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A two-speed Europe, chronic unemployment and the Euro experiment

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Illustration: Presseurop / Chinese illustrator and cartoonist Luo Jie (William Luo) works for the Beijing English newspaper, China Daily.

There is worry in Europe about the euro, its ten-year-old currency, and about unemployment, which has stayed persistently high throughout 2011. The Euro press has reflected the worries and concerns of the salaried and the informal workers of Europe, and is now talking about whether there is already a ‘two-speed’ Europe. Presseurop has provided some insight:

In ‘Eurozone crisis – Will the EU end up like Yugoslavia?’ Serbian daily Politika remarks on the similarities with the years preceding the break-up of the federation founded by Tito. The Politika opinion said: “Seen from Belgrade, Zagreb or Sarajevo, the economic and institutional crisis that has struck the European Union has a certain air of déjà-vu. Relatively speaking, the European Union (EU) is beginning in many ways to resemble Tito’s Yugoslavia. As At a time when the EU is attempting to reinforce centralised control of its periphery, its foundations are being threatened by excessive nationalism and accumulated incompatibilities between member states.”

The “democratic deficit” suggests yet another parallel, according to the Serbian paper: in the one-party system in Yugoslavia, leaders were not elected by universal suffrage, just like the highly placed civil servants that manage today’s EU – in spite of the fact that all of the members of the Union have multi-party systems. In both cases, the fear that the more populous states would have too much influence has prevented the introduction of the principle of ‘one citizen, one vote’.

The 'La Tribune' front page on a 'two-speed' Europe

Presseurop also invokes the ‘two-speed Europe’ meme in ‘Employment – A two-speed Europe’. Mentioning the front-page headline ‘Europe split in two by unemployment’ of La Tribune, Presseurop has quoted the paper’s reporting on the growing gap between Southern and Northern Europe: “The rate in Germany has declined to a level not seen since 1991 while soaring to new high in Spain, where it is now almost 23%.”

The Paris business daily continued: “This European dichotomy is first and foremost a reflection of the state of the continent’s economies. While some countries have sunk into recession (Greece, Portugal, Spain), others have succeeded in maintaining growth, albeit modest.” Citing reforms undertaken before the crisis as one of the reasons for the healthier economies in the North, The Financial Times remarked that changes to labour legislation in Luxembourg, the Netherlands, Austria and Germany “have helped make the workers of these countries internationally competitive – a factor which is sorely lacking in the eurozone periphery”. Typically arrogant and dismissive opinionating from the British paper, which is notorious for kowtowing shamelessly before industry and American foreign policy dictates.

The Berlin leftish newspaper Tageszeitung (Taz) takes issue with this argument, and notes that the reforms undertaken by Berlin have not created new jobs, but simply redistributed them to a larger number of workers – a process that has resulted in the creation of a new low-pay sector. Reporting that 8.4 million Germans are ‘under-employed’, the Taz recalls that economic inequality in Germany has grown more rapidly than in other industrialised countries. Finally, the Berlin newspaper notes that to ‘celebrate’ the record of 41 million wage earners, the German government has spent 330,000 euros on a poster campaign ‘Danke Deutschland – Wirtschaft. Wachstum. Wohlstand.’ [“Thank you Germany – Economy. Growth. Prosperity”].

Taz is close to the truth, quite the opposite of what the feckless Financial Times, a speechwriter for predatory capitalism, would have us believe. Almost one in four people in the European Union was threatened with poverty or social deprivation in 2010. This is the conclusion of an official report by the European Commission presented in December. According to the report, 115 million people, or 23 percent of the EU population, were designated as poor or socially deprived. The main causes are unemployment, old age and low wages, with more than 8 percent of all employees in Europe now belonging to the “working poor”.

Single parents, immigrants and young people are worst affected. Among young people, unemployment is more than twice as high as among adults. Some 21.4 percent of all young people in the EU had no work in September 2011. Spain leads all other EU countries with a youth unemployment rate of 48 percent. In Greece, Italy, Ireland, Lithuania, Latvia and Slovakia youth unemployment is between 25 percent and 45 percent.

In countries such as Germany, the Netherlands and Austria, youth unemployment rates are lower only because training takes longer and many unemployed young people are ‘parked’ in all sorts of schemes that exclude them from the official statistics – so much for the crafty and misleading ‘Danke Deutschland’ campaign. But even in these countries the chance of getting a decent-paying job is diminishing. Some 50 percent of all new employment contracts in the EU are temporary work contracts. For workers aged 20 to 24, the proportion is 60 percent.

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Written by makanaka

January 8, 2012 at 14:47

‘Germany is not head of the class of the Union’

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A 'debt meter' shows the level of Germany's debt, which is currently over 80 percent of GDP. By European standards, that is nothing to boast about. Photo: Der Spiegel / Carsten Koall

About the euro and Germany, and about Europa and the Germans, there’s not a lot that can be read on the matter that helps clear it up. We need some help from inside Europe to do that – instead of clueless yammering about ‘markets’ from American economists, or instead of smug garbage about Euro politics from barmy Brit commentators, and instead of overaged tripe about the EU from the World Bank and the IMF. Without further ado, here’s the help.

Jacques Attali, the influential former advisor to Mitterrand, has sent a blunt warning to Angela Merkel, the German Bundeskanzlerin. Writing in Slate.fr Attali has said that Merkel either must agree to the purchase of defaulted European bonds by the European Central Bank and the issuance of European bonds, or she will end up holding the smoking gun of Europe’s suicide. In a translation of Attali’s short but astringent article, helpfully provided by Sign and Sight, we are told that he rids Germans of their most cherished illusions. “Germany is not head of the class of the Union, who winds up having to pay for the sins of all the others. Its public debt is close to 82 percent of its gross domestic product, practically as bad as France. Ten of its banks, all owned by the government, which provide twenty percent of the credit outside of the financial markets, are currently in very poor condition. Germany’s energy consumption will increasingly rely on Russian gas, which today represents 37 percent of its imports. Its demographics are so catastrophic, that Germany will already have less inhabitants than France in 2060, and 44 percent of the Germans are over 65 in comparison to 35 percent of the French, which will make it particularly difficult for Germany to repay its debts.” Over to you, Angie, if you dare.

"We are deeply ashamed," the German parliament declared in a joint statement issued on Tuesday condemning the crimes committed by a neo-Nazi terror cell. Photo: Der Spiegel / Michael Gottschalk / dapd

Here is part of the French original:

Elle n’est pas le bon élève de l’Union, qui refuse de payer pour les erreurs des autres. Sa dette publique est de 82% du PIB, pratiquement égale à la dette française; dix de ses banques, toutes publiques, qui fournissent 20% des crédits au secteur non financier allemand, sont en très mauvaise situation. Sa consommation d’énergie dépendra de plus en plus du gaz russe, qui représente 37% de ses importations. Sa démographie est catastrophique au point que, en 2060, il y aura moins d’Allemands que de Français et que 44% de la population allemande aura plus de 65 ans contre seulement 35% en France, ce qui rendra particulièrement difficile le remboursement de la dette publique allemande. Enfin, l’avenir de l’industrie allemande n’est pas si prometteur qu’elle le croit: selon une récente étude anglaise, sur les 100 entreprises les plus innovantes du  monde, 11 sont françaises et seulement 4 sont allemandes.

What is it about Deutschland, Germans and the idea of Europe that invariably gets all tangled up in knots? Eurozine has presented an interview, originally carried by the magazine Esprit, with Jan-Werner Müller who talks about “German contradictions”.

This situation now has to be addressed by leaders who are clearly not great believers in moral-historical justifications for European unity, and who often obfuscate the issues: Germany’s foreign minister has just called for ‘more Europe’ while a Christian Democratic minister recently even demanded the creation of the ‘United States of Europe’ – without saying what in practice this would mean. So I fear that Germany has no real road map of how it wants to relate to Europe, other than preserving what has already been achieved in the way of economic gains and personal freedoms (e.g. travel), while at the same time minimizing the costs.

To be sure, there are also some voices who advocate a much more assertive global role for Germany in conjunction with core Europe (of course France in particular) – for instance the political theorist Herfried Münkler, who in a recent article in Der Spiegel openly expressed his concern that Europe is being destroyed by its periphery (e.g. Greece), instead of adopting a global strategy to increase its power. He explicitly called for ‘all power to the centre’ so as to re-empower European elites and for Germany to exercise more leadership, rather than hoping for some illusory democratization of the EU as it is. This is a coherent stance that may well become attractive for a German government, especially if the current approach of muddling through makes neither Germans nor other Europeans really happy – and fails to solve the Euro crisis.

Germany and Iran, a long-running hypocrisy reprised by the blocking of India’s oil payments to Tehran

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The German government has stopped the government from India from paying for oil, bought from Iran, through a German bank. This action has been explained by the German government as halting its dealings with Iran, which America, Germany’s Nato ally, has placed under an economic blockade for allegedly pursuing a nuclear weapons programme.

The extreme but characteristic hypocrisy of Germany with regard to countries of the Middle East has once again come to the fore with this action. Ever since the outbreak, in 1991, of the American invasion of Iraq, Germany’s private sector role in providing engineering and technical know-how to countries of the Middle East – specifically Iran, Iraq (under Saddam Hussein) and Libya – has been exposed. (America’s own complicity in arming, supporting and dealing with all manner of governments is too well-known.) More on the German hypocrisy follows after a brief description of the immediate action.

New media have today reported that India has agreed to stop paying for its Iranian oil imports via Germany. Payments to a Hamburg-based bank handling international trade with Iran had been halted. The Handelsblatt business daily has reported that German chancellor Angela Merkel had intervened by instructing Germany’s central bank, the Bundesbank, to stop clearing payments from India headed to the bank, known as EIH, which is under USA but not EU sanctions.

Reuters has reported that this action will end “a trade conduit that had drawn strong disapproval from the United States and Israel” and that “the decision was a result of consultations between Berlin and New Delhi, and not pressure from Chancellor Angela Merkel at home or abroad to disrupt the payment scheme”. The news bulletin has been picked up by a number of small and regional newspapers in the USA, going under the headline ‘Germany won’t funnel oil money from India to Iran’.

The initial response from India, according to a few early reports, is that India’s finance ministry is now considering routing its payment for Iranian oil through a European bank which is ‘more neutral’ than the European Iranian Trade bank (EIH). The Indian Express has said that so far, India has paid 1.5 billion euros through EIH to the Iranian central bank. The Indian Express quoted a finance ministry official as having said: “EIH can’t be a long-term solution. We are looking at banks in Europe where Iranian central bank has an account. We will also open an account with (that) bank. We will have to look for a neutral bank, which EIH is not.”

India depends on Iran for about 15% of its crude oil imports. Iran is India’s second-biggest oil supplier after Saudi Arabia. India had imported 400,000 barrels per day (bpd) of oil from Iran in 2009-10 and about 178,000 bpd during April-September. India, Asia’s third-largest oil consumer, imports over two-thirds of its oil needs and depends heavily on volumes from the West Asia to power its economy. India and Iran have been negotiating for months on ways to resolve the payment deadlock on a long-term basis and salvage the trade, which is worth around US$12 billion annually.

So much for India’s oil dealings with Iran. What moral standing has Germany in such a matter? Let’s revisit the recent past to see what Germany’s current imperialist ally in Libya – the USA – has itself had to say on German interest in Middle Eastern and North African business opportunities.

Foreign energy in Libya. Map: Stratfor

Remember Rabta? This was reported to be the largest chemical weapons factory in the developing world, and in the 1990s it was estimated that the Rabta factory’s potential output was between 8.5 and 33 tons of mustard gas and nerve agent daily. The Rabta plant, about 65 km south of Tripoli, was seen as having been buit and operated with the assistance of western (i.e. from western Europe) companies. At the time, it was the USA which concluded that a West German company played a central role in the design and construction of the rabta plant. Ronald Reagan was US president then and Helmut Kohl the German chancellor. The company was Imhausen-Chemie, and both the company and the feckless German government of the day claimed that all it was doing at Rabta was making plastic bags.

Let’s turn to Germany and Iran. Germany has been intensely involved in the international effort to thwart Iran’s nuclear weapons development program. Yet, while Chancellor Merkel has vocally stated her opposition to Iran’s acquisition of a nuclear weapon, Germany has continued to be Iran’s largest trading partner in the EU and – whatever shape the coalition government in Berlin has taken – it has been pro-business, favouring commercial ties over the West’s security interests – this is typical, after all, for the country that until last year was the world’s biggest expoert economy, business comes first, never mind who it’s done with and what it’s used for. Germany’s exports to Iran reached about US$426 million in September 2009, while its imports were about US$140 million. This has been reported by The Jerusalem Post (September 29, 2009) and by Tehran Times (December 17, 2009). Which are the major companies that have, with the full knowledge and encouragement of the German government, done business in and with Iran? Some of the best-known are Siemens, ThyssenKrupp, BASF, Bayer, Herrenknecht and MAN Ferrostahl.

It is tiresome to hear sanctimonoius claptrap about Germany’s replacement of the primitive nationalisms of the past with multilateral principles of an integrated Europe, as its lying and double-dealing officials assure the European Parliament and international fora every so often. The “forgetting of power” in the West German peace movements and in the political language of détente used by its over-intellectualised political commentators is plain rubbish, for what Germany does abroad is quite different from what it says at home in Europa.

UN head gives Europe blunt message on ‘integration’ and immigrants

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Secretary-General Ban Ki-moon addresses the European Parliament in Strasbourg, France. Source: UN News

There are times when the United Nations gets it right, and this is one of thise times. The UN Secretary General Ban Ki-moon has delivered a ringing statement to the rightists of Europe, against what he called a new “politics of polarization”.

His statement comes in the week following the extraordinary and unconscionable declaration by Angela Merkel, chancellor of Germany, that multiculturalism has failed in Germany and so has integration of foreigners. Ban’s statement, contained in two addresses – to the European Parliament and to the Council of Europe – also comes a month after Nicholas Sarkozy’s government in France deported several thousand Roma to Bulgaria and Romania.

Ban warned Europe against a new “politics of polarization”, discrimination and intolerance over immigration, with Muslim immigrants as primary targets. “Almost seven years ago, my predecessor Kofi Annan stood before you,” he told the 27-nation European Parliament in Strasbourg, France. “In his address, he made an impassioned call for Europe to seize the opportunities presented by immigration and to resist those who demonized these newcomers as ‘the other’. I wish I could report, today, that the situation in Europe has improved over the intervening years. But as a friend of Europe, I share profound concern.”

In a speech earlier to the 47-nation Council of Europe, he highlighted the Universal Declaration of Human Rights’ proclamation of the equal and inalienable rights of all members of the human family. “That is our base line,” he declared at the session marking the 60th anniversary of the European Convention on Human Rights. “That is our standard. There are no exceptions. In a complicated and connected world, this mission is essentially simple and simply essential.”

Germany's persistent discomfort with migrants. Image: Deutsche Welle

In his address to the parliamentarians, Mr. Ban said Europe has served “as an extraordinary engine of integration, weaving together nations and cultures into a whole that is far, far greater than the sum of its parts. But for Europe, ‘winning the peace’ was the narrative of the last century. “The 21st century European challenge is tolerance within. Inclusion, building diverse communities, is as complex a task as the one Europe faced after the Second World War. None of this is easy,” he added.

Migrants, he noted, suffer disproportionately, whether they are from within Europe or beyond, and he pointed to “a new politics of polarization” as a dangerous emerging trend. “Some play on people’s fears. They seek to invoke liberal values for illiberal causes. They accuse immigrants of violating European values. Yet too often, it is the accusers who subvert these values – and thus the very idea of what it means to be a citizen of the European Union,” he said.

Ban made particular reference to Germany’s history of right-wing nationalism. “Europe’s darkest chapters have been written in language such as this,” he said. “Today, the primary targets are immigrants of the Muslim faith. Europe cannot afford stereotyping that closes minds and breeds hatred. And the world cannot afford a Europe that does this.” In his address to the Council, Mr. Ban cited evidence of backsliding on civil and political rights and a growing anxiety in many developed countries over migration and economic hard times that are used to justify policies of discrimination and exclusion.

Germany's violent, racist and xenophobic rightist groups still organise with impunity. Image: Deutsche Welle

The UN Secretary General also said bluntly that none of Europe’s largest and wealthiest powers had signed or ratified the Convention on the Rights of Migrant Workers 20 years after it was adopted. “In some of the world’s most advanced democracies, among nations that take just pride in their long history of social progressiveness, migrants are being denied basic human rights,” he said. “We must respect cultural diversity, while never compromising our fundamental principles and never tolerating intolerance, Lasting social change, including respect for human rights, and particularly women’s rights, cannot be planted from afar. It must take root within societies.”

In a typically clumsy and painfully transparent attempt at camouflaging the Merkel government’s increasingly illiberal position, the German federal government has announced plans for legislation to promote the integration of immigrants into mainstream society. “For a while multiculturalism in Germany was about immigrants living as they wished and not putting integration too much in the forefront,” said spokesman Steffen Seibert at a government press briefing in Berlin. “In everybody’s interest, this society has to act, and the government will act.”

"Demonising the 'other' " as a dangerous political manoeuvre. Image: Deutsche Welle

Seibert said Merkel’s center-right coalition cabinet planned to adopt “concrete” new regulations next Wednesday on immigration policy and residency permits. The legislation would focus on German language courses and combating forced marriages, and make it easier for foreign diplomas to be formally recognized. Deutsche Welle quoted Seibert as saying: “This country is extremely glad to have hundreds of thousands, probably millions, of people with foreign roots who are well integrated. But we also recognize, and perhaps we are stressing it more now than in years gone by, that with some foreigners integration is not happening as it should. In some cases it is quite openly being rejected.”

Seibert’s schizophrenic prose does nothing to explain Germany’s deep-seated discomfort with the foreigner. It’s very label for the immigrant of the 1950s, gastarbeiter, or guest worker, implied that when the ‘guest’ had completed his term of economic usefulness he would cease being the guest by leaving. This is a term that continued to be used by all sections of Germany’s political spectrum even throughout the years when the country claimed it was encouraging multi-culturalism. It did no such thing, choosing instead to raise barriers based on language proficiency, the recognition of educational qualifications and the ‘burden’ on its services. By her contemptible statement, Merkel has revealed the deeply alarming tendency of western European ruling elites to resort to dangerous polarisation in order to disguise the failures of their policies for their own marginalised and economically depressed citizens.

Billions of euros, and the zero-rupee note

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The German weekly newspaper, Die Zeit, is easily among the best designed papers in the world. It is also consistently critical in its investigations and reporting, and just as consistently innovative in the manner in which it presents subjects. Visually, Die Zeit’s pages have few peers worldwide, if at all.

Billions swallowed up (Die Zeit, Deutschland)This is a typical example of how Die Zeit is able to hold its readers’ interest, dramatically present numeric data and at the same time make a strong political statement about state spending.

The title of this arresting full page graphic is ‘Seid verschlungen, Milliarden!’, which means ‘Billions swallowed up’. The graphic purports to be an aid to politicians who notoriously have no idea, says Die Zeit, how many zeros there are in a billion but who blithely continue to agree to spend billions (of public money).

There are some eye-popping numbers represented by the coloured squares on this page. The German healthcare system is 245 billion euro, the income of the church in Germany is 330 billion euro, Germany’s federal budget for ‘Bildung und Forschung’ (education and research) is 11 billion euro, Germany must reserve 283 billion euro for pensions (which is separate from the 36 billion euro to be spent on pensions for its government officials).

Billions swallowed up (Die Zeit, Deutschland)The cost of sending all children in developing countries to school for five years is reckoned to be 321 billion euro, the development aid of the richest developed/industrialised countries is 72 billion euro, the cost of halving the incidence of poverty in developed countries (as under the UN’s Millennium Development Goals) is 32 billion euro, the cost to the USA of the 2003 Iraq war was 40 billion euro, and the cost to date of the Iraq and Afghanistan war to the USA is 1,242 billion euro.

While on the subject of money and public spending, The Economist has reported the issue of the zero rupee currency note. The surprising note looks like the typical 50-rupee note, except it is for ‘zero rupees’. In place of ‘Reserve Bank of India’ it says ‘Eliminate Corruption at all Levels’ and in the same vein has replaced the usual “I promise to pay the bearer…” with “I promise to neither accept nor give bribe”. This excellent public campaign has been launched by a Chennai-based NGO called 5th Pillar (P O Box No 5338, Chennai 600024, phone +91 44 65273056).

The zero rupee noteVijay Anand is president of the NGO and is also, according to the Economist report, an expatriate Indian physics professor from the University of Maryland “who, travelling back home, found himself harassed by endless extortion demands. He gave the (zero rupee) notes to the importuning officials as a polite way of saying no.” 5th Pillar reportedly had 25,000 zero rupee notes printed and publicised to mobilise opposition to corruption. The idea caught on and the NGO says it has distributed a million zero rupee notes since 2007. Haven’t seen any in Mumbai though – although in Mumbai it’s at least a hundred that the most junior traffic policeman will settle for and for municipal jobs one starts with 500 rupees, so 5th Pillar will need to do a Mumbai and Delhi set of zero-rupee notes in those colours, not 50-rupee colours.