- Sarkozy's 'incoherence' is a sign of the euro-impasse,
says Eric Walberg
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- Riots swept across Eastern Europe this winter. In Latvia
100 were arrested when they attacked the Finance Ministry with cobblestones
from the quaintly restored tourist area protesting unemployment, budget
and wage cuts. In Lithuania, riot police fired rubber-bullets and tear
gas on a trade union march. A demonstration in the Bulgarian capital turned
violent leading to the arrest of 150 protesters. These three states are
all members of the Exchange Rate Mechanism (ERM2), the euro's pre-detention
cell. They must join.
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- The IMF calls for devaluation of the currencies of these
"economies", which are not really economies at all after their
deindustrialisation over the past two decades, but the euro-agreements
prevent this. And even if they could do the IMF number, their huge mortgage
debts contracted in euros and Swiss francs over the past decade would still
be unrepayable.
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- Latvia's government was trying to comply with IMF-imposed
measures to qualify for an emergency loan, much like Argentina in 2001,
when brutal cuts to education and social programmes sparked a general strike
and radicalised the entire nation (except, or course, those responsible
for the crisis). The riots in Lativa brought the government down and its
credit rating was just lowered to junk status.
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- It's no better inside euroland. Q: What's the difference
between Ireland and Iceland ? A1: The letter "c". A2: Six months.
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- We haven't even mentioned Greece, which is already considered
a failed state, virtually in a state of civil war since last September.
And now the very pillars of the European Union are crumbling. In January,
hundreds of thousands marched in French cities in the biggest protest in
two decades. An ongoing month-long strike in France's far-flung Guadeloupe
is now full-scale urban warfare, with the dead including a trade union
leader. The ruling white elite and tourists are at this very moment fleeing
in panic. Martinique and Reunion have joined in.
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- In Britain demos are breaking out across the country
protesting unemployment and the bank bailouts. The British National Party
shocked the establishment by winning a council seat in Kent, "penetrating"
the south of England, and are expecting major gains in the EU elections
in June. Spain lost a million jobs in 2008 and the unemployment rate is
expected to reach 25 per cent this year. Spain's (and Ireland's) so-called
wage inflation now requires wage deflation, workers are told. With Spain's
high debt levels, this is impossible. Even if it were possible, wage deflation
is a recipe for revolution.
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- Marches protesting the economic plight of the people
are expected to grow and lead to further violence throughout Europe, with
Greece as the prequel. Suddenly, the spectre of the end of the EU, certainly
the end of the common currency, is being raised. Coined to convince the
"free world" of the dangers of Communism, the domino effect is
back with a vengeance.
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- The string pullers over the past two decades managed
to transform the face of Europe, destroying the Soviet Union and expanding
the EU and NATO rapidly eastward. But just as Napoleon and Hitler before
them, the over-confident conquerors moved too far too fast, and now face
the prospect of losing everything. The marvel of the euro zone is now derided
as the Völker-Kerker (prison of nations) recalling the Austro-Hungarian
Empire. Italian journalists have begun to talk of Europe's "Tequila
Crisis", referring to the collapse of Mexico's peso in 1993 when the
elite took their money to the US. A similar capital flight from Club Med
could set off an unstoppable process and even bring the euro down.
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- What is the euro, except a fixed exchange rate agreement
among members? Sceptics have always dismissed it as a dangerous straight-jacket,
since Europe is far from uniform. It means national governments are highly
restricted in their monetary and fiscal policies to deal with crises. It
also means that ripples in Europe become tidal waves, as all the countries'
economic successes or failures happen together.
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- This is fine if governments are united in pursuing a
common agenda to promote stability and prosperity for the common Europeans,
but neoliberalism allows for no such political will. The common economic
space has merely allowed large companies and banks to take control of the
whole market, supposedly to be equal competitors to their big brothers
in the US, China and elsewhere. But riding the wave of privatisation and
euro-expansion, they threw caution to the winds, with no strong national
governments to clip their wings. The EU "government" is exposed
as worse than useless, a rubber stamp for this Thatcherite mania, fooling
Europeans into thinking there was someone controlling the private chaos.
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- As the euro begins to slide against the worthless dollar
(that's right), no one is seriously preparing for the possibility of its
immanent collapse and what to do about it. Instead, incredibly, a Financial
Times columnist calls on the EU to drop its euro-entry requirements for
the "economies" of eastern Europe and quickly shepherd them into
the "safe" euro-fold. Just as mad as this strategy may seem is
the one presently being implemented: to pump endless cash into the banks
that have recklessly moved into this economic wasteland.
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- It is vital to keep the edifice afloat, after all. Virtually
all of Eastern Europe is in hock to Western banks and as they go bankrupt,
or for the "lucky" ones, their exchange rates plummet with respect
to the euro, they represent bargain-basement fire sales for the West. The
Polish zloty plunged 50 per cent in the past six months, making it impossible
to repay the countless euro-Swiss loans contracted by unwitting Poles,
lured by low interest rates.
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- The banks have lent Eastern Europe about $1.7 trillion,
since "independence" and this must be saved from disappearing
at all costs. The currently proposed $31 billion to be pumped into the
banks is peanuts -- as long as national governments (that is, the people)
pay it, of course.
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- If the steely-nerved bankers can stay the course, the
pay-off is potentially immense. Lured into euro-clutches, these orphan
nations can now be squeezed. Integration with a vengeance, on a par with
their WWII and post-WWII occupations. At least under post-WWII socialism
(which many Eastern Europeans remember fondly), the common people were
provided for and the ruling party's privileges circumscribed. But if today's
unsupervised elites keeping sending their money abroad, the pit becomes
bottomless. Riots turn into revolutions.
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- France will no doubt lead the way. Students occupied
the Sorbonne recently in a long-running battle against President Nicolas
Sarkozy's education reforms, supported by 70 per cent of the population.
French radical politicians Jose Bove and the popular New Anti-Capitalist
Party leader Olivier Besancenot have already travelled to Guadeloupe in
solidarity with the strikers. "Their fight is our fight - against
captialism, exploitation, the big supermarkets," exhorted a newly
radicalised Bastille district activist.
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- Sarkozy's popularity is at its lowest at 36 per cent,
with a similar number of French saying they would welcome strikes "on
a huge scale". The pollster Dabi said, "There is a sense of incoherence
and a sense that Sarkozy does not really know where he is taking France.
But that's largely because there is an incoherence and Sarkozy doesn't
know here he is taking France."
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- The same can surely be said of all Western leaders these
days. United States President Barack Obama has it easy. He at least has
a clear agenda to tear up -- the Reagan-Bush one. But the only common policy
of Western leaders so far is one dictated by the banking elite: "Bail
us out, but leave us alone." If anything, they are demanding coordinated
bailing out and calling for a new international banking institution, which
of course they will control, and which, we are supposed to believe, will
avert any further unpleasantness. Such an institution may well act to avert
capitalism's collapse, but there will be lots of "unpleasantness",
evenly distributed among the common people.
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- The sunny euro-vistas of yesterday are no longer. Eastern
Europe risks being eaten alive by Western banks. Western Europe risks mere
stagnation and endless political unrest. All indications are that this
is a deadend, that the only way forward is to break the hold that the economic
system has on both East and West. The upheavals have begun and the real
domino effect will spread throughout Europe this summer. That the European
parliament elections in June will take place in a hostile atmosphere is
an understatement.
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- Using a crisis to push through unpopular measures doesn't
work anymore, as Greek and Latvian politicians have discovered. The streets
are already ringing with the cry: "We won't pay for your crisis!"
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- ***
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- Eric Walberg writes for Al-Ahram Weekly. You can reach
him at www.geocities.com/walberg2002/
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