By Roberto Savio
SAN SALVADOR, Aug 20 2015 (IPS)

The long saga on Greece is apparently over – European institutions have given Athens a third bailout of 86 billion euros which, combined with the previous two, makes a grand total of 240 billion euros.

Roberto Savio

There is no doubt that the large majority of European citizens are convinced that this is a great example of solidarity, and that if Greece is not now able to walk on its own feet, the responsibility will lie solely with Greek citizens and their government.

But this is only due to the fact that the media system has, by and large, ceased to provide alternative views … and some people even ignore that the bailout is a loan, and therefore increases the country’s debt.

In fact, the productive economy of Greece saw very little of that money because the bailouts were merely financial operations and Greek citizens, not only did not see anything, they have even had to pay a brutal price.

The truth behind the operation has been aptly described by Mujtaba Rahman, the respected chief Eurozone analyst for the London-based Eurasia Group, who said: “The bailout is not really about a growth plan for Greece, but a plan to make sure the European Central Bank (ECB) and the International Monetary Fund (IMF) get paid, and the euro area does not break up.”

And the purpose of this third bailout is clear. Of the famous 86 billion, 36 billion will go to pay the debt with the other European governments (and first of all Germany). Another 25 billion will go to recapitalize the Greek banks, because much capital left the country, heading for safer European banks. Another 18 billion will go to pay interest on the debt which Greece has been piling up. And, finally, seven billion will go to pay the debt of the state with Greek enterprises.“How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?”

So, seven will go to the real economy and nothing to the citizens, who will have now to go through several new drastic measures of austerity, which will further depress their standards of living and their ability to spend.

Financially, the bailouts have been a success. All the losses and bad exposure of European institutions have been passed on to Greece. Before the first bailout, French banks were exposed with bad bonds for 63 billion euros, now only for 1.6 billion with no losses. German banks have gone from 45 to five billion.

What is intriguing is that a number of studies show that until the very last moment, when it was widely known that Greece was in deep crisis, European banks and investors continued to buy Greek bonds.

Were they certain that Greece would pay? No, but they were confident that the Greek government would be rescued, and that they would therefore recover their investments, which is exactly what happened.

The financial system has now a life of its own and has nothing to do with real economy, which it dwarfs by being 40 times larger (if we judge by the volumes of daily financial transactions against the production of goods and services). Capital is untouchable and circulates freely in Europe, unlike its citizens. And now there is a great wave of legislation to introduce lower taxation for the richest one percent!

During the negotiations, one frequent accusation levelled against the Greeks was that they were unable to have their rich ship-owners pay their share of taxes. Of course, ship-owners place their money where it cannot be reached.

But is this not hypocritical when we know that there are at least two trillion euros stashed in fiscal paradises, and that, just to give one example, nobody has got Ryanair to really pay taxes? Not to mention the fact that when he was prime minister of Luxembourg, European Commission President Jean-Claude Juncker granted secret tax rebates to over a hundred international companies?

Now Agence France Press has circulated a new astonishing study from the German Leibnitz Institute of Economic Research, which says that Germany has profited from the Greek crisis to the tune of 100 billion euros, saving money through lower interest payments on funds the government borrowed amid investor “flights to safety” and “these savings exceed the cost of the crisis – even if Greece were to default on its entire debt.”

Meanwhile, a large number of studies point out how, by having a positive balance of trade with its European partners, Germany is in fact sucking capital from Europe.

Interpreting the third bailout and its conditions of austerity as a mere economic operation would be to commit a great error.

No economist can believe that Greece will be able to pay back and not only because it has always had a fragile economy, with little industry and with tourism as its main source of income (aggravated by decades of mismanagement and the corruption of its traditional parties, the very parties that European leaders would like to see come back).

Greece is already in recession and now the doubling of VAT is going to compress consumption further, also because there will now be further reductions in pensions and public salaries (which have been already cut by 20 percent).  It is widely believed that the Greek debt will now reach 200 percent of its GDP, up from 170 percent prior to the bailout.

How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?

Well, it is no coincidence that the IMF, which is the Rotary Club of conservative economists, has refused to join this bailout. The IMF has said it will not put in any money unless European creditors (which is a diplomatic way of saying Germany) accept a restructuring of the Greek debt.

It is clear that the bailout has not been a technical but a political operation. Many European leaders, starting with Juncker himself, intervened in last month’s internal Greek referendum, asking Greeks to vote against Prime Minister Alexis Tsipras. They indicated clearly and openly, in a campaign that the Wall Street Journal repeated in the United States, that the revolt against austerity and the neoliberal economy should be stopped dead in its tracks to avoid political contagion.

For her part, German Chancellor Angela Merkel has declared on German television that she has come to the conclusion that °Tsipras has changed°. This has an air of dejà vu … was it not then British Prime Margaret Thatcher who, intent on destroying the trade unions, launched her famous TINA slogan – There Is No Alternative?

And is there no alternative to this kind of Europe? (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

With little fanfare, the German IFO Institute for Economic Research recently published a report on population projections for Germany which states simply that the country’s population is shrinking fast.

The country has lost 1.5 million inhabitants since the last census in 2011 and it is estimated that it will have fallen from the 82.5 million in 2003 to 66 million in 2060, when Great Britain (if it still exists as such), will be the most populated country in Europe.

Roberto Savio

Meanwhile, a European Commission Population Policy Acceptance study found that 23 percent of German males thought that “zero” was the ideal family size, and this despite the 243 billion euros that the government spends each year in family subsidies.

The IFO report also states that, without immigrant families, the number of newly-born children would only reach 400,000 in a country of 82 million, and that even if German couples were to start having children again, it would take two decades to have citizens contributing to the social system.

It concludes that a decline in income and productivity because of the aging population is a serious concern for everybody for the near future.

This is happening in the European country which has most immigrants – close to 10 million.  Last year, Germany accepted almost 700,000 immigrants, placing itself after United States in terms of numbers. Nevertheless, even with that “open” policy, its population is destined to a massive decline.

“Instead of opposing populist parties with a campaign of facts, European governments try to neutralise them by incorporating their requests”
At European level, we see the same chilling trend. According to population projections from Eurostat, the official statistical agency of the European Union, the projected values for Europe’s population “are unprecedented in any human population.”

It says that “whereas in 1960 there were on average about three youngsters (aged 0-14 years) for every elderly person (aged 65 or over), by 2060 there may be more than two elderly people for each youngster: in other words, more grandparents for fewer grandchildren than in the past.”

Let us add to all this a Migration Policy Debate paper issued in 2014 by the Organisation for Economic Cooperation and Development (OECD) which states that ”contrary to widespread public belief, low-educated immigrants have a better fiscal position – the difference between their contributions and the benefits they receive – than their native born peers.”

“Where immigrants have a less favourable fiscal position, this is not driven by a greater dependence on social benefits, but rather by the fact they often have lower wages and thus tend to contribute less … Efforts to better integrate immigrants should be seen as an investment rather than a cost.”

Finally, the U.K. government has declared that, although migrants make up only eight percent of the population, they contribute 10 percent to the country’s gross domestic product (GDP), and that the economic growth rate of the United Kingdom would be some 0.5 percent lower for the next two years if net immigration were to cease.

Now, what is impressive is that those data remain for the specialists even though they have vital political implications. No newspaper has been publishing them and no parliamentarian – let alone government – has used them.

This simply because we now have anti-immigration (and usually right-wing and anti-euro) political parties which have sprung up in every European country, especially since the financial crisis of 2008, and this argument is now taboo.

The fact that the U.N. Population Fund (UNFPA) considers that Europe will no longer be competitive in just a few decades, because its aging population will not be competitive and a major burden on the social system, unless it opens the door to at least 10 million people, is totally ignored.

Instead of opposing populist parties with a campaign of facts, European governments try to neutralise them by incorporating their requests. After the anti-immigrant and anti-euro U.K. Independence Party (UKIP) took four million votes in May’s general elections, Prime Minister David Cameron has embarked on a campaign among European colleagues to demand that he be allowed to expel European immigrants if they do not find a job within six months and, among others, cancel their rights to social benefits.

This is a brilliant example of the difference between a statesman and a politician. A statesman does what is good for his country, even if that costs him dear.

When German Chancellor Helmut Khol was in favour of European integration and the euro, he had to face very hostile public opinion. For the Germans, the Deutsche mark was a symbol of stability and trust, and the idea of a new currency shared with other less responsible people revived memories of the hyperinflation of the Weimar Republic. At the same time, Europeans were suspicious of German intentions.

Kohl decided to accept a non-German, Wim Duisenberg of the Netherlands, as the first governor of the European Central Bank to make the Euro possible.

Today, the existence of Pegida, a German far right anti-Islam political organisation which boasts a few thousand members at most, is enough to paralyse Chancellor Angela Merkel, a politician. She has voiced her opposition to the quota proposed by the European Union for sharing the load of immigrants entering Europe via the Mediterranean.

Her position has immediately been shared by France, with the United Kingdom and Denmark asking to be left out, and several Eastern and Central Europe countries agitating against immigrants … even though they are the countries which provide the bulk of internal immigrants in Europe!

So, we have the data, the projections, and the hard fact that Europe is heading for decline unless it changes policy and acts to increase its population. And, speaking of projections, in the meantime the population of Africa is expected to double.

When will the European political class wake up and realise that time is passing? (END/COLUMNIST SERVICE)

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

By Roberto Savio
ROME, Mar 21 2015 (IPS)

The “surprise” re-election of incumbent Israeli Prime Minister Benjamin Netanyahu in the Mar. 17 elections has been met with a flood of media comment on the implications for the region and the rest of the world.

However, one of the reasons for Netanyahu’s victory has dramatically slipped the attention of most – the support he received from young Israelis.

According to the Israeli daily Haaretz, 200,000 last-minute voters decided to switch their vote to Netanyahu’s Likud party due to the “fear factor” and most of these were voters under the age of 35.

Roberto Savio

Perhaps the “fear factor” was actually an expression of the “Masada factor”. Masada is a strong element in Israeli history and collective imagination. The inhabitants of the mountain fortress of Masada, besieged by Roman legions at the time of Emperor Tito’s conquest of the Israeli state, preferred collective suicide to surrender.

Israelis today feel besieged by hostile neighbouring countries (first of all Iran), the continuous onslaught by the Caliphate and the Islamic State, overwhelming negative international opinion and growing abandonment by the United States.

Netanyahu played a number of cards to bring about his last-minute election success, including his speech to the Republican-dominated U.S. Congress on Mar. 3, which was seen by many Israelis as an act of defiance and dignity, not a weakening of fundamental relations with the United States.

His support for Israeli settlers in the West Bank and Gaza, his denial of the creation of a Palestinian state and his show of contempt for an international community unable to understand Israel’s fears led Netanyahu’s Likud party to victory.

In Israel, being left-wing mean accepting a Palestinian state, being right-wing means denying it. In the end, the Mar. 17 vote was the result of fear.“Taking refuge in parties that preach a return to a country’s ‘glorious’ past, blocking immigrants who are stealing jobs and Muslims who are challenging the traditional homogeneity of society, country … is an easy way out”

Israeli’s young people are not alone in moving to the right as a reaction to fear. It is interesting to note that all right-wing parties which have become relevant in Europe are based on fear.

Growing social inequality, the unprecedented phenomenon of youth unemployment, cuts in public services such as education and health, corruption which has become a cancer with daily scandals, and the general feeling of a lack of clear response from the political institutions to the problems opened up by a globalisation based on markets and not on citizens are all phenomena which are affecting young people.

“When you were like us at university, you knew you would find a job – we know we will not find one,” was how one student put it at a conference of the Society for International Development that I attended.

“The United Nations has lost the ability to be a place of governance, the financial system is without checks and corporations have a power which goes over national governments,” the student continued. “So, you see, the world of today is very different one from the one in which you grew up.”

As Josep Ramoneda wrote in El Pais of Mar. 18: “We expected that governments would submit markets to democracy and it turns out that what they do is adapt democracy to markets, that is, empty it little by little.

This is why many of those of who vote for right-wing parties in Europe are young people – be it for the National Front in France, the U.K. Independence Party (UKIP) in Britain, the Lega Nord (North League) in Italy, the AfD (Alternative for Germany) in Germany and Golden Dawn in Greece, among others.

Taking refuge in parties that preach a return to a country’s “glorious” past, blocking immigrants who are stealing jobs and Muslims who are challenging the traditional homogeneity of society, country, and bringing back to the nation space and functions which have been delegated to an obtuse and arrogant bureaucracy in Brussels which has not been elected and is not therefore accountable to citizens, is an easy way out.

This is a major – but ignored – epochal change. It was long held that an historic function of youth was to act as a factor for change … now it is fast becoming a factor for the status quo. The traditional political system no longer has youth movements and its poor performance in front of the global challenges that countries face today makes young people distrustful and distant.

It is an easy illusion to flock to parties which want to fight against changes which look ominous, even negative. It also partially explains why some young Europeans are running to the Islamic State which promise a change to restore the dignity of Muslims dignity and whose agenda is to destroy dictators and sheiks who are in cohort with the international system and are all corrupt and intent on enriching themselves, instead of taking care of their youth.

What can young people think of President Erdogan of Turkey building a presidential palace with 1,000 rooms or the European Central Bank inaugurating headquarters which cost 1,200 million euro, just to give two examples? And what of the fact that the 10 richest men in the world increased their wealth in 2013 alone by an amount equivalent to the combined budgets of Brazil and Canada?

This generational change should be a transversal concern for all parties but what is happening instead is that the welfare state is continuing to suffer cuts. According to the International Labour Organization (ILO), young people in the 18-23 age group will retire with an average pension of 650 euro. What kind of society will that be?

Without the safety net now being provided by parents and grandparents, how can young people in such a society avoid feeling left out?

We always thought young people would fight for social change, but what if they are now doing so from the right?

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Emma Bonino
ROME, Feb 27 2015 (IPS)

When I am asked whether Europe is still a relevant “protagonist” in the modern world, I always answer that there is no doubt about it. For a long time now, the continent has been shaken by financial crises, internal security strategy crises – including wars – and instability within its borders, which definitely make it a protagonist in world affairs. 

If the question asked were about what the leading role of the European Union actually is, it is enough to take a look at a few days’ entries in German Chancellor Angela Merkel’s diary.

Emma Bonino

On Thursday Feb. 5 she was in Moscow with French President François Hollande for negotiations on the Ukraine crisis with Russian President Vladimir Putin, and the following day she met Ukrainian President Petro Poroshenko for talks in Kiev. At the weekend she was back in Munich, where she argued publicly for resistance against increasing pressure from the United States to arm the Ukrainian forces.

On Monday Feb. 9 Merkel was in Washington, where she obtained – at least temporarily – U.S. President Barack Obama’s agreement to her stand against providing arms to Ukraine, in order to maintain a favourable climate for the negotiations that were about to be held in Minsk.

Next she went to Minsk to participate in three exhausting days of talks including a 17-hour debate with the presidents of Russia and Ukraine, which led to a proposal of truce in Ukraine, presented on Thursday Feb. 12 to an informal meeting of E.U. heads of state in Brussels.

This brief overview, and the reports and images disseminated in the media, clearly show that Angela Merkel personifies the global role of Europe and puts other European heads of state and institutions in the shade.

Other protagonists on the international stage, like Obama and Putin, show a similar perception when they make important agreements with the German Chancellor.

In my federalist vision of Europe, it would be just perfect if Merkel were the president of the United States of Europe. Unfortunately, that is not the case.“I am convinced that Berlin is aware that Germany is called on to shoulder strategic responsibilities that go beyond its status as an economic superpower”

I do not want to dwell on the oversimplified dilemma that has been exercising think tanks for years: Are we moving towards a Europeanised Germany, or towards a Germanised Europe?

But I am convinced that Berlin is aware that Germany is called on to shoulder strategic responsibilities that go beyond its status as an economic superpower. This view is reinforced by the certainty that the proposal to reform the United Nations Security Council by granting Berlin a permanent seat is not going to happen in the foreseeable future.

And if, at some date far in the future, such a reform of the Security Council is approved, the Council’s powers may by then have been reduced.

I believe this because in the last few months, while the events that are public knowledge were happening in Syria, in Iraq, with respect to the Islamic State, in Ukraine, in Sudan, Libya and Nigeria, the Security Council was conspicuous by its absence.

Furthermore, it is a disappointing surprise to witness the almost non-existent resilience of the institutions created by the Treaty of Lisbon in 2007, which reformed the European Union. At the time they were praised as a new departure in the framework of international law and as the consolidation of a united European foreign policy.

While we watched the serious conflict in Ukraine on our continent, many of us asked ourselves what the top E.U. authorities, who had been elected transnationally for the first time, were doing: E.U. President Jean-Claude Juncker, European Council President Donald Tusk and High Representative for Foreign Affairs and Security Policy Federica Mogherini.

What credibility can possibly remain for structures that are systematically side-lined when conflicts become red-hot?

The problem does not lie in the persons who perform these functions. Such an analysis would be too superficial.

It is rather a question of ascertaining whether European institutions are sufficiently robust to resist what many call a return to the Westphalian system, that is, to the treaties of 1648 that demarcated a new order in Europe founded on the nation-state as the basis of international relations.

Outside Europe, this tendency has been developing for some time. The role of global power is increasingly taken over by “mega states”: the United States, Russia, China, India, and soon to include Brazil, South Africa and Indonesia.

The European Union has difficulty matching up to these as a valid counterpart.

I am afraid that this tendency may lead to the definitive crisis of the European federalist project. However, we federalists must resist the trend and reflect on the best way to face the situation.

Since 2008, the economic and political measures taken by EU member countries have aimed at “renationalising” their interests, with the exception of actions implemented by Mario Draghi, the president of the European Central Bank.

Consequently, Europe has abandoned the pursuit of a common foreign policy and has reverted to inter-governmental practices that prioritise national interests.

The dilemma is clear: either the European Union is a global power and is recognised as such, or Europe will be represented by others in crucial debates.

In this context, what is emerging is that Germany is increasingly taking on a new role.

This process began with the bizarre designation in 2006 of a group of countries to negotiate with Iran, known as 3+3, or more commonly, outside Europe, as 5+1: the five permanent members of the Security Council (the United States, Russia, China, the United Kingdom, France) plus Germany.

Since then Berlin has taken on a leading role, not only in the European context but also in many international affairs, often on behalf of the European Union.

To sum up: the European Union works jointly to the extent that this is possible. After that there is a level at which decisions – and responsibilities – are taken by those with the power to do so. That is the scheme practised in today’s Europe. It is time for other Europeans to sit up and take notice. (END/IPS COLUMNIST SERVICE)

Translated by Valerie Dee/ Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service

Excerpt:

By Roberto Savio
ROME, Jan 22 2015 (IPS)

Every day we receive striking data on major issues which should create tumult and action, but life goes on as if those data had nothing to do with people’s lives.

A good example concerns climate change. We know well that we are running out of time. It is nothing less than our planet that is at stake … but a few large energy companies are able to get away with their practices surrounded by the deafening silence of humankind.

Roberto Savio

Another example comes from the world of finance. Since the beginning of the financial crisis in 2009, banks have paid the staggering amount of 178 billion dollars in fines – U.S. banks have paid 115 billion, while European banks 63 billion. But, as analyst Sital Patel of Market Watch writes, these fines are now seen as a cost of doing business. In fact, no banker has yet been incriminated in a personal capacity.

Now we have other astonishing data from Oxfam – if nothing is done, in two years’ time the richest one percent of the world´s population will have a greater share of its wealth than the remaining 99 percent.

The richest are becoming richer at an unprecedented rate, and the poorest poorer. In just one year, the one percent went from possessing 44 percent of the world´s wealth to 48 percent last year. In 2016, therefore, it is estimated that this one percent will possess more than all the other 99 percent combined.

The top 89 billionaires have seen their wealth increase by 600 billion dollars in the last four years – a rise of five percent and equal to the combined budgets of 11 countries of the world with a population of 2.3 billion people.

In 2010, that figure was owned by 388 billionaires, and this striking and rapid concentration of wealth has, of course, a global impact. The so-called middle class is shrinking fast and in a number of countries youth unemployment stands at 40 percent, meaning that the destiny of today’s young people is clearly much worse than that of their parents.“In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production”

It will probably take some time before those figures become part of general awareness but it is a safe bet that they will not lead to any action, as with climate change. U.S. President Barack Obama is the only leader who has announced a tax increase on the rich, although he stands little chance of succeeding with his Republican-dominated Congress.

In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production. But up to a point: 34 percent of today’s billionaires inherited all or part of their wealth, and – interestingly – “inheritance tax is the most avoidable of levies”, as James Moore noted Jan. 20 in The Independent.

The “father of modern times”, late U.S. President Ronald Reagan, saw it clearly when he said that the rich produce richness, the poor produce poverty. So let the rich pay less taxes.

Well, in a just-released report, the U.S. Institute on Taxation and Economic Policy notes that in 2015 the poorest one-fifth of Americans will pay on average 10.9 percent of their income in taxes, the middle one-fifth 9.4 percent, and the top one percent just 5.4 percent.

Now, 20 percent of the richest billionaires are linked to the financial sector and it is worth recalling that this sector has grown more than the real economy, and has regulations only at national level. At global level, finance is the only activity which has international body of some kind of governance, as do labour, trade and communications, to name just a few.

Finance is no longer at the service of the economy and citizens. It has its own life. Financial transactions are now worth 40 trillion dollars a day, compared with the world’s economic output of one trillion.

At national level, there are now attempts half-hearted attempts to regulate finance. But let us look what is happening in United States. The new bland regulation is the Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly known as the Dodd-Frank, and it does not go as far as restoring the division between deposit banks, which was where citizens put their money and which could not be used for speculation, and investments banks, which speculate … and how!

This separation was abolished during the U.S. presidency of Bill Clinton, and is considered the end of banks at the service of the real economy. In any case, the lobbyists on Wall Street are intent on having the Dodd-Frank chipped away at, little by little.

There is some schizophrenia when we look at the relations between capital and politics. The U.S. Supreme Court has eliminated any limit to contributions from companies to political elections, declaring that the companies have the same rights as individuals. Of course, there are not many individuals who can shell out the same figures as a company, unless you’re one of the 89 billionaires!

Meanwhile, banks are not only responsible for the corruption of the political system, and for the illegal activities which have earned them billions of dollars, they are also responsible for funding only big investors, and leaving everybody else out from easy credit. The efforts of the Chairman of the European Central Bank,  Mario Draghi, to have banks give credit to small companies and individuals has gone largely nowhere.

But a new and imaginative initiative comes from the very stern Dutch bankers. All 90,000 bankers in the Netherlands are now required to take an oath: “I swear that I will endeavour to maintain and promote confidence in the financial sector. So help me God”.

This is not so much oriented towards the customer, and it is very self-serving; and it brings God in as the regulator of the Dutch banking system. Perhaps the Dutch bankers have been paying heed to the words of Goldman Sach’s CEO Lloyd Blankfein who said at the time of the financial crisis in 2009 that bankers were “doing God’s work”.

Well God will have to be actively involved. All the three biggest Dutch banks – Rabobank, ABN Amro and ING Groep – have been involved in scandals that have hurt consumers, or were nationalised during the financial crisis, costing taxpayers more than 140 billion dollars. In one case, Rabobank was fined one billion dollars.

New York’s Wall Street and London’s City are said to be open to the idea of introducing a similar oath.

It is probably only that kind of Higher Power which could turn the tide in this world of growing inequality and lack of ethics. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

The author can be contacted at utopie@ips.org

Excerpt:

By Roberto Savio
ROME, Nov 26 2014 (IPS)

After the Italian sea search-and-rescue operation Mare Nostrum at a cost of nine million euros a month, through which the Italian Navy has rescued nearly 100,000 migrants – although perhaps up to 3,000 have died – from the Mediterranean since October 2013, Europe is now presenting its new face in the Mediterranean.

The European Union is launching Joint Operation Triton with a monthly budget of 2.9 million euros and funds secured until the end of the year. Its function is to enforce border controls – not to save “boat people” – and it will patrol just thirty nautical miles from the coast, which pales in comparison with Italy’s Mare Nostrum operation which saw patrols being sent close to the Libyan coast.

Roberto Savio

Even with this very limited operation, British Prime Minister David Cameron has said that the United Kingdom will not contribute because operations that save migrants make them more willing to try to cross the Mediterranean. Of course, there is a perverted logic in this: the more migrants that die, the greater will be the discouragement for others to try.

Following this logic through, the ideal situation therefore would be to reach a death rate that would stop illegal immigration once and for all!

In this context, it is worth noting that the U.K. government is considering withdrawal from the European Convention of Human Rights (something that even Russian President Vladimir Putin has never considered). The argument is that nobody can be above U.K. courts.

London is also refusing to pay its share of increased of contributions to the European Union and is considering how to put an annual cap on the number of Europeans who are entitled to work legally in the United Kingdom.“Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation”

And finally, the U.K. government received with great uproar the sentence of the European Court of Justice, which placed a European cap on banker bonuses, rejecting Britain’s claims that it was illegal. The British argument was that pay levels (also of discredited bankers) were part of social policy and thus under the authority of member states not of the European Union.

Meanwhile, the same Court has issued another sentence under which E.U. member states are not obliged to support European citizens who do not have economic activities in the E.U. countries to which they have migrated. And the German Parliament is now preparing a law to expel European immigrants who do not find a job within six months.

Of course, this will open the doors to all other countries to reduce the free movement of Europeans in Europe, a cornerstone of the original vision of a solidary Europe. Now Europeans will be obliged to take any job, and therefore the law of market will become the primary criterion for their movements in Europe.

Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation.

In fact, the point has now been reached where social criteria are the last to be used to judge whether a country is recovering or not, well after economic and financial criteria.

A devastated Greece is now again being considered in financial markets because its economic indicators are on the up. And, at the last G20 meeting in Brisbane, Spain was touted as the example that austerity policies – those indicated by German Chancellor Angela Merkel as the example for laggards like Italy and France – are the correct way out of the crisis.

At the same time, a very different source, Caritas, has reported that only 34.3 percent of Spaniards live a normal life, while 40.6 percent are stuck in precariousness, 24.2 percent are already suffering moderate exclusion and 10.9 percent are living in severe exclusion.

To understand the trend, six years ago, 50.2 percent of Spaniards had a normal life. Now, one citizen in four is suffering exclusion, and of those 11 million excluded citizens, 77.1 percent have no job, 61.7 percent no house and 46 percent no health care support.

According to UNICEF’s recent report on children under recession, 76.5 million children in the rich countries live in poverty, and in Spain, 36.3 percent of the country’s children (2.7 million) are living in a state of precariousness.

What is now new is that some major financial institutions have started to draw attention to social issues.

Janet L. Yellen, chairwoman of the U.S. Federal Reserve, has declared that she is concerned about the growing inequality of wealth and income in the United States, and that chances for people to advance economically appear to be diminishing. And Mario Draghi, governor of the European Central Bank, is now constantly mentioning the issues of “unbearable unemployment “and “growing exclusion”.

In the background there is the proven fact that countries which took emergency measures to reduce public borrowing have mostly had weaker growth, like most European countries (with the exception of Germany, helped by a boom in machinery exports to Russia and China), while those which introduced a policy of stimulus, like the United States, Japan and Britain, have done much better, also in reducing unemployment.

But Merkel continues to ignore calls from the International Monetary Fund (IMF), the World Bank and other monetary institutions – she is only interested in pleasing her constituency, which is increasingly looking to its immediate interests and losing sight of European perspectives.

In all this, the banks continue to be uninterested in any social perspective. A few days ago, European and U.S. regulators imposed new fines worth 4.5 billion dollars on a number of major banks (we are now approaching the 200 billion dollar mark since the crisis started in 2008) for illegal activities.

Jamie Dimon, the CEO of the largest of them, JP Morgan, declared in an interview with Andrew Ross Sorkin of CNBC that it is important that United States creates a “safe harbour” where JPMorgan’s illegal practice of hiring the relatives of political leaders “is not punished”.

In Dimon’s country, between 2009 and 2010, 93 percent of economic growth ended up in the pockets of one percent of the population, according to Nobel economics laureate Joseph Stiglitz, and the 16,000 families with wealth of at least 111 million dollars have seen their share of national wealth double since 2012 to 11.2 percent.

The last U.S. presidential elections cost 3.4 billion dollars, and most of that came from this small minority. Democracy, where all votes are equal, is increasingly becoming a plutocracy where money elects.

Meeting leaders of social movements on Oct. 26, Pope Francis told them: “They call me a communist [for speaking of] land, work and housing … but love for the poor is at the centre of the Gospel.” Certainly, governments are doing otherwise …

(Edited by Phil Harris)

Excerpt:

PPC power station in Ptolemaida. northern Greece. Credit: Nikos Pilos

By Apostolis Fotiadis
ATHENS, Jul 9 2014 (IPS)

Plans by the Greek government to sell companies that handle the key resources of energy and water face serious obstacles and its policy to offer investors exceptional privileges in an effort to boost interest in privatisation is coming under strong pressure.

Privatisation is one of the ‘prerequisites’ of the Troika – the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund – in exchange for additional bailout money that Greece is seeking to continue to avoid insolvency.

The Greek government recently announced plans to sell a 30 percent share of its Public Power Corporation (PPC), and create a new ‘Small PPC’, which will be sold to private investors.

The new company will take with it some key production sites, lignite mines, and hydroelectric and natural gas units. In addition, about two million customers will be transferred from the original company and will be obliged to receive services from the new company for six months.Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country.

The lucrative terms and assets accompanying the new company, described in the legislation that creates it, are already attracting many local investors as well as major foreign energy companies like Germany’s RWE as well as the French EDL and the Italian ENEL.

The plan has caused strong reactions in north-western Greek cities where communities depend heavily on employment created by PPC mines and electricity production plants. PPC unions decided to take strike action to protest the privatisation plans, but these were declared illegal. The Greek opposition has called for a referendum on the issue but it appears unable to gather the 120 signatures of members of parliament necessary for it to go through parliament.

Kriton Arsenis, an independent Member of the European Parliament, has asked the European Commission whether obliging customers to receive services from the company constitutes an illegal state subsidy. In response, European Commissioner for Energy Gunther Oettinger said that the Commission “does not have adequate information to deliberate on whether this constitutes illegal state subsidy”.

At the end of March, Arsenis submitted a similar question concerning the Hellenic Republic Asset Development Fund (HRADF), which has been set up to manage Greek privatisations, and met with a similarly evasive answer.

The HRADF has announced the sale of 100 percent of Hellinikon SA – which administers 6,200 acres of land occupied by the former Athens Airport of Hellinikon – to Lamda Development.

Arsenis pointed that Article 42 of Law 3943/2011 establishing Hellinikon SA states that the company “shall be exempt from any tax, duty or fee, including income tax, in respect of any form of income derived from its business, of transfer tax for any reason, and capital accumulation tax” and again asked the Commission whether this unjustifiable tax exemption constituted state subsidy.

European Commissioner for Competition Joaquin Almunia replied that “Greece has not notified the Commission about the alleged tax exemption measure”, thus the Commission does not have sufficient information to assess whether it constitutes state aid and will ask Greece to provide clarifications on the issue.

Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country. Last week, Greek Energy Minister Ioannis Maniatis said that oil and gas explorers would pay 25 percent tax, down from the current 40 percent, to attract them to help exploit Greece’s untapped offshore hydrocarbon resources. “We have done this in order to incentivise our investors to invest in the future of Greece” he told a conference in London.

Plans to privatise water utilities stalled last month after the Supreme Court considered privatisation of the Athens Water Supply and Sewerage Company (EYDAP) unconstitutional. Following this decision, the transfer of a 34.03 percent share of the company’s stock holding to HRADF has been cancelled and the privatisation authority has publicly admitted that it is reconsidering the tender despite still holding 27.3 percent of the company.

This has effectively cast doubts on the privatisation process for EYATH, the water and sewage company of Thessaloniki, Greece’s second largest city. HRADF President Konstantinos Maniatopoulos was quoted saying in Greek media that “it will be difficult to continue the process for EYATH without taking into account the decision for EYDAP.”

The Suez/Ellaktor and Merokot/G. Apostolopoulos/Miya/Terna Energy consortia had been in the process of submitting binding offers by June 30. It appears now that HRADF will return about 50 percent of the 74 percent of its share in EYATH back to the state.

Two weeks ago, the Greek National Commission for Human Rights produced a focus report about the protection of access to water. Kwstis Papaioanou, President of the Commission told IPS: “International experience has proven that privatisation curtails the access of people to safe water. It is very encouraging though that the water has united citizens against its privatisation.”

Privatisation of water has indeed provoked strong public reactions. In an informal referendum in Thessaloniki in which over 200,000 people took part, 98 percent voted against privatisation.

“The court’s deliberation against privatisation of water companies is very clear but I would not be surprised if the government finds a way to circumvent it. There are plenty of other examples in which they have not implemented court decisions,” Arsenis, told IPS.

“Those interested in Greek public assets do not think like real investors. They take an interest only in privileged deals when profits are guaranteed and when most of investment risk is undertaken by the state in advance so that they have secured income that will cover their expenses in two or three years’ time.”

A first privatisation target of 50 billion euros in revenue by 2020 has been cut by more than half, with the country’s lenders now forecasting 22.3 billion. So far, only 3 billion has been collected.  The 2014 and 2015 targets for revenue from privatisations were set at 1.5 billion euros and 2.24 billion euros respectively but these are now very unlikely to be achieved.

By Emma Bonino
ROME, May 14 2013 (IPS)

The recent agreement for the normalisation of relations between Serbia and Kosovo has confirmed that the European Union (EU) is still acting as a “magnet”, attracting its external neighbours and transforming and integrating them. Thanks to its prospects for EU membership, the whole Balkan area has become more stable and secure. Unfortunately, this virtuous magnetism no longer exerts the same force of attraction on our own citizens.

Italian Foreign Affairs Minister Emma Bonino. Credit: Victor Sokolowicz/IPS

With every passing day, the founding fathers’ dream of peace and freedom seems to be turning into a nightmare for many.

The EU is increasingly being associated with austerity policies that lead to recession, unemployment and social despair. More worryingly, there are signs that the current crisis is not limited to the EU’s economic sphere but also impacts its most fundamental values.

Everywhere in Europe we see rising intolerance; growing support for xenophobic and populist parties; discrimination and a weakening of the rule of law; and entire populations of undocumented migrants, virtually without rights, punished for their status rather than their individual behaviour.

Our inclusive and open community is threatened by destructive actions pursued by nationalistic and demagogic groups. But they are not the only ones inflicting damage on the Union.

In some countries, including Italy, we see too many violations of the rule of law and of international and European treaties, an unreliable justice system, inhumane and degrading conditions in prisons, serious infringements of human rights and grave cases of lack of accountability. How can we preach respect for universal values abroad if we are among the countries most condemned by the European Court of human rights?

It is in our vital interest to react to all these alarming trends.

To defend the European construction, we need to rediscover its mission. Its founding fathers had to discard a whole world of prejudice and fear. They knew from their tragic experience that building fortresses and walls under the guise of ensuring peace and security was an illusion.

They chose integration, and rejected barriers. And they understood that all freedoms are closely linked: one cannot want free trade yet hinder the free movement of people.

Nationalist and demagogic groups are spreading fear and prejudice across Europe by exploiting the current malaise and social despair of all those without a job, and without faith in their future. As European Central Bank President Mario Draghi stressed: “It is of particular importance at this juncture to address the current high long-term and youth unemployment.” This is a fundamental mission of the new Italian government. The data flow is still depressing, urging us to adopt new measures in coordination with our partners and in full respect of our fiscal commitments.

However, I believe that the choice is not simply between fiscal tightening and reckless spending, nor can fear of and disaffection with Europe be tackled with economic measures or financial engineering alone. No solution is credible without a political dimension and without encompassing the whole European architecture.

We need a new score: a federal solution.

I have spent a lot of time, passion and energy supporting the creation of a federal Europe; not for ideological reasons but simply because I do not know any other system capable of allowing 500 million people – belonging to different nations, cultures, religions and speaking a multitude of languages – to live together in freedom and diversity in the 21st century.

Federalism does not mean that the central European government should become a Leviathan, as described by the frightening words of the Europhobes.

A couple of years ago, I proposed a “light federation”, an institutional model that would absorb no more than five percent of European gross domestic product (GDP) in order to finance specific government functions such as foreign and security policy, scientific research, trans-European networks and safety of commercial transactions, among others.

For instance, how can European governments provide adequate security, with fewer financial resources? Only a shared European defence system, with common, integrated armed forces, would enable us to get out of the corner into which tight budgetary constraints are confining us. European governments are reluctant to take decisive steps towards this goal. The consequences of that reluctance are fragmented initiatives, wasted resources and a growing irrelevance of European influence on the world stage.

The same applies to scientific research, a field where national programmes are often too small to be productive and compete successfully with the huge projects of the other global powers.

The 2014 European parliamentary elections will be a significant test. If we want to prevent the risk of an over-representation of populist parties, we need to put federal Europe at the centre stage of the electoral campaign. The pro-Europe political families should present their own candidate for the presidency of the European Commission and submit political agendas for the future of the EU, stressing that a federal solution would save significant financial resources. So, the federalist perspective could assume concrete meaning for all citizens, avoiding the risk of being perceived as an abstract juridical matter.

In 2014, exactly a century after the murder of Franz Ferdinand in Sarajevo that led to the destruction of Europe, we will have another opportunity to give a new impetus to the federal project, under the Italian presidency of the EU. And after 2014, a review of the treaties could give European citizens a stronger sense of ownership of our common institutions and ensure an easier coexistence between countries in the eurozone and the other member states.

If Europe does not solve its problems of recession and populism, we could lose all that we have achieved since the 1950s, with no estimate of how long it will take to regain the same level of democracy, prosperity and stability as before. But if we adopt a new vision, engage our citizens and unite our governments, we could start a new phase of boosting growth and fostering democratic legitimacy and global influence.

(END/COPYRIGHT IPS)

Excerpt:

Political leaders in Cyprus are working on an alternative proposal to stave off bankruptcy after parliament overwhelmingly rejected an international bailout plan.

Nicos Anastasiades, president of Cyprus, has met party leaders and central bank officials on Wednesday to work out how they can raise billions of euros in funds to stave off bankruptcy.

The president also met representatives of his country’s potential creditors, from the International Monetary Fund, European Central Bank and European Commission. However, no statement was issued on the result of those talks.

The talks come a day after MPs rejected terms set by the EU and IMF to raise money in return for the 13-billion-dollar bailout by seizing up to 10 percent of people’s bank savings, with zero votes in favour, 36 against and 19 abstentions.

Meanwhile, with Russian banks and individuals heavily invested in the island, Cyprus’ finance minister has asked Moscow for help to avert a financial meltdown.

Government spokesman Christos Stylianides said that a meeting had begun at the central bank to discuss a “Plan B” on how the administration could raise funds and reduce the 5.8 billion euros (7.5 billion dollars) that must be found domestically.

Central Bank deputy governor Spyros Stavrinakis said that no decision had been taken on when banks would reopen after they were shut at the weekend.

He said that the new plan being worked on Wednesday had not yet been presented to the EU and IMF.

Russia talks

Michael Sarris, Cyprus’ finance minister, said that he had reached no deal on financing with his Russian counterpart, Anton Siluanov, but talks were continuing.

Cypriot officials disclosed that the country’s energy minister was also in Moscow, ostensibly for a tourism exhibition.

Cyprus has found big gas reserves in its waters near Israel but has yet to develop them.

“We’ll now continue our discussion to find the solution by which we hope we will be getting some support,” Sarris said after initial talks with Siluanov.

ECB support

Austria’s finance minister made clear the European Central Bank (ECB) could soon pull the plug on Cypriot banks after the island’s parliament bailout rebuffal.

Not a single politician voted for the proposed levy that would have taken up to 10 percent from larger accounts, many of which are held by foreigners, while sparing smaller savers with fewer than 20,000 euros in the bank.

It was the first time a national legislature had rejected the conditions for EU assistance, after three years in which politicians in Greece, Ireland, Portugal, Spain and Italy all accepted biting austerity measures to secure aid.

The ECB is keeping the Cypriot banking sector going by allowing the local central bank to extend emergency support.

It said it would end that if there was no bailout deal and it was clear the banks had no hope of becoming solvent again.

For now, the ECB says it will continue allowing banks access to credit. But analysts note that if there is no bailout deal within days, the ECB will have to end it.

*Published under an agreement with Al Jazeera.

Poverty in Portugal has risen to levels that were unimaginable a year ago despite the bleak outlook forecasted by the harsh measures imposed by the troika of creditors in exchange for the country’s financial bailout.

An eatery in Lisbon offers cheap “troika” lunches to weather the crisis. Credit: Katalin Muharay /IPS

Unable to pay their bills or even meet basic food needs, thousands of families are facing dire times and turning increasingly to charities for assistance. Many do so secretly, however, ashamed to admit they have to resort to such means to get by.

The phenomenon has become so widespread that the impoverished middle class is starting to be known as the “embarrassed poor”.

This new poverty, caused by unemployment and the inability to repay bank loans, is also driving up the number of suicides, according to reports by Caritas, Food Bank and other social solidarity organisations.

According to figures from the National Statistics Institute, in 2012 a fifth of all Portuguese were living on less than 478 dollars a month, well under the minimum wage established by law at 644 dollars a month and 14 salaries a year.

In June 2012, a year after the troika – comprised of the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank (ECB) – stepped in with a bailout package, soup kitchens have sprung up across Lisbon, bringing back the “sopa dos pobres” served out by Catholic organisations to feed the poor in the 1950s.

Today long lines of people can again be seen queuing outside charity centres waiting to receive their only hot meal of the day.

Teachers around the country report alarming cases of middle-class children coming to school on an empty stomach, dizzy and even fainting from hunger, but trying to act normal so as not to be confused with poorer children.

Middle-class Portuguese people of all ages are finding it hard to accept the fact that their dream of attaining the upper middle-class status they had been working towards for the past two decades is slipping away.

Those efforts are, in fact, having the opposite effect, experts say. Buried under a mountain of unpayable debts, the middle class is sinking closer and closer to the lower class, which at 24.4 percent has increased two percentage points since 2009, in a population of 10.6 million.

According to the National Statistics Institute anyone with an income between 768 and 2,660 dollars a month is considered middle class, in a country where half the population earns less than 932 dollars. Officially, around 60 percent of the population falls within that definition.

“In Portugal, poverty is becoming part of the scenery,” João Pedro da Fonseca, a young unemployed electrician specialising in generators, told IPS.

After a decade on his own, enjoying a high standard of living, he had to move back in with his parents and depend on their meagre pensioner income, “with little hope of finding work” in his field.

Out of a job for nearly a year now and with no unemployment insurance, this 29-year-old Lisbon native believes “this is just the beginning of a long period of poverty, a terrible crisis that I’m not responsible for, caused by the usual powerful men.”

Marina Oliveira, a 26-year-old psychologist who has been unemployed for the past 13 months, told IPS that when a crisis hits — no matter where in the world — “poverty only comes calling at the doors of the most vulnerable.”

She survives thanks to her parents, who are helping her “until I can leave the country to follow my dreams, which sadly have become impossible in my country, where poverty is only going to get worse, as new measures are imposed to pay the troika back,” Oliveira said.

The troika granted the Portuguese government a total of 110 billion dollars to service the national debt, meet administration costs and, above all and despite great criticism, provide capital for its distressed banks.

Oliveira highlighted that other countries have also suffered “these crises imposed by the promoters of the consumerist dream, who never get stuck with the bill.”

“The most outrageous example of this is the United States, where some of the leading people responsible for the 2008 crisis, which later spread across the world, were invited by (President Barack) Obama to serve as advisers and consultants for his administration,” he said.

In “Portugal we have to live under the rules dictated by this enormously powerful troika, making us bow to a global financial system that is unscrupulous and completely heartless and that forces us to surrender our country to that pack of vultures that are the large banks.”

The latest statistics available indicate that in 2011 Portugal had a gross domestic product (GDP) of 214 billion dollars and its national purchasing power stood at 77.4 percent of the average purchasing power for the EU.

Preliminary data for 2012 reveal a drop of 2.9 percentage points in Portugal’s GDP, confirming the downward trend observed since the start of the crisis. From 2009 to the end of 2013 it will have dropped by a total of 7.4 percent, according to projections released by the Bank of Portugal on Jan. 15.

For the victims of the crisis, the last straw came on Jan. 10 with the IMF’s new recommendations.

In a document addressed to the Portuguese government, the IMF called for greater austerity, which is certain to affect an already besieged middle class that in 18 months lost almost 25 percent of its purchasing power.

The IMF recommends a new package of measures, with additional cuts in pensions and wages, in particular in sectors such as education, health and law enforcement.

It also recommends raising public hospital fees, firing 14,000 teachers, placing 50,000 elementary teachers in a mandatory relocation scheme and privatising public education.

In his Jan. 22 opinion column, featured in the Público de Lisboa newspaper, analyst José Vítor Malheiros noted that this policy of drastic cuts is applied “only to social areas, never affecting the benefits of the (wealthiest) one percent”, and it is aimed at “pleasing creditors and perpetuating Portugal’s dependence on the financial system”.

Among the many waiting in line at a Lisbon Employment Centre, a man in his forties told IPS that he comes to the centre every day in the hope of finding “any job they can offer me, because I have a 12-year-old daughter and we’re both going hungry.”

He agreed to talk to IPS but asked to remain anonymous “because I’d like to speak frankly and, if I give you my name, they’ll never give me a job.”

He also refused to give his profession or trade, merely noting, “I was foolish enough to think that a university degree would guarantee a decent future. But here I am, willing to take any job.”

“Portugal has been gripped by fear, a fear that’s spreading thanks to outrageous policies. And those who are lucky to still have a job are bending over backwards to please their bosses, afraid they’ll be fired and will have to join the ranks of the new poor.”

Thousands have protested against the austerity measures imposed on Greece by its creditors. Credit: George Laoutaris/CC-BY-ND-2.0

By Apostolis Fotiadis
ATHENS, Nov 9 2012 (IPS)

Ignoring the thousands of protestors gathered outside the Greek parliament on Wednesday, the government voted in public spending cuts amounting to 17 billion dollars in an economy already on its knees from a lacerated budget.

The government was promised 40 billion dollars of bailout money in exchange for the implementation of this fresh bout of austerity.

But the country’s creditors – the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF), known as the Troika – have fallen out over crucial disagreements about the terms of the financial “rescue” operation, resulting in a stalemate that has brought Greece to the knife’s edge.

It is obvious that a write-down of Greece’s 200-billion-euro debt, now owned by the European public sector, is sorely needed in order for Greece to avoid disorderly default.

In fact, a day before the election in the United States, even incumbent President Barack Obama threw his weight behind calls for a write-down.

But the EC and ECB are reluctant to accept losses, which the IMF has deemed “necessary”.

The handling of Greek debt has been a point of contention between the IMF management and European interests in and outside the Fund since Greece first asked its international creditors to rescue it from default back in May 2010.

Unable to survive its debt obligations, Greece entered into a 110-billion-euro loan deal with its eurozone partners and the IMF, conditional on the implementation of severe austerity measures.

The programme failed and the economy has all but imploded.

Peter Chowla, head of the London-based Bretton Woods Project, a non-governmental organisation that monitors IMF and World Bank activity, told IPS that it was obvious to most observers very soon after the program began that a second bailout agreement would soon follow.

He added “Even during 2010, many internal IMF reports warned that the Greek programme would not work out. Those were systematically ignored by the Fund’s leadership in order to present homogeneity of the Troika in negotiations with Greece.”

Meanwhile the main line inside the Fund gradually shifted away from European interests and closer to the positions of developing countries like India, Brazil and Russia, all of whom expressed doubts about the efficacy of the Greek plan.

Finally a compromise was struck between the IMF and the European financial institutions about the writing down of Greek debt to a level that might allow the programme to continue.

“In the spring of 2011, amid disagreements about the sustainability of Greek debt, the IMF warned, for the first time, of not offering any more money unless a debt restructure took place. European interests, inside and outside the Fund, finally had to accept this, but tried to limit their losses as much as possible,” Chowla explained.

In October 2011, the Troika offered a second 130-billion-euro bailout loan that not only demanded another austerity package, but also forced private creditors holding Greek government bonds to sign a deal accepting a 53.5 percent face value loss.

Soon after, it became clear that the second programme was wreaking havoc on a crumbling economy and would not put Greek public finances back in order.

And meanwhile, relations within the Troika kept deteriorating.

A confirmation of the depth of the fracture inside the Fund emerged this past July, when Peter Doyle, after two decades of service within the Research and Development branch of the Fund, resigned.

In his brief letter he criticised the IMF’s role in the Troika, blaming ‘European bias’ for constraining the Fund from exercising an impartial role.

Doyle charged that the IMF had compromised its independence, citing “suppression” of information that had been identified well in advance as a reason for the failure of the institution’s surveillance mechanism, which should have properly examined the impacts of the austerity plan.

Austerity shock therapy, according to Doyle, has caused the economy to disintegrate faster than expected and has brought “the second global reserve currency to the brink”.

Further evidence of the Fund’s responsibility in what is now a full-blown Greek crisis surfaced during the launch of the IMF’s autumn 2012 World Economic Outlook in Tokyo, where the IMF’s chief economist, Olivier Blanchard, acknowledged that the Fund’s surveillance models, used to dictate the terms of bailouts, were flawed.

Panagiotis Roumeliotis, Greece’s one-time representative to the IMF, confirmed to IPS that Doyle’s criticism is serious and valid.

He also provoked a high-profile investigation about the handling of the crisis by stating in an interview with the New York Times this August that the bailout plan was “condemned” from the start.

Domenico Lombardi, Italy’s former representative on the IMF’s executive board, says the impasse within the Troika is now reaching a total deadlock.

This August, the Fund refused to provide money to pay off a 3.2- billion-euro Greek bond held by the ECB, Lombardi told IPS. This was made up by an emergency bond sale by the Greek state.

A 5.5-billion-euro bond due to expire on Nov. 16 should be covered by anticipated bailout loans, but the IMF seems unwilling to participate in financing that either.

“Basically the IMF is not going to contribute in any meaningful way till the debt restructuring issue is agreed, formally or informally, explicitly or implicitly,” Lombardi told IPS.

He added that the entire joint programme would have to be restructured if the IMF pulled out at this late stage.

Given that the Greek economy will face an emergency liquidity problem next week, it hastily organised a short-term bond sale Friday to close the gap.

This debt is owned by the ECB, which has thus far refused to write down the debt or lower interest rates.

The situation has now become very dangerous, according to Lombardi.

The creditors may be able to buy some time “by lowering the interest rate on bailout money they have loaned to Greece,” he said.

But the most pressing issue is that none of the leading players seems to have any idea what is to be done in the long term.

(END)

For anyone who might not have realised it yet, the current crisis is demonstrating beyond a shadow of a doubt that the financial markets are the lead players in the current economic situation in Europe. Power has passed from the politicians to speculators and crooked bankers. This is a fundamental change.

Ignacio Ramonet

Every single day a staggering quantity of money floods through the markets – for example, seven billion euros worth of eurozone governments’ debt alone, according to the European Central Bank. The daily collective decisions of these markets can now topple governments, dictate policies, and subjugate entire populations.

Moreover, these new “lords of the earth” have no concern whatsoever for the common good. Solidarity is not their problem, much less the preservation of the welfare state. Greed is the only motive for their actions. Speculators and bankers, driven by a hunger for profits, behave with total impunity, diving like birds of prey on target after target.

Since the crisis broke in 2008 no serious reform has been imposed to either regulate the markets or rein in the bankers. It is apparent that banks play a clear role in the economic system and that their traditional activities ­ encouraging savings, providing families with credit, financing businesses, spurring commerce ­ are constructive.

However, since the dawn in the 1980s of the “universal bank”, which added speculation and investment to the above mix of functions, risks to customers’ savings shot up dramatically along with deceit, scandals, and fraud.

One of the most shameless acts was carried out by Goldman Sachs, which now dominates the financial universe. In 2001 it helped Greece to cook its books so that Athens would meet the conditions to join the euro.

In under seven years, this scam was discovered and the reality exploded like a bomb. The consequence: a debt crisis engulfed almost an entire continent; Greece was sacked and forced onto its knees; recession struck, with massive unemployment and plummeting buying power of workers; restructuring and drastic cuts in social services followed, with widespread misery and the imposition of structural adjustment programmes.

How were the perpetrators of this devastating swindle punished? Mario Draghi, the ex-vice president of Goldman Sachs for Europe who was aware of most of the fraud, was named president of the European Central Bank. Meanwhile, for its crooked window-dressing for Greece, Goldman charged 600 million euros. The story has a clear moral: when it comes to major rip-offs by the banks, impunity is the rule.

For confirmation look no further than the thousands of Spanish depositors who bought stocks in Bankia the day it was listed on the stock market. It was known that the bank had no credibility and that according to the ratings agencies its stock was just a step above junk.

But the depositors trusted Rodrigo Rato, then president of Bankia and ex-managing director of the International Monetary Fund, who proclaimed on May 2, 2012 (five days before resigning in response to market pressure and just before the Spanish government had to inject 23.5 billion euros to keep it out of bankruptcy): “In terms of both liquidity and solvency, we are in a very robust position.”

It is known that a year earlier, in July 2011, Bankia apparently passed the “stress test” imposed by the European Banking Authority (EBA) on the 91 largest financial businesses in Europe. This should give an idea of the incompetence and ineptitude of the EBA, the European agency charged with guaranteeing the health of our banks.

But that wasn’t the end of the scandals. Indeed, new bank frauds have come to light in recent months. HSBC was accused of money laundering for Mexican narco-traffickers. J.P. Morgan engaged in massive speculation and unprecedented risk-taking that led to losses of 7.5 billion euros and ruined dozens of clients. The same happened at Knight Capital, which lost over 323 million euros in a single night because of a mistake by its automatic trading programme.

But the scandal that is most infuriating on a global scale is the Libor. The Association of British Bankers issues each day what is called the “London Interbank Offered Rate”, an average calculated by Reuters financial news agency of the interest rates obtained by the 16 largest banks for borrowing.

As the rate at which the major banks lend money to each other, Libor constitutes a fundamental benchmark for the entire world financial system. In particular, it is used to calculate mortgage rates for homeowners. Worldwide, Libor influences some 350 trillion euros in credit and any variation in it can have a colossal effect.

How did this scam work? Some of the 91 Libor banks colluded in lying about the rates they were obtaining, thus manipulating not only Libor but all derivative contracts and the credit rates for businesses and families alike. This went on for years.

Investigations have shown that about ten major international banks ­ Barclays, Citigroup, JP Morgan Chase, Bank of America, Deutsche Bank, HSBC, Credit Suisse, UBS, Societe Generale, Credit Agricole and the Royal Bank of Scotland ­ participated in the racket.

What we see from the Libor disaster is that criminal behaviour has infected the very heart of the financial industry, and that probably millions of families were issued mortgages at incorrect rates. Many had to leave their homes. Others were evicted because they couldn’t pay artificially-manipulated interest rates. And once again the authorities charged with overseeing the operation of the markets turned a blind eye to this crime. No one has been punished beyond four schemers.

How long can democracies continue to allow such impunity? In 1932 in the United States, Ferdinand Pecora, son of Italian immigrants who became a prosecutor in New York, was named by president Herbert Hoover to investigate the responsibility of the banks for the crash of 1929. His report was overwhelming. It was he who coined the term “banksters” (out of “bankers'” and “gangsters”).

On the basis of this report, president Franklin D. Roosevelt acted to protect the American people from the risks of speculation. He passed the “Glass-Stegall Act” which (until it was repealed in 1999) required the separation of commercial banking from investment banking. What government of the eurozone would dare pass similar legislation today? (END/COPYRIGHT IPS)

* Ignacio Ramonet is editor of Le Monde diplomatique en español.