Showing posts with label Eurozone. Show all posts
Showing posts with label Eurozone. Show all posts

11 March 2019

The wars of European Unification - What lies ahead?

When we look into history, we see periods when it seems obvious what the outcome was going to be, and wonder how they could not or did not see it coming during those times. Take the expansion of Rome from about 210 BC through about 150 AD, or the rise of the British Empire from 1700 to 1900. There is also the rise of the United States in its first three-quarters of a century. Then we can look at Europe from about 1870 to 2030. In the middle of any of those periods, it would not have been obvious that there was a peak coming, followed by stability and decline, or civil war.

One thing that distinguished each of these historical eras was the growth of empire, apparent unending upside, followed by limits, competitors on the periphery, conflict and civil war (across the greater empires, if not in the core). Is this what we should expect of the German Europe Empire Union?

In each of the first two examples, history shows us the rise and rise of the empires and civilisations, the peaks and the beginnings of their declines. Rome in 210 BC was fighting an existential war with Carthage, or so it seemed at the time. Yet through the eyes of history, Roman domination seems inevitable; Carthage simply was not a match, and Hannibal was never going to get Latins to fully abandon alliances with Rome, a prerequisite for Carthaginian victory. Later, Britain expanded into India and North America, Australia, New Zealand and various parts of Africa, but reached its peak and the strains on empire eventually pulled it apart. By the middle of the nineteenth century, pressures were building, and the second great spasm to hit the empire occurred with the Indian Mutiny (the first being the rebellion in the North American colonies). The British Empire survived, but by 1900 it becomes clear that the next century would be one of disengagement from Empire.

Will historians look back at the Franco-Prussian War (1870) as the first of the three great wars of European Unification under the hegemony of the German Empire? And as war is the continuation of politics by other means (Clausewitz, 1827), was the failure of the wars to accomplish the political objective then replaced by the politics of acquiescence by countries exhausted by war, fearful of a re-industrialised and again potentially imperial Germany? After all, the very embryos of what became the EEC and then the EU were attempts to contain post-WWII Germany; containment that ultimately failed with Germany once again becoming the economic and industrial powerhouse of Europe.

Our other example from history could be the United States of America from 1776 through 1850. American independence from the United Kingdom was hard won, and through a series of almost Roman campaigns over the following 75 years, a Union was formed. While American (European) technology and organisational skills were sufficiently advanced to make the subjugation of the natives almost a foregone conclusion, it probably did not appear to be that pre-ordained at the time. 

I have selected 1850 for the United States, and 1900 for the British Empire, and 100 AD for the Roman Empire, because these are the rough dates at which we can see the stresses appearing, that ultimately lead either to the long retreat, or to civil war before renewed expansion. Each of these empires reached levels of expansion that tested their organisational and political systems, alliances and ultimately stretch them to their limits, while also putting them into too-close proximity with emerging blocks or nations/groups that do not wish to be assimilated (and whose "power" is adequate to counter the residual level of power available to the Empire at its outer fringe..

So is Europe and the EU at its 100 AD, 1900, or 1850 point yet? Certainly, the wars of European Unification failed to accomplish the goal that has been achieved through peaceful politics. Europe is now a unified imperial power centred on Brussels, but under the effective economic control of a few "member states" of that union. Like the Romans before them, Germanic Europe has created a politically unified hegemony over much of the continent, and happily exercises that power in the suppression of local politics, or actively sides with the regional satrapies in the suppression of dissent in their regions. 

If we look far enough back, we see Rome arbitrating over the succession of Masinissa as the king of the Numidians, and we see the Romans continuing to support Masinissa as the King of all Numidia, and in his disputes with Carthage. Of course, their support for Masinissa came at the expense of Carthage, and eventually precipitated the Third Punic War and the destruction of Carthage. Today we see "Brussels" supporting Madrid in their dispute with the Catalonians, ensuring continued suppression of Catalonian independence and the continued imposition of the Spanish culture and language on the Catalonians. 

And Catalonia in Europe is not alone. Almost every European country has its ethnic and national minorities, some seeking independence and others comfortable that their cultures are protected, even if that means subjugation within a larger nation-state. The Breton in France and the Welsh in the United Kingdom are good examples of nationalities that are attempting to protect and even promote their national cultures and languages within existing countries. And for these two, close relatives that they are, the years of suppression of language and culture are mercifully in the past. In neither are there "national movements" seeking independence, though there is in each a greater awareness of their culture and language.

But other groups within Europe do seek independence to a greater or lesser extent. Northern Italy is a different country from Southern Italy, and while the south is comfortable with that single national identity, many in the north would happily forge a different national path.

The Balkans remain a mixture of independent nations and cultures, and languages. Their civil war of the 1990s should have been a wake-up call and warning of the dangers of an overbearing central government, but instead is viewed as the poster-child for the dangers of nationalism. Without the overly powerful central government, demonstrably supportive of the desire and needs of one community within the Yugoslav nation, nationalism would not have been a problem. So which came first, excessive control perceived to be in the hands of one national group, or the rise of nationalism on the part of the many national groups within Yugoslavia?

The current European government is not in danger of repeating that error; it is actively repeating that error, to the very visible detriment of European national groups. 

The "European Project" today is pushing up against a combination of barriers, each of which can be managed, but like all empires, it is the combination of barriers and pressures that result in stagnation, civil war and ultimately slow (and sometimes fast) decline and fall. While the countries will remain - there were follow-on nation-states after the fall of Rome and the retreat of the British Empires. The European Empire's barriers are both external and internal.

Externally the European Empire is boxed in; to the east by the still existent and now re-expanding Russian Empire, while to the west, the United States has evolved from mentor to competitor to adversary. To the south, the entire African continent views Europe as either a former colonial master to be soaked, or the future of on their poor populations. 

Internally the threats are just as strong, and mainly come as a result of imperial over-reach by Brussels and their German masters (and French lapdogs), aided by Benelux intolerant and culturally domineering liberalism. The nations of Eastern Europe do not accept the idea that the dominant liberalism represents the only "core value" of European nations. These are conservative countries with populations that remember totalitarian rule, and in many cases remember personally starvation and impoverishment after the fall of those regimes with the collapse of the Soviet Union. Their current economic conditions, while far superior to their condition under the Soviet system, comes at the cost of what they believe are their core, conservative and predominantly "Christian" values. In many cases, the younger and more "liberal" members of their societies have migrated westward, and those who remain see no reason to cast aside their historic prejudices and values.

Further, the incompetent handling of the migrant crisis, with edicts from Brussels that countries must accept certain numbers of illegal migrants, harkens back to the rule of the Soviets who likewise demanded that countries accept Russian migrants (and troops).

As mentioned earlier, there is also the perception that the centre will be more than willing to punish any country or nation that does not follow the edicts and instructions of the centre, all in the name of "helping them". Recently, Former Finance Minister and now President of the German Parliament, Wolfgang Schaeuble said “as minister of finance, I had asked for a lot from the Greeks, but these reforms had been in the interest of the Greeks if they wanted to stay in the eurozone,”

This is the same man who told Yanis Varofakis that "elections cannot be allowed to change economic policy" or to put it more simply, the EU, German, the ECB and the IMF did not care who the Greek people voted for, and that they would punish Greece for even asking for debt relief. Another way of looking at this; no German or French banks will be harmed by the lending that they provided, even knowing that the loans could never be repaid.

Yanis Varofakis wrote, "Of course he had a point: democracy had indeed died the moment the Eurogroup acquired the authority to dictate economic policy to member states without anything resembling federal democratic sovereignty."

Such situations will only continue to increase the dissatisfaction within the empire (oops, Union), with the result that Brexit will not be the last event in the disintegration of the European Empire  Union but will be seen in history as the first event.

So returning to the question of looking back on Europe from 2040 or 2050, or further in the future. Will the Wars of European Unification give way to the First European Civil War?

Here we look again at the American experience, in which the period of expansion between 1776 (independence from the United Kingdom) and 1850 pushed the boundaries of centralised power versus the power at the individual state level. Eventually, the issue of slavery, dressed up as a "States Rights" issue was to tear the country in half. Slavery was not the only issue, but underlying any of the other issues was the principal issue of a State's right to allow slavery.

The rich and industrial North was pushing for the elimination of slavery, while the poorer and less industrialised South required slavery to provide the labour for the large landholders, and through them provide the economic foundation to support the rest of the South. While the percentage of actual slave owners in the South was fairly low, and the number of slaves individually owned was low, there were enough major (and minor) slave owners whose personal and community economic structures would be upended by emancipation. 

In modern European terms, the South simply needed to modify their economies and introduce labour and capital policies similar to the North, and all would be good. (Being very clear, Slavery was a blight on the South and the United States as a whole, and remains, unfortunately, a blight on the world. The very practice of defence of slavery is evil).

The problem faced by the South was that there was no way that they could restructure their economies without major upheaval and economic dislocation. The South could not, and never did become an industrial society that continued to power the Northern states long after the Civil War.

With this history in mind, and a quick review of the current European economic situation, we find a similar situation (thankfully without slavery) of an industrial and "rich" North and a poorer South, bound by a common currency and a central power authority that favours and indeed is directed by the North.

Greece has provided an example to all of how far the centre is willing to go to ensure that the rest of the South stays in line. And the Brexit fiasco provides additional evidence of the centre's willingness, and intention, to punish any who think they have the right to make their own decisions.

This will work for some time. But for how long. And will the final pulling apart of the European Empire Union be peaceful, or like the United States, will a Civil War be fought in Europe, the Centre against the East and South?

If the Wars of European Unification are anything to go by, we already know how the sides will be drawn, with the big difference this time being that the "Central Powers" of Germany and Austria may well include a new "Central" of France and the Benelux countries.

How soon might this happen? It is hard to say, but the rhetoric out of Brussels and outright hostility to (and from) the Eastern members suggests that it may be years and not decades away. While the Treaty of Lisbon contains the now famous Article 50, the defection of multiple countries and the very visible shrinking of the European Empire Union may be more than the centre will allow. 

29 August 2018

With Greece, “Europe” has nothing to be proud of

So Greece has exited the bailout. Wonderful. Great. Fantastic. I guess this means that the Germans have squeezed all the blood they, and their French puppets, can from that stone. The numbers of Greeks that will have died as a direct result of the “austerity” that was imposed on Greece will never be known, but that number will be dwarfed by the numbers of Greeks that have had to flee their country in search of work, only to become the highly educated baristas and shop and factory workers of Europe.

We can argue that Greece should never have taken the loans, and that indeed they should be paid back. That’s what you do with loans. 

A stronger argument is that those who made the loans should also be culpable, knowing as they did that Greece could never repay the loans, and knowing that they would push the default and pain onto others (the Greek people and/or European and international banks and through them to the shareholders of those banks). Equally culpable are the handful of Greece politicians and functionaries who aims to profit by continued electoral victory and control of the government, and by personal wealth from their part in the scamming of the Greek nation.

Just as there were those in the communities persecuted by the Nazis who collaborated for whatever reason, so there were Greek government officials and politicians who collaborated with the German and European banks to take loans that they knew could never be repaid.

Yet it is the behaviour of the various European players once the loans were made that shows the perfidy of the “European”, and their willingness to see other European children and elderly die for profit, and to see an entire generation without work. 

Germany, the ECB, IMF and we cannot forget the French banks (and others) have acted as the loan-sharks of “Europe” happily destroying one of their own “family” for profit. 
Further evidence of the impact on Greece from the austerity programme comes from a Bank of Greece report from 2016.

“The report of the Governor of the Bank of Greece reckons surveys conducted by Greek Statistic Authorities (ELSTAT) and according to which:
  • a significant increase of 24.2% of people aged 15+ suffering from chronic health problem or chronic disease.
  •  increase of more than 15% of people who limited their activities due to health problems in 2014.
  • percentage of low-weight (below 2.5 kg) births increased by 19% in 2008-2010, and that this is associated with long-term negative effects on the health and the development of children.
Citing OECD data of 2013, the BoG underlines that 79% of the population in Greece was not covered with insurance and therefore without medical and medicine due to long-term unemployment, while self-employed could not afford to pay their social contributions.”

A January 1st, 2017 article in the Guardian makes the impact clear. “Figures released by the European Centre for Disease Prevention and Control recently revealed that about 10% of patients in Greece were at risk of developing potentially fatal hospital infections, with an estimated 3,000 deaths attributed to them.”

And so Germany profits from dead Greeks, and the French support their overlords, to ensure the security of their own banks.

Meanwhile, the rest of Europe bumbles along, hoping that one day the Germans will “share” some of the wealth that they continue to accumulate, to the detriment of the rest of Europe. On the German side, one wonders if they worry that one day the rest of Europe will say “enough is enough” and either leave the Eurozone or demand that Germany begin to contribute to the parts of Europe that pay for their current account surplus.

Source Wikipedia
One chart shows clearly the situation in Europe today, and why the Eurozone is in such danger. It is not the debt of Greece, or the bailouts for German and French banks and the ECB, it is the current account surpluses and deficits across Europe.

Without Europe to and the Euro to “level” costs and prices across Europe, the German Deutschmark would be so overvalued as compared with other European currencies. The Euro ensures that Germany is “cheap” while removing the options or ability for European competitors to adjust their costs and pricing via free-floating currencies appropriate to their monetary policies.

Greece stands out in the chart, with the massive drain in the early years of the century, with artificially low prices for imports and easy credit, much of which is reflected in the net Current Account surplus in Germany.

Now that Greece is officially out of the bailout, it is time for Greece to regain control of its currency, and of its future. The New Drachma is needed, and a Grexit a must for the future of Greece. It may also be the only action that can save Europe from Germany, if only by showing Germany just how important it is that they "share the wealth" or risk their own economy.

08 January 2018

Is the EU just Yugoslavia on a massive scale?

1.      Introduction

The 28 countries (soon to be 27) of the EU vary considerably in their economics, religion (or lack of), languages and national characters. Originally the creation of the EU was midwifed by the US after WWII, driven by a need to ensure both a “western” democratic, peaceful Europe, and common bulwark against the Soviet Union that their desire to create their own strategic depth. Following the fall of the Soviet Union, the EU grew to include former Easter European countries and consolidated membership on the Med with the inclusion of Greece. Overlaying everything was the introduction of the Euro in 2000; the common currency that now exposes the fundamental economic fragility of the entire European experiment. Meanwhile other pressures expose the centre's determination to impose their culture and cultural priorities on member nations.

All this bares a more than passing resemblance to Yugoslavia, formed out of the ashes of WWI, with Balkan enemies forced into a single national entity and economy with a faux common history, common currency and a similarly non-democratic central government. Yugoslavia was then reformed into a single country after WWII. Unfortunately, Yugoslavia was held together not by a common democratic system with open and free elections, but by a single party that exercised coercive control over a number of national groups, with central control in the hands of one national-ethnic group, the Serbians.

Equally unfortunately, the EU is being held together by a non-democratic system dominated by a single national / ethnic group that exercises coercive power over the economic and political activity of member nations. Perhaps the major difference, other than sheer size, between the two is leadership of Europe by a finance-dominated technocracy instead of a political party.

Further, the pressures of Brexit may well contribute to individual countries attempting to negotiate with the UK to cement their own best interests, to the detriment of the rest of the EU. President Macron of France has this week warned that such individual dealing may result in a “prisoners’ dilemma” problem, potentially splitting the EU. [1]

We must hope that when the inevitable breakup happens, what follows is a Slovenian divorce trajectory and not the Bosnian. The only realistic alternative will be a civil war of consolidation of European power in the hands of a single dominating ethnic group, with the potential for a result more similar to Syrian history of aligned ethic, clan and tribal groups under a dominant ethnic - tribal group. That didn't work out too well when exposed to external interference after the "Arab Spring".

That, after all, is what happened twice in the past century, resulting the 50 – 100 million deaths in those “World Wars”. [2]

So our resulting options are Slovenian or Bosnian in nature; individual national independence with the acceptance of the centre, or a bloody civil war designed to change the “reality” on the ground through the imposition of ethnic and cultural domination.

We’ve been down this road already, twice. I hope Europe and its constituent parts will take that former. My fervent hope is that the EU will find a way through. My fear is it might not.

2.      Forced Friends

After two twentieth century wars for central European domination, Germany and surrounding nations lay in waste. As the perpetrator of the wars, the Morgenthau Plan of 1944 was to create an agrarian Germany that would never again have the industrial might to create and field an army strong enough to dominate Europe. Roosevelt himself wrote "Too many people here and in England hold the view that the German people as a whole are not responsible for what has taken place – that only a few Nazis are responsible. That unfortunately is not based on fact. The German people must have it driven home to them that the whole nation has been engaged in a lawless conspiracy against the decencies of modern civilization."[3]

This plan was never going to survive the realities of post-war Europe, and the need initially to feed and rebuild, and ultimately to face down the Soviet Union. And in Western Europe there was only one industrial power. As Yannis Varoufakis points out in his book "And the Weak Suffer What They Must?", even at the end of the Second World War in April 1945, defeated Germany still had over double the factory capacity of France.

And so while Germany was forgiven for the war (including 70% of its debt) in order to become the industrial bulwark against communism, the rest of Europe was required to play along, pretending that is was just a few strange creatures called “Nazis” that perpetrated war and destruction across Western and Eastern Europe, deep into European Asia and across the Mediterranean. France was none too pleased, as the initial stages of what became the EU started specifically in order to enable Germany to rebuild its industrial base while (hopefully) limiting the ability or need for Germany to convert that industrial based into a war machine, again. France and the Benelux (Belgium, Netherlands, and Luxembourg) countries had little option but to attempt to contain Germany, just as the Americans used Germany to help contain the USSR. German containment took the form of NATO and the economic links that lead to a strong Deutsche Mark and eventually to a strong Euro. Yet the source of the strong Deutsche Mark was the economic disparity between Germany and the rest of Europe, a disparity that exists today.

Fundamentally then, the EU began as an economic union in which former adversaries were cajoled into merging interest to the ultimate benefit of all (or so the theory) with the immediate and lasting greater benefit to one - Germany. Friends they pretend to be, but memories are still there on one side, and while forgiveness may be official, forgetfulness and re-framing is the rule. Crimes against occupied countries and peoples were committed by "Nazis" not by Germans. To this day it is almost impossible to find a German whose father or grandfather was a Nazi, or who committed war crimes. In the formerly occupied countries, people today remember growing up sitting on their grandmother's lap, hearing tales of the occupation.

These memories do not disappear when those that went through the occupation die, these are the memories that forever undermine the politically and socially appropriate forgetfulness required for countries and peoples to work together.

The treatment of Greece by the German Finance Ministry and the ECB (not to mention the IMF, etc) has done little to encourage forgetfulness or forgiveness. The forgiveness of German debt after multiple aggressions still burns Greece, as German (and to be fair, French and other) major banks and national institutions gouge the pitiful remaining Euros out of Greece to protect their non-Greek shareholders and governments.

While Greece is probably the most visible example of how the EU is failing Europeans, there are other examples across the continent. These range from economc disadvantage, cultural suppression, loss of legal sovereignty, and the imposition of demographic choices opposed by the individual member countries.

3.      Yugoslav breakup

It is important to remember that Yugoslavia was a multi-ethic "republic" and an economic union, forged out of the First and then again out of the Second World Wars. So in many ways Yugoslavia provides a model of the EU, including multi-generational cultural integration and an enforced political as well as economic union. Yugoslavia was also an economically successful country, certainly when compared to the rest of the Warsaw Pact and other Socialist countries.

So why did Yugoslavia fail?

While there were a number of contributory causes, the death of Josip Broz Tito in 1980 began a long process of dis-union and resurgence of nationalism, driven in no small part by each of the constituent national groups losing faith in a centre dominated by one of the nationalities; the Serbians. With its capital in Belgrade, it was always natural that Serbia would be the dominant nationality.

Yet Yugoslavia had come through a period of significant market liberalisation and economic growth, and had, in large part, achieved reasonable and consistent GDP growth through increase international trade. Unfortunately that liberalisation stagnated due in part to internal demands of additional democracy in Croatia.

In his paper "Socialist Growth Revisited: Insights from Yugoslavia", Leonard Kukić demonstrates that Yugoslavia was able to demonstrate considerable economic growth through the 1960s and 1970, but were unable to continue that growth into the 1980s.

"Given their capacity to embark on radical reforms during the early years, how come Yugoslavs were unable to reform their economy later on? Policy makers were aware of remedies, but politics got into way. Duˇsan Bilandˇzi´, a historian and a politician, reports in his memoirs that in 1970 the Central Committee of the CPY accepted draft proposals aimed at liberalising capital markets and entry of firms (Bilandˇzi´c, 2006). The aim of these policies was to diminish or eliminate the apparent labour distortions. However, these policies were abandoned with the flaring of political and ethnic tensions by the 1971 calls for democracy in Croatia, a member republic of Yugoslavia.

The inability of Yugoslavia to cope with the 1979 oil shock was compounded by a major domestic shock. The lifelong president of Yugoslavia, Tito, died in 1980. He was replaced by an ineffectual collective presidency containing nine members. They lacked political capital to pursue planned reforms."[4]

The breakup of Yugoslavia and the following civil war is frequently "blamed" on the Serbians and their attempts to create an ethnically cleansed territory that included major portions of Bosnia. Ultimately Slobodan Milosevic was convicted of war crimes in The Hague, and died in prison. Numerous other Serbians have been tried and convicted, as have Croatians and others.

It is also worth remembering that there was a history of inter-communal violence on a massive scale during WWII in particular, with the Croatians Ustaše responsible for the deaths of hundreds of thousands, and had the goal of an ethnically pure Croatia. While we (now) think of the Serbians and the primary culprits, they look to a long history of being the underdog, fighting to protect their culture and society.

So the lack of strong central government, faltering economic performance, long memories, rejection of a centrally imposed mono-culture, and rising nationalism worked together to doom Yugoslavia.

4.      Next for Europe

Probably the single largest difference between Yugoslavia and the EU today is the lack of large scale inflows of economic migrants (politically correctly labelled "refugees") from Africa and war-torn Middle-Eastern countries. This influx, aided and abetted by EU member countries public comments and demonstrations of welcome or at least acceptance on arrive, has created a new dynamic not present in Yugoslavia prior to its breakup; an imposed external cultural disruption seemingly imposed by the central government, in this case the EU with its mandatory quotas imposed on member countries.

The issue is not immigrants, as the Open Boarders policy has facilitated the flow of Europeans between countries for almost two decades. The issue is the forfeiture of national sovereignty, with the illegal immigration issue providing the highly visible demonstration of such forfeiture. It has been too easy to label Europeans as racist for opposing illegal migration, yet to do so sweeps under the carpet the far wider range of issues that are associated with centralised determination of individual cultures, nation-level priorities, and the ability of the dominant participants to override the desires of local peoples and communities.

Below are a few of the strains facing Europe in the form of specific country tensions with the EU. These are not the only tensions, and while none of these may be the spark, quite possibly one of them could.

5.      The Precarious State of the EU: Other pressures

The United Kingdom is by far not the only European country or region that is experiencing problems in the relationship with Brussels. The European experiment continues, and at its heart remains a struggle between demands for regional and national sovereignty, and the desire for a continued concentration of power in the centre. How this will end remains an open question, the experience of the UK is only one example of the stresses that Brussels is experiencing, some of which challenge the current nation-states that make up Europe, while others challenge the very concept of a single unified Europe.

The following are five (only) specific examples of the ongoing stresses on the European Experiment. These will not go away quickly, and some threaten the very cohesion and assumption of an "Ever Greater Union" as demanded by Brussels and the European Commission. There are a number of other examples of stresses, and we will watch these evolve over the coming months and years.

5.1.   Catalonia

On October 27th, the Catalonia Parliament declared independence.  This was foreshadowed by the family of the Catalan president (Carles Puigdemont) leaving the country the day before. How Europe and the EU respond over the coming weeks and months will impact the viability and future of the EU and the European Commission. It is no surprise that the UK has rejected any suggestion that it should recognise Catalonia, for to do so would undermine any hope of a successful Brexit negotiation.

After arrests and (gentle) suppression, new elections were held in December 2017. Voter turnout was high, at around 80% of eligible voters, and the pro-independence parties won.

The mess in Catalonia will not be getting better any time soon, and it was the Spanish Government's fear of contagion that resulted in the strong and immediate rejection of any Scottish dreams of joining the EU as a separate country. That contagion appears to have come to fruition, after decades of perceived grievances by both sides, and a not-fully forgotten legacy of the Franco era.

With the referendum, Article 155 of the Spanish government, and now a renewed electoral mandate for independence, we can only watch and hope that this does not become the European Union's first fully fledged civil war. Regardless of the outcome, this cannot and will not remain a Spanish problem.

5.2.   Austria

The recent elections in Austria should not come as a shock, as there has been a growing backlash against centralised Brussels control and usurpation of national priorities, with the immigration crisis providing the catalyst for demands for greater local authority. Yet the Austrian People's Party, the conservative party founded in 1945, instead of running in second place, finds itself with the highest percentage of the vote and number of seats, and with the ability to go into coalition with the right wing party, the Freedom Party of Austria.

"Austria became the latest European country to take a sharp turn right on Sunday, with the conservative People's Party riding a hard-line position on immigration to victory in national elections and likely to form a government with a nationalist party that has long advocated for an even tougher stance."[5]

"If there's one topic that really dominated the campaign, its migration and integration," said Sylvia Kritzinger, a political analyst at the University of Vienna. "Especially with Kurz, it always came back to immigration. We had very little discussion of the issues beyond that."

For most of the past two years, these two conservative parties have polled at a combined greater than 50% support, and the snap election called this year has created the opportunity for these two to rule without the need for centrist or left-of-centre support.

Should the new government in Vienna actually follow through on their platform, they will quickly find themselves in the same situation as Poland, potentially having their voting rights restricted, or more.

5.3.   Poland

Poland is not alone in its desire for full EU membership on its own terms, and recent Polish law has been in direct conflict with EU legislation and regulation. Poland's primary objective in joining the EU was freedom of movement and economic advantage, with an ultimate joining of the Eurozone. Security from Russian hegemony was achieved, they hope, by joining NATO. This was designed to balance against the need for, and to reinforce, the concept of collective defence.

Yet Poland is a profoundly conservative and Roman Catholic country now joined to a sectarian Europe. Recent Polish law has been in conflict with the EU to the point that Brussels has discussed sanctions against Poland. While there is no realistic chance that Poland would exit the EU, it may contribute to a paralysed Brussels unable the marshal the 27 votes required for almost anything.

As recently as August 2017, there were threats that Poland could lose its voting rights in Brussels. Such a move would not engender much support from other marginalised EU members.

"The fact that a European tribunal decision is rejected so arrogantly is evidence of something very dangerous in my opinion — it is an overt attempt to put Poland in conflict with the European Union," Tusk said. (EU President and former Polish Prime Minster)

Tusk noted that several actions of the Polish government appear to be "very controversial" and could risk the country's continued EU status. Brussels has already been considering triggering Article 7 of the EU treaty, a legal process which could suspend the country's voting rights.

"It smells like an introduction to an announcement that Poland does not need the European Union and that Poland is not needed for the EU," Tusk noted.[6] 

5.4.   Belgium

The two primary cultural groups in Belgium have a long history of working together, primarily because the country was created as an artificial buffer state between Germany and France in 1830. Roman Catholic Flanders and Roman Catholic Wallonia historically had less to fear from each other than from their Protestant or Anti-clerical peoples of the Netherlands and France. The second half of the 20th Century and the creation of the EEC reduced those external threats, and created the conditions for sectarian conflict. While Belgium is not going to collapse into civil war, it has been referred to as the "First Bosnia". [7] 
In 2010 Belgium managed to go for 541 days without a government, and the two regions continue to co-exist, but with continued moves to greater regional autonomy. This was after the 196 days without a government in 2007. [8] (https://en.wikipedia.org/wiki/2007%E2%80%9311_Belgian_political_crisis)

With Flanders contributing close to 80% of GDP while accounting for 65% of the population, a breakaway, or even a devolution that strips Wallonia of tax revenues, will force Brussels (EU, not Belgium) to face the prospect of a further long period of no-government in Belgium, or potentially a desire for full independence by Flanders.

5.5.   Czech Republic

And so, with 61% voter turnout, the Euro-sceptic oligarch Andrej Babis is to be the new Prime Minister of the Czech Republic. The October 20 election puts Mr Babis in line to form a new government.

"The 63-year-old made his estimated $4bn (£3bn) fortune in chemicals, food and media - but he has also faced numerous scandals including a fraud indictment and accusations he was a communist-era police agent. He says he would not bring the Czech Republic in to the Eurozone but he wants the country to stay in the EU, telling Reuters he would propose changes to the European Council on issues like food quality and a 'solution to migration'."[9] 

This represents a core EU member states that has turned from the even-closer union demanded of Brussels, making the "every closer union" appear to be more for a French, German, Dutch, and Belgian dream than an actual potential outcome for the foreseeable future.

6.      Slovenia or Bosnia?

With the stresses in Europe, and that disparity that has been caused by a semi-centralised union devoid of effective internal transfers, and therefore with countries unable to create balance through exchange rate management or regulatory discretion, pressures continue to build, ultimately to a breaking point.

If Germany, and to a lesser degree France also, radically changes their outlook and policies to be “Europe-first, then Germany” instead of “Deutschland über alles” then there is hope. The changes required would be at the political, economic and cultural level and would be so far reaching as to ensure the swift demise of any government that attempt to implement the needed changes. Therefore I hold out little hope that German will enable the changes needed to keep Europe together.

So our resulting options are Slovenian or Bosnian in nature; independence with the acceptance of the centre, or a bloody civil war designed to change the “reality” on the ground through the imposition of ethnic or cultural domination.

We’ve been down this road already, twice. I hope Europe and its constituent parts will take that former.



[1] http://www.telegraph.co.uk/news/2018/01/04/emmanuel-macron-warns-against-eu-splits-brexit-perils-prisoners/
[2] https://www.diffen.com/difference/World_War_I_vs_World_War_II
[3] https://en.wikipedia.org/wiki/Morgenthau_Plan
[4] http://personal.lse.ac.uk/KUKIC/Kukic_SocialistGrowthRevisited.pdf
[5] http://www.chicagotribune.com/news/nationworld/ct-austria-election-20171015-story.html
[6] https://www.cnbc.com/2017/08/04/tusk-poland-european-future-in-question.html
[7] https://orientalreview.org/2017/10/11/forget-catalonia-flanders-is-the-real-test-case-of-eu-separatism/
[8] https://en.wikipedia.org/wiki/2007%E2%80%9311_Belgian_political_crisis
[9] http://www.bbc.com/news/world-europe-41708844

11 January 2016

So what is some good news for 2016?



Well, that last posts of mine did seem a little grim, and I've been asked if there is any good news for 2016. Well, there is. It just won't sound like good news when you read this, but do dig in, and provide your thoughts on 2016.
For example, health sciences continue to progress at a rapid pace, with improvements across the board. Major advances in the diagnosis and treatment of Alzheimer’s for example, and remarkable treatments for cancer. It is well worth noting the comment by Louise Perkins, chief science officer for the Melanoma Research Alliance: "The options were far fewer even a year ago". "My most recent MRI brain scan did not reveal any signs of the original cancer spots nor any new ones," Mr Carter said in a statement.

In the civil war in Syria, and terrorism and the Islamic civil war (ISIS vs the Shi’a world), the entry of Russia to the fray gives real hope. After 4 years of civil war in Syria, backed by the bloodied hands of the West and Saudi Arabia, real progress is now being made. No longer are the waves of fuel trucks streaming from the oil fields of Iraq and Syria to the refineries and tankers of Turkey. This year we will see then end of the civil war in Syria, and not a moment too soon.

Of course, strangely, if the Saudis and the Iranian start throwing exploding things at each other, or a cyber-attack on Aramco is successful this time, then we could see a dramatic reduction in oil production, spiking oil prices, and counter-intuitively, greater economic growth in the West, and a resurgence of the Russian economy. It might even be enough of a bounce to counter the China slowdown. Who said wars are all bad? 

Hopefully while the Saudis and Iranian are throwing exploding things at each other, they will avoid throwing things that go "boom" at US ships in the Gulf. Recently Iran demonstrated that it certainly can, and that it can get close enough to US ships to possibly, if they really mean it, do some damage to those ships. That would not be a good thing to happen this year.

But back to how does that happen to oil, etc? Oil at $35/barrel results in uneconomic wells in North America and Russia (the ‘other’ largest producers) resulting in lost jobs, failing companies, and local economies in trouble throughout their economic supply and support chains. Boost the price of oil, and we will see more ‘domestically’ produced oil and with it booming communities.

We would also see a Saudi Arabia that will desperately need to focus on their own people and economy, instead of exporting terror through individuals supporting, financially, the likes of ISIS and various alternative Sunni terror groups. Saudi Arabia need an oil price of over $100 per barrel to break even. Can they really outlast the West? Even if they try, they will consume their financial reserves in the process, leaving behind a bankrupt desert country with no effective economy, and thousands of princes expecting their monthly subsidy. Things do not look good for Saudi Arabia.

2016 is also the year that Europe will start to fall apart. This won’t be a permanent falling about, but we will see Schengen put on hold. Only yesterday former French President Sarkozy said “Schengen is dead”. No more free flow of people without identification between countries in Europe, allowing for local security and reduction in terrorism. Radical Islam will be on the retreat in Europe, but expect to see a spasm of increased attacks earlier in the year. By the 3rd or 4th quarter, I fully expect Europe to be quieter. Migrants will not find open doors, and those that did get in will be forced, on threat of summary expulsion (forget going to Strasbourg for a legal pass) for almost any offense.

Further good news in Europe will be the Grexit, in which Greece finally adopts the New Drachma and exists the Eurozone. Good news? Absolutely. The only hope that Greece has of recovery is through debt forgiveness or restructuring into a new currency. Otherwise the Germans, the ECB and the IMF will continue to crush the Greek people, in no small part to prove to all others that they must comply, or else.

This will also be wonderful news for Democracy in Europe, a land that has forgotten that people can vote out those that have cheated them and on them, and they can repudiate the bribes accepted on their behalf. Yes, Greece needs to pay back its loans. Absolutely. But when there is no ‘moral hazard’ then there are not incentives for lenders to act prudently. Greece is guilty, but equally guilty are those that provided loans knowing that they wold never be repaid, and that the Greek people would be skinned of everything they have.

I think my summary would be that there is very good news also, but some of it will not look very good as it happens…