 2013

Italy, in Search of a Government.

By
Published: March 14, 2013

Italy’s newly elected Parliament convenes on Friday with no clear governing majority. Only a government with a strong popular mandate can push through the kind of radical changes Italy really needs: sweeping labor market and tax reforms, tough anticorruption laws, electoral reform and a new fiscal bargain with euro-zone partners that replaces austerity with growth. All or most of that will now have to wait until new elections, probably later this year, can produce more definitive results.

The vote produced a four-way split among two parties that endorse the European-backed austerity policies that have plunged Italy into deep recession, the anti-establishment Five Star Movement and a bloc led by former Prime Minister Silvio Berlusconi.

That four-way split means that no politically feasible coalition is mathematically possible, especially since the Five Star Movement’s founder, Beppe Grillo, has repeatedly declared that the movement will not support a government led by any of the other groupings. Even if Mr. Grillo does not reconsider that position, there is no need for Italians, their European partners or the bond markets to panic. Mario Monti will continue as the caretaker prime minister until Parliament can agree on a successor. Taxes will be collected, government bills paid and administrative decisions taken. One ratings agency, Fitch, last week downgraded Italian bonds one notch but still considers them investment grade. Bond auctions this week went tolerably well, and Rome has now successfully raised a significant chunk of the money it will need to see it through this year. Democracy’s ways can be frustratingly slow, especially when radical changes are on the agenda and long established parties fail to rise to the occasion. Yet democracy is the European Union’s founding and defining principle. Italy’s partners, though understandably frustrated, need to be patient and supportive. And the European Central Bank must be prepared to deter speculators by stepping in if necessary as a lender of last resort.

Those, like Chancellor Angela Merkel of Germany, who pressured Mr. Monti’s government to tighten the screws of austerity on Italy’s growth-starved economy share some responsibility for his disappointing electoral performance. And they now share some responsibility to stand by Italy as it seeks a democratic way out of the resulting parliamentary deadlock.

A version of this editorial appeared in print on March 15, 2013, on page A24 of the New York edition with the headline: Italy, in Search of a Government.

 

 

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Posted on Sustainabilitank.info on March 5th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

This is serious – a professional clown is a good man trying to make a living. A clown impersonator is something else. While Bepe Grillo is fighting for the cause of change in Italy and everywhere else, it is Mr. Berlusconi who used the facade of government and wealth in order to create a court of clowns to his kingdom and rule. True Conservatives reject his behavior but corralled  to save him because he was in their service.

March 4th, 2013 the  Karl Renner Institute of the Socialist Party of Austria had a reassessment of the Italian elections with the participation of two Journalists from Italy – Tonia Mastrobuoni from La Stampa in Turino, and Franz Koessler  who was for many years the foreign policy commentator at the Austrian “Falter” and is now a freelance in Rome.

I learned that Monti who was seen by the European banking institutions as the man who will save them and Italy, and was seen as  having the baking of over 50% of the Italians – just came in as a poor fourth with 10%. It is the 25% that Grillo’s movement got .and the fact that the other two parties that have less then 30% each – that make it impossible to form a government that is supported by a clear majority.

The popular thinking is that new elections will favor Mr. Grillo and put him in the position to dictate the rules for a coalition government.

Conventional thinking believes that if he has not put forward a real plan, and is not ready to join another party, this is a sign that his group will eventually break up. But why? His Grillini want to see change, and not being politicians that live by having a political job, they may actually relish the idea of having brought about change and be very calculated in their support of any government.

I suggested that the original individuals that started out like them, could actually be the example for the Grilini – and the warning being that eventually politicians from the right got hold of their movement and turned the Tea Party that started out as “Taxes we had enough” ended up backing all sort of ideas that had nothing to do with their original rebellion.

On the other hand, if the Grillini manage to avoid the fate of the Tea Party, they may become the toast of all those in the EU that would want to change the rullling strata in most of the EU Member States.
—————————————————————————————-
The New York Times Editorial

Italy Chooses None of the Above

First Published: February 27, 2013

Italy’s voters surprised and frightened governments and financial markets across Europe with their repudiation of austerity and much of the Italian political establishment.

Europe’s fears of an ungovernable Italy and renewed euro-zone crisis may prove justified. With no party holding a majority in the new Parliament, there is little chance for renegotiating the economic straitjacket demanded by European lenders or enacting needed reforms.

For decades, the political establishment, regardless of party, has failed to deal with Italy’s well-known problems — excessive bureaucracy, official corruption, organized crime, unequal and regressive taxes and anemic economic growth. The past 15 months of growth-crushing austerity policies under Prime Minister Mario Monti have mainly added to the pain. Italy’s borrowing costs declined (at least until the election returns came in).
But recession has deepened, unemployment has risen and living standards have fallen back to the levels of the 1980s. Mr. Monti’s popularity never recovered from the deeply regressive tax he imposed on family homes.

A protest vote driven by public anger is not so surprising. The big losers were centrist supporters of Mr. Monti, who came in a dismal fourth, and the center-left Democratic Party, led by Pier Luigi Bersani, which won only a slim plurality in the lower house and ran a disappointing second in the regionally apportioned Senate. These two blocs were expected to form a coalition government with policies not very different from Mr. Monti’s. That would have pleased Europe, but is now impossible.

The winners were the anti-establishment Five Star Movement, founded just three years ago by the comedian Beppe Grillo, and the People of Liberty led by the disgraced former prime minister, Silvio Berlusconi. Mr. Berlusconi’s slate won the largest number of Senate seats and the second largest contingent in the lower house. Mr. Berlusconi, who bears much responsibility for Italy’s economic and political dysfunction, brought his party back from near oblivion by shamelessly restyling himself as an anti-establishment, anti-austerity populist. He even promised to refund the homeownership tax, offering to dip into his personal fortune to do so.

As the top vote-getter, the Democratic Party gets the first chance to form a new government. Recognizing how tough that will be, Mr. Bersani has begun setting forth a limited legislative program that he hopes can attract support from beyond his own ranks. Mr. Grillo declared Wednesday that his supporters would not form an alliance with Mr. Bersani, or Mr. Berlusconi, who gets to try next if Mr. Bersani fails. But he did leave open the option of backing specific reform measures proposed by other parties. That is not a prescription for stable government and could force another election later this year. But it is probably the best hope for enacting at least some of the political reforms and anti-corruption laws Italy desperately needs and so many fed-up Italian voters desperately want.

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Posted on Sustainabilitank.info on March 4th, 2013
by Pincas Jawetz (PJ@SustainabiliTank.com)

March 3, 2013

Populists or Business (Banking) Lobbyists?

The public media and European mainstream parties’ politicians are unisono lamenting the rise of populism as manifested by the strong showing of Beppe Grillo in Italy’s parliamentary election last weekend. They decry, as they did earlier in the case of Greece, when the “populist” Syriza party nearly won the election, the irresponsibility, the negativism, the “against-it-all” attitude of these parties’ leaders. Let us add to these election results the street demonstrations and battles in Greece, in Spain, in Portugal, in Bulgaria, in Slovenia – all these before the background of people jumping to death from windows of their to-be-repossessed apartments, of soup kitchens, of soaring unemployment rates (especially, and even more tragically, of the young), and of the horrifying increase in poverty rates in many of these and other countries.

It does seem, that in spite of these politicians’ lamentoes, that European citizens are no longer accepting the crisis resolution policies imposed on them by politicians – at the bidding of financial markets. Yes, Mario Monti, the unelected and now defeated prime minister, managed to calm “market fears”, yes, Mario Draghi, the ECB president, managed to do the same – and more – by last fall promising to “do everything necessary” to enable European states’ return to the financial markets, yes, some of the Southern states (plus Ireland) were able during the past months to place bond auctions at “sustainable” yields (i.e. below the benchmark of 6%). But the concomitant “aid programs” by the European Central Bank, the European Commission and the International Monetary Fund, the dreaded “troika” are what the restive populations are no longer willing to swallow. Since governments took over bank debt, the citizens have been called upon to foot the bill, by having their taxes increased, government expenditures, especially social expenditures, cut and losing their jobs as a result of the persistent recession which these programs (and the similar, if less stringent “debt brake” conditions imposed on all EU countries. There is already talk about a “lost decade” for Europe.

With all this austerity (which is portrayed as without alternative) it is completely unclear where future growth should come from even after this decade. The mainstream recipe that balanced budgets (and their corresponding structural reforms) guarantee growth has been proven false, not only in theory, but also in empirical practice. If the second largest economic block in the world (with about 18 trillion $ in GDP, about one fourth of the world economy) reduces public sector demand in addition to falling demand in the private sector, this affects the whole world. This is different from the frequently cited more recent cases, where one individual country managed to export its way out of recession, when all other countries were growing and thus increasing their demand.

In this situation, the EU parliament has achieved a spectacular success, by agreeing (also with EU Finance Ministers) to limit bankers’ bonus payments to 100% of base salary (in exceptional cases to 200%). This is part of a hard-fought package setting new rules for European banks’ equity and liquidity requirements. There are widespread “populism” cries by especially English bankers, but also their colleagues around Europe that this would drive out banking from Europe, that this is a Continental coup to transfer banking business from London to Paris or Frankfurt (??), that this is “unfair”. The more sanguine bankers say (see eg. Financial Times March 2, 2013) that this just means that their base salary will have to be doubled as a consequence. Tory MPs are fuming and using this as an additional argument that the UK should leave the EU as soon as possible. Of course, they do not mention the fact that it was their leader, David Cameron, who pulled the Tories out of the European Peoples’ Party group, which – in the form of the Austrian Othmar Karas – was leading the negotiations of the European Parliament with the Finance Ministers. They also forget to mention that banking lobbies (led by the English) have delayed and watered down the other parts of the Banking package to be concluded.

The Greek and Italian elections, the street protests, the events in many other European countries should lead to a realization by the EU policy makers, both in the Central Bank, in the Commission and in the Council, that it is not just “clowns” (@ Peer Steinbruck, the Social Democratic candidate for the German premiership) who say “no more” to this oppressive economic policy recipe, but it is large parts of the European populations who have not only lost confidence that these recipes will work, but actively are against them – because they see that as in the Great Depression of the late 1920s – they lead to impoverishment and political disaster. Politicians should listen more closely to their populations, and less to the financial sector lobbyists, who have caused this crisis and refuse to play their part in shouldering their part of the burden. It was the lobbyists’ close connection to the politicians who made banking debts into government debt, it was their whisperings which had told politicians fairy tales about the financial markets being the most efficient markets in the world, thus self-regulation and “light-touch” regulation was all that was needed.

What are the alternatives?

The primary policy objective should not be to “return countries to financial markets’ access”, but to have indebted states return to a sustainable economic and social policy path which improves the welfare of their populations. To this end, government debt financing should be taken away from financial markets and turned over to a publicly accountable public institutions (the ECB or the ESM with a banking licence).

As far as bank debt is concerned, a European plan must be developed with a medium-term view of how the European Financial sector should look like in 10-20 years. This would counter-act the present “re-nationalization” trends where every country attempts to save its banks (frequently at the expense of others) at high costs to the taxpayers. Some banks will need to be closed, others restructured, and effective regulation set up. It is clear that (some) debts will need to be repaid, but much of bank debt should be paid by bank owners and their bondholders, not by taxpayers. For highly indebted bank sectors, a European bank resolution fund could take over some of the debt.

It is true that a number of “problem countries” in the EU have pursued wrong policies in the past, e.g. waste of public (EU and national) funds, neglect of innovation and R&D policies, high military expenditures, neglect of industrial policies, neglect of modern education systems, neglect of building up sustainable energy systems (both on the supply and demand side), and many more. Each country needs to develop a positive vision of where it wants to stand in 10 years’ time, and then select the appropriate instruments, and convince its EU partners of its way.
The major political task will be to convince the populations that there is light at the end of the tunnel, that some sacrifices are necessary, but that these will be distributed equitably, that there are positive prospects for this and the next generation, that the social system will cushion the inevitable burdens. To generate the confidence that “we are all in this together” will not be credible, if voiced by those politicians who have gotten us (knowingly or unknowingly) into the present mess. This is the task for new, and credible politicians who not only know what possible alternatives are, but can also muster enough support, both political and technical, from the populations who voted for them. This may and will require new communication methods – as they have been employed during the recent elections.

At a European level, a new more comprehensive economic policy umbrella must be opened. The nearly exclusive attention to budget consolidation was geared to placating the financial markets – who also are getting cold feet seeing what “their” policies do to growth (see the most recent downgrade of the UK). It must throw off the yoke of financial market dictate and turn itself to strengthening the European model, with a view to balance social, economic and environmental requirements for the future.

European civil society is growing together. Public institutions, like the labor movement, are not. In the face of the crisis, labor unions are re-nationalizing, attempting to save jobs for their own members at the expense of their foreign colleagues. They should learn from the business lobby, which has been much more successful in convincing European and national policy makers of their own interests.

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Posted on Sustainabilitank.info on December 1st, 2012
by Pincas Jawetz (PJ@SustainabiliTank.com)


Six EU leaders to skip Nobel gala

30.11.12 @ 09:51

By Andrew Rettman on www.EUobserver.com

BRUSSELS – Six EU leaders, including the UK, are to skip the Nobel gala next month, as criticism of the award multiplies.

  • A Nobel – the EU award continues to stir debate (Photo: EUobserver)

Nobel Institute director Geir Lundestad told EUobserver on Friday (30 November) that 18 EU leaders will come to watch the Union’s top three officials – Herman Van Rompuy, Jose Manuel Barroso and Martin Schulz – collect the peace prize in Oslo on 10 December.

He declined to list them. But he indicated that they include the “big” countries – France, Germany, Italy, Poland and Spain.

He said six others – including the Czech republic, Sweden and the UK – have confirmed they are not going, while the rest are still making up their mind.

The British and Czech decisions come from two eurosceptic VIPs – David Cameron and Vaclav Klaus – and are likely to fuel talk on whether Cameron thinks the UK is on its way out of the bloc.

Sweden’s Frederik Reinfeldt cannot go because he is busy in a parallel Nobel event in Stockholm the same day.

Lundestad declined to speculate on whether Cameron and Klaus’ decision amounts to a boycott. “It’s up to them to explain why they are not coming,” he said.

But he did criticise four cabinet ministers from Norway’s eurosceptic Centre Party for also deciding to stay away.

“They put the emphasis on Norway and whether Norway should be a member of the EU or not. The committee dos not address that question. It recognises the EU’s contribution to a more peaceful Europe through six decades. It has nothing to do with Norway,” he noted.

The Nobel decision back in October prompted debate on whether the EU deserves the prize.

Some of the arguments were repeated this week.

For his part, the Austrian leader of the centre-left S&D group in the EU parliament, Hannes Swoboda, said in a debate in Brussels: “The EU was a vision for peace, after WWII. And the EU brought peace.”

But a joint letter by the World Council of Churches and the Conference of European Churches said: “The economic and humanitarian tragedy today in Greece challenges the EU as a peace builder for the next generation.”

Meanwhile, the recent Gaza crisis – which claimed 168 Palestinian lives and five Israeli ones – prompted a fresh rebuke.

A joint letter by 52 former peace prize laureates, artists, academics and diplomats on Wednesday said the EU should be disqualified for its ties to Israel.

“The role of the European Union must not go unnoticed, in particular its hefty subsidies to Israel’s military complex through its research programmes,” they wrote.

Former Nobel laureates Desmond Tutu, Mairead Maguire and Adolfo Perez Esquivel also wrote a letter attacking the EU as a party in conflicts around the world.

“The EU is clearly not ‘the champion of peace’ that Alfred Nobel had in mind when he wrote his will … The Norwegian Nobel committee has redefined and remodelled the prize in a manner that is not consistent with the law,” they said.

They called for the committee to withhold the prize money of €930,000, even though the EU has promised to give it to charities for child victims of war.

For his part, Lundestad said the Tutu letter was organised by Fredrik Heffermehl, a Norwegian jurist who has “protested for many, many years against every decision of the Nobel committee.”

He added: “The prize money has never been withheld.”

Related:

  1. Barroso and Van Rompuy win battle for Nobel limelight
  2. Pride, confusion and sour grapes after EU wins Nobel
  3. EU ambassador to attend Nobel gala despite Chinese ‘bullying’

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Posted on Sustainabilitank.info on December 1st, 2012
by Pincas Jawetz (PJ@SustainabiliTank.com)

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Japan Industrial Output Rises 1.8% In October
Japan’s industrial production grew 1.8% in October from the previous month for the first rise in four months, largely helped by demand …

Kuwaiti Voters Head to Polls to Elect National Assembly Members Over 400,000 Kuwaiti voters headed to the polls early Saturday in the country’s five constituencies to choose 50 National Assembly …

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Posted on Sustainabilitank.info on November 5th, 2012
by Pincas Jawetz (PJ@SustainabiliTank.com)

For the US it was the warning from President Dwight Eisenhower about the military – industrial complex. He was best positioned to understand the industry interest in supplying the military with materials they do not need. Today this is a political stand of Romney Republicans that pushes austerity on everybody else. Here an Obama campaign proposition that austerity itself is an unmanageable security threat to a State that allows unacceptable income gaps that destroy the middle class. The article uses the example of Europe in order to reflect on what might happen to the US.

Austerity Doesn’t Reduce Deficits.

By Terrance Heath from the Campaign for America’s Future
 ourfuture.org/blog-entry/20121144…

November 1, 2012

Austerity is back in the news, and the news about austerity is never good. We’ve only had de facto austerity on this side of the pond. So as usual, the news is from Europe, where the austerians are going full-tilt boogie. Our homegrown austerians, like their European counterparts, tell us that the kind of severe austerity underway in Europe is necessary to reduce the deficit. Everything from food stamps to Medicaid and Medicare — everything except defense spending — must be cut in order to reduce the deficit.

The thing is, it hasn’t worked. In Greece, Europe’s austerity poster child, austerity has shrunk the economy and increased the national debt.

Greece’s draft budget for 2013 has forecast a deeper recession and worse debt problems than previously thought.

The economy is expected to shrink by 4.5% next year, and government debts to rise to 189% of economic output.

Greece held inconclusive negotiations with its rescue lenders on Wednesday over the economic reforms needed to release further bailout funds.

The government also faces opposition to the reforms from coalition partners and unions have called a general strike.

Finance Minister Yannis Stournaras held a conference call on Wednesday with his counterparts from the Eurogroup of eurozone finance ministers, as well as representatives of the International Monetary Fund and European Central Bank.

The German Finance Minister Wolfgang Schaeuble said afterwards that Athens still needed to do more.

Austerity is literally killing Greece. Yet the austerians demand more.

Austerity only increased inequality in Portugal. Now, after painful austerity measures that hit ordinary Portuguese and public sector workers hardest failed to reduce the deficit, Portuguese citizens are planning to rally against new tax increases.

Anti-austerity protesters in Portugal are planning street rallies as the country’s parliament is expected to approve big tax rises in a new budget.

The centre-right government in Lisbon is hoping to reduce its budget deficit as part of the 78bn-euro (£63bn; $101bn) EU-IMF bailout deal.

However, the proposed 2013 budget could face a challenge in court.

Portugal has already cut public sector wages and raised taxes, triggering a series of street demonstrations.

Unemployment in Portugal is at a record high, and people have faced sharp reductions in their incomes. None of it seems to have made a dent in Portugal’s debt problem. Yet the austerians demand more.

Austerity has been disastrous for Ireland, which once made the top ten on the Heritage Foundation’s Index of Economic Independence.

The Central Statistics Office released its yearbook of Ireland, giving a comprehensive picture with facts and figures on key areas of life, including population, education and the economy.

It revealed that the look of the labour market worsened in 2011, with jobs and pay still in decline since the recession.

The number of people in work fell to 1.821 million since 2010, while those unemployed rose 3.7 per cent to 304,500.

… A staggering 23 per cent of people had hit the deprivation rate by 2010 and were experiencing two or more types of poverty.

In September, Spain braced for further austerity measures even as hungry Spaniards foraged in trash bins for food. But Spain’s economy contracted for a fifth quarter, because of austerity-driven inflation.

Spain’s economy contracted for a fifth quarter, undermining efforts to plug the budget deficit that’s pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high.

Gross domestic product declined 0.3 percent in the three months through September and 1.6 percent from a year earlier, the National Statistics Institute said today, compared with an Oct. 23 estimate from the Bank of Spain of a 0.4 percent contraction. Consumer prices, based on European Union methodology, rose 3.5 percent from a year earlier, INE said.

The deepening of Spain’s five-year slump, which is prompting record loan defaults at the nation’s banks and job cuts at companies including Gamesa SA, adds to pressure on Prime Minister Mariano Rajoy as he resists requesting international aid. While tax hikes he’s implementing as part of his austerity program are depressing consumption, they are also spurring inflation, which threatens to add 3 billion euros ($3.9 billion) to the country’s pension bill.

All across the EU, austerity has driven joblessness to a record high.

The jobless rate in the euro area climbed to a record in September as the fiscal crisis and tougher austerity measures threatened to deepen the economy’s slump.

Unemployment in the economy of the 17 nation single currency area rose to 11.6 per cent from 11.5 per cent in August, the European Union statistics office Eurostat said today. That’s the highest since the data series started in 1995.

Some 18.5 million people were unemployed in the euro area in September, up 146,000 from the previous month.

At 25.8 per cent, Spain had the highest jobless rate in the currency bloc.

Portugal’s unemployment rate was at 15.7 per cent, while Ireland reported a jobless rate of 15.1 per cent. France’s jobless rate was at 10.8 per cent.

Italy’s jobless rate rose to its highest point in 13 years, at 10.8 per cent on a seasonally adjusted basis.

Yet the austerians demand even more.

Americans should pay attention to the saga of austerity in the EU, for a couple of reasons. First, because conservatives here at home are committed to the same agenda that’s failed in Europe.

If Mr. Obama wins, he’ll presumably go back to pushing for modest stimulus, aiming to convert the gradual recovery that seems to be under way into a more rapid return to full employment.

Republicans, however, are committed to an economic doctrine that has proved false, indeed disastrous, in other countries. Nor are they likely to change their views in the light of experience. After all, facts haven’t gotten in the way of Republican orthodoxy on any other aspect of economic policy. The party remains opposed to effective financial regulation despite the catastrophe of 2008; it remains obsessed with the dangers of inflation despite years of false alarms. So it’s not likely to give up its politically convenient views about job creation.

And here’s the thing: if Mitt Romney wins the election, the G.O.P. will surely consider its economic ideas vindicated. In other words, politically good things may be about to happen to very bad ideas. And if that’s how it plays out, the American people will pay the price.

Second, if good things end up happening to bad political ideas here in the U.S., we may need to follow the example of Europeans who are standing up and saying “No,” when the austerians keep demanding more.

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