SIPTU stops short of calling for rejection

SIPTU has described the EU Permanent Austerity Treaty as the worst possible response to the economic crisis. In a grim warning the general president, Jack O’Connor, claimed it amounted to a contraction in the face of the “most serious recession since the 1930s.”

The treaty’s twin-pronged approach of cutting public spending and raising taxes, he predicted, would have a far-reaching effect on people’s lives. “It is hard to imagine a worse response to the challenge of recession and stagnation. It’s not about stimulating job creation through investment: it’s actually the reverse.”

O’Connor claimed that EU leaders’ talk of “restructuring” was code for the most savage assault on gains made by working people since the Second World War. “It’s about reducing pension provision, cutting public services, eroding people’s rights at work, and driving down the cost of labour.”

Trade unions have organised a wave of protests throughout Europe about the new Permanent Austerity Treaty over the past month. The day of action on 28 February publicised the “anti-social and anti-democratic” aspects of the treaty—part of a series of centrally driven austerity agreements endorsed by EU leaders.

The pressure increases for co-ordinated corporate tax

France and Germany have moved a step closer to a full fiscal union by announcing a harmonisation of their corporate tax rates by 2013. The proposals are “a first step towards more European coherence” and support the “Euro-Plus Pact,” setting out rules for economic and fiscal co-ordination, which not all member-states signed.

The move will join France and Germany in a single “aligned” rate of business tax, known as a common consolidated corporate tax base, as a prelude to its introduction throughout the EU—a development that Enda Kenny has described as hugely damaging for Ireland’s low-tax regime.

But it won’t be long now until his mettle is tested, as the “own resources” provisions of the Lisbon Treaty come home to roost. Just to remind readers, he promised “constructive engagement".

Austerity Bites: The poor get poorer - 115 million Europeans; 23 per cent of EU population

Recently released figures for 2010 show that 115 million Europeans, or 23 per cent of the EU population, live in households with less than the poverty threshold disposable income, in households where there is severe material deprivation (such as a lack of heating), or where the adults worked less than 20 per cent of their total work potential.

While 13 of the 25 member-states that provided information recorded an increase in the numbers affected when compared with 2009, Spain (23.4 per cent to 25.5 per cent) and Lithuania (29.5 per cent to 33.4 per cent) recorded the greatest leap from one year to the next.

The figures for deprivation were even higher among those under the age of seventeen, with 27 per cent of young people throughout the EU falling below the threshold.

In all, twenty countries recorded a higher rate of poverty and risk of social exclusion among young people than among the general population.

The poverty statistics come on top of unemployment statistics showing a record unemployment rate in the EU, with some 23 million people out of work.

Greek president rejects German interference

Relations between Germany and Greece, strained since the beginning of the economic crisis in 2009, appeared to reach a new low point amid the exchange of barbed comments between the two countries.

President Károlos Papoúlias was uncharacteristically blunt in his response to repeated criticism about the Greek economy and politics. He accused the German minister of finance, Wolfgang Schäuble, of making insulting comments, including the suggestion that Greece should not hold elections now, because its politicians are incapable of keeping to the terms of a new bail-out. “We all have a duty to work hard to get through this crisis,” he said during a visit to the Ministry of Defence. “I will not accept Mr Schäuble insulting my country. I don’t accept this as a Greek.

“Who is Mr Schäuble to insult Greece? Who are the Dutch? Who are the Finns? We always had the pride to defend not only our own freedom, not only our own country, but the freedom of Europe.”

The comment that appears to have sparked Papoúlias’s response was a suggestion by Schäuble that Greece should follow Italy’s example by forming a “technocratic” government. He also cast aspersions on the record of Greek politicians in the past.

“After [the technocrats have completed their work] the democratic process can resume with the effects that we have all seen over the last few decades.”

Fianna Fáil returns from Damascus

Fidelma strikes back...

Senator Mark Daly (Fianna Fáil):

Ireland and the EU have a democratic deficit. The direction the EU is taking is not democratic in nature. Since the failure of the euro started, we have seen that it was designed to fail. According to many commentators, it was not structured correctly. The new EU structures being put in place are also designed to fail. They lack consultation with—

Senator Fidelma Healy Eames (Fine Gael):

The senator is living in his own world.

Senator Daly:

If Senator Healy Eames believes that Europe is democratic in nature while the Germans and French dictate to everyone how it should be run, she is the one who is not living in the real world.

A very late conversion for Fianna Fáil!

Septic tanks?

The European Commission is proposing for the first time to regulate pharmaceutical pollutants in surface water, citing their potential hazard to humans and aquatic life.

Three pharmaceutical substances—including those found in oral contraceptives and hormone medicines—are among the fifteen chemicals the Commission proposes to add to those regulated in EU member-states.

Israel to demolish EU-funded renewable

8Six EU-funded wind and solar energy projects that provide electricity for six hundred West Bank Palestinians have been put on a “demolition list” by Israel, allegedly in response to a report by an EU mission that called for laws to prevent the financing of illegal settlements.

West Bank project managers say the “stop work” orders served against the projects are “a first step to almost automatic demolition.”

Elad Orian, a joint founder of Comet-ME, which oversaw the renewables project, said that four hundred people would be left completely without electricity if the demolition went ahead.

“The people will be left without light or the ability to charge cellphones [mobile phones], which is the only means of communication there.”

The project, supported by Comet-ME and the German group Medico International, built a total of fifteen solar plants and hybrid systems for electrifying villages with a combined population of some 1,500 people.

Area C is a canton under full Israeli control, comprising some 60 per cent of the West Bank and—beyond the West Bank Wall—all of Israel’s settlements, which are considered illegal under international law. Palestinians need permits to build in this region, but a study by the Israeli group Peace Now found that, between 2000 and 2007, 94 per cent of their applications were turned down.

The region, spanning the Dead Sea, Judaean Desert and Jordan Valley, is underdeveloped and the German Foreign Office provided approximately €300,000 for the six hybrid wind and solar energy projects, which serve poor villages in the South Hebron Hills.



Real pay per employee (2000 = 100)
Source: Ameco database.


Some EU diplomats, and many nongovernmental groups, see a link in the timing with a confidential report by the EU’s regional diplomats into the building of settlements and the demolition of houses in Area C. It called on the Commission to draft legislation “to prevent/discourage financial transactions in support of settlement activity.”

Less than two weeks after the report was leaked, notices were served on clean-energy projects in Haribat al-Nabi, Shaab al-Butum, Qawawis, and Wadi al-Shesh.

The German role in the euro-zone crisis

The Economic and Monetary Union that Ireland signed up to under the Maastricht Treaty (1992) and Lisbon Treaty (2009) assumed that the deficit rules of 3 per cent and 60 per cent of GDP for every euro-zone state would be complied with and enforced by means of sanctions that are set out in those treaties.

When Germany and France broke these rules in 2003, the EU treaty sanctions were not applied against them, and they were effectually dropped for everyone else.

Now Germany and France are using the present euro-zone crisis to set about increasing their political sway over the euro zone by changing the whole basis of the Economic and Monetary Union that Ireland signed up to by establishing a permanent €500 billion so-called European Stability Mechanism bail-out fund, surrounded by a framework of controls over national budgetary policy, including a permanent balanced-budget rule (0.5 per cent deficit rule) proposed in the Fiscal Compact Treaty.

Remember that, under the Lisbon Treaty, in two years’ time Germany’s vote in making EU laws, as well as voting in euro-zone matters will double, from its present 8 per cent to 16 per cent, while that of France and Italy will go up from 8 to 12 per cent.

And Ireland’s vote? Cut by half, to 1 per cent.

But what about the German economic model?

Here is a typical portrayal, by Martin Hart-Landsberg at www.spectrezine.org:

As growing numbers of countries face renewed austerity pressures, there is a tendency to explain the trend by searching for specific policy failures in each country rather than considering broader structural dynamics.

Key to the credibility of those who argue for a focus on national decisions is the existence of countries that people believe are performing well. Thus, the argument goes, if only policy makers followed best practices their people wouldn’t find themselves in such a bad place. Recently, German has become one of these model countries.

Here is a typical framing of the German experience:

At a time when unemployment rates in France, Italy, the UK, and the US are stuck around 8%–9%, many are turning to the apparent miracle in the German labor market in search of lessons. In 2008–09, German GDP plummeted 6.6% from peak to trough, yet joblessness rose only 0.5 percentage points before resuming a downward trend, and employment fell only 0.5%. In August 2011, the standardized unemployment rate was about 6.5%, the lowest since the post-reunification boom of 20 years ago.

In other words, Germany seems to be doing things right. Despite suffering a deep decline it actually enjoyed a lower unemployment rate. So, how did it do it? Often cited are recent German policies which have increased labour market flexibility.

But are these the best practices that should be adopted elsewhere? One way to answer that question is to look at what these changes have meant to German workers.

A Reuters report concluded: “Job growth in Germany has been especially strong for low wage and temporary agency employment because of deregulation and the promotion of flexible, low-income, state-subsidised so-called ‘mini-jobs’.”

The number of full-time workers on low wages—sometimes defined as less than two thirds of middle income—rose by 13.5% to 4.3 million between 2005 and 2010, three times faster than other employment, according to the Labour Office.

Jobs at temporary work agencies reached a record high in 2011 of 910,000—triple the number from 2002 when Berlin started deregulating the temp sector . . .

Data from the Organization for Economic Cooperation and Development shows low-wage employment accounts for 20% of full-time jobs in Germany compared to 8.0% in Italy and 13.5% in Greece . . .

One out of five jobs is a now a “mini-job,” earning workers a maximum 400 euros a month tax-free. For nearly 5 million, this is their main job, requiring steep publicly-funded top-ups.

“Regular full-time jobs are being split up into mini-jobs,” said Holger Bonin of the Mannheim-based ZEW think tank.

And there is little to stop employers paying “mini-jobbers” low hourly wages given they know the government will top them up and there is no legal minimum wage.

As the New York Times astutely reported,

But hidden behind the so-called German economic miracle is an underclass of low-paid employees whose incomes have benefited little from the country’s stability and in fact have shrunk in real terms over the last decade, according to recent data.

And because of government policies intended to keep wages low to discourage outsourcing and encourage skills training, the incomes of these workers are not likely to rise anytime soon.

That, in turn, means they are likely to continue to depend on government aid programs to make ends meet, costing taxpayers billions of euros a year.

The paradox of a rising tide that does not lift all boats stems in part from the fact that Germany has no federally set minimum wage. But it also has its roots in recent German politics, which have favoured measures to keep unemployment low and win support from employers . . .

The Confederation of German Employers’ Associations says the introduction of a minimum wage would push up labour costs and lead to more unemployment. Jobs would simply move out of Germany and to Eastern Europe or Asia.

An ILO report, Global Employment Trends, 2012, shows the connection between these policies and the euro-zone crisis.

For they have not only taken a toll on German workers, they have also greatly contributed to the crisis in Europe. The low wages and insecure employment conditions have enabled German employers to boost exports and limited imports.

The ILO report concludes:

The rising competitiveness of German exporters has increasingly been identified as the structural cause underlying the recent difficulties in the Euro area. Crisis countries had not been able to export enough of their goods to Germany as domestic demand there was not strong enough because of low wages. 

German policies to keep down wages had created conditions for a prolonged slump in Europe as other nations on the continent increasingly saw only even harsher wage deflation as a solution to their lack of competitiveness.

The report called on Germany to enact swift changes.

“An end to a low-wage policy would create positive spill-over effects to the rest of Europe and restore a more equitable income distribution . . . An end to a low-wage policy would create positive spillover effects to the rest of Europe and restore a more equitable income distribution.”

As the chart shows, German wages have been stagnating for more than a decade. No wonder Germany has been exporting so successfully and other countries in Europe have found it difficult to compete.

While German politicians blame these other countries for their problems, the fact is that German growth has depended on the high consumption and borrowing in those other countries.

Kenny, Gilmore, and a referendum

Enda Kenny and his cronies would do well to tell the truth about the EU Permanent Austerity Treaty. The Taoiseach and his mates deny that the pact was crafted to minimise the prospect of a referendum in Ireland. That is exactly what happened, however, and it is no secret at all in Brussels, where the treaty was written.

Parts of the pact were explicitly drafted to give Kenny a chance of avoiding a vote on it. An EU official quoted in the Irish Independent accepted that the matter was likely to go to the Supreme Court but said the EU authorities hoped there would be no referendum, as many voters would relish an opportunity to inflict a bloody nose on the Government and the EU over their austerity and pro-bondholder bail-out policies.

Kenny insisted that Irish negotiators were not told to circumvent the risk of a vote and were given a mandate to maximise Ireland’s interests in the talks. But think about the damage that would be done to Kenny if there was a referendum and it was rejected. He would be hugely diminished—domestically and internationally—and questions would be asked about his ability to plough on with the EU-IMF programme, which Eurocrats hope will deliver a badly needed success for their cruel austerity policy.

So there is every reason to believe that the authorities would tinker with the text of the treaty to make an Irish vote less likely.

And what about the comment made by Éamon Gilmore that the provisions of the treaty had no “appropriate” place in the Constitution of Ireland? If that is a legitimate argument to make before an Oireachtas committee, is it not equally legitimate to make it in an EU negotiating forum?

And was it made? Somehow it echoes Gilmore’s claim that there would not be another referendum following the first rejection of the Lisbon Treaty!

Well, there’s a pair of them in it; but remember what happened to Fianna Fáil! There are big changes ahead, and those who are honest with the electorate, uphold their interests and enhance the sovereignty of the people will be the ones to benefit.

Irish spooks up to their necks in it

"Deep in the EU undergrowth..."

...since it has quietly signed up to the Justice and Home Affairs section of the Lisbon Treaty, where it enjoyed a temporary opt-out, Ireland is engaged in discussions on a wide range of “security” issues with a potentially huge effect on civil rights and individual liberties.

The opt-out meant that this hugely important part of the treaty remained below the radar during the referendum debates, but...

....measures designed to combat terrorism and crime and to protect the EU from “natural and man-made disasters,” even “traffic accidents,” are featured on the agenda of a myriad of committees of unaccountable officials.

Their work is revealed in a series of classified EU documents, littered with acronyms, reflecting the large number of proposals designed to strengthen links between the security and intelligence agencies of EU member-states...

One document, “Draft working method for closer cooperation and coordination in the field of EU security,” was sent by the presidency of the EU Council, a post then held by Hungary, to the Standing Committee on Operational Cooperation on Internal Security. It refers to “calls for closer cooperation between the fields of the common foreign and security policy and the area of freedom, security, and justice.”

After mentioning moves to “enhance links between the internal and external aspects of counter-terrorism,” the document states: “It is important to note that effective and timely coordination between the competent authorities at national level and cooperation with the relevant actors at EU level are of critical importance to building close relations between the external and internal aspects of EU security.”

Included among “possible areas of cooperation in the field of EU security” are “the proliferation of weapons of mass destruction,” “terrorism,” “organised crime, including cross-border crime and illicit trafficking,” “cyber-security,” “energy security,” and “climate change.”

Another classified document from the Crisis Management and Planning Department for the Political and Security Committee discusses strengthening ties between the common security and defence policy and the area of “freedom, security, and justice.” Entitled “Elements of a draft road map,” it refers to the EU’s little-known Political and Security Committee drawing up plans for “comprehensive situational awareness and intelligence support” and “improving cooperation in planned EU external action.”

Other documents refer to “informal networks,” a “joint situation centre” designed to promote cooperation between EU spooks, “road maps,” and “inter-institutional information meetings.”

A list of initials and acronyms copied into one document illustrates the plethora of committees relating to “security” and intelligence spawned by the EU. They include JAI, COSI, COPS, CIVCOM, PESC, RELEX, JAIEX, ENFOPOL, COTER, and PROCIV.

The documents were leaked to Statewatch, a British charity that monitors threats to civil liberties throughout the European Union. They reveal a patchwork of committees that may appear on the surface to be little more than an attempt at European bureaucratic empire-building. Their significance, however, is much greater than that, as this secretive network is concerned with security, intelligence, and law enforcement—issues of vital concern to EU citizens.

Tony Bunyan, editor of Statewatch, pointed out that “a whole new panoply of working parties and informal groups is mushrooming in the field of EU external security.” He added that the European External Action Service, headed by Catherine Ashton, was pushing for EU agencies to operate outside Europe on such issues as gathering intelligence and personal data as well as distributing personal information throughout the EU...

"These practices would go far beyond the remits laid down in EU law. Crucial documents are not publicly available," and there is no mechanism for parliamentary accountability at the national or the EU level; and it would more than optimistic to expect that Alan Shatter might break the veil of secrecy!

http://www.guardian.co.uk/news/defence-and-security-blog/2012/jan/24/eu-intelligence-security

"How can one speak of default in future tense when we’re already bankrupt?"

Greece saved for an uncertain fate!

How can one speak of default in the future tense when we’re already bankrupt? . . . Don’t you see the people scouring through refuse and sleeping on pavements? Those who led us to bankruptcy—the troika and the government—now claim they want to save us from bankruptcy. It’s incredible!”

—Míkis Theodorákis, Greek composer and songwriter.

If Greece’s latest €130 billion loan was to be used for fiscal stimulus, it might be worth the commitment. Because that kind of money could put a lot of people back to work and kick-start the economy fast.

But the loan isn’t going to be used for stimulus. It’s going to be used to recapitalise the banks and pay off creditors, neither of which will do anything to boost activity or create jobs.

So, why bother? Why dig an even deeper hole if it achieves nothing?

If that’s the case, Greece should just default now and begin rebuilding the economy ASAP. There’s no point in putting it off any longer.

The “troika” (European Central Bank, European Union, and International Monetary Fund) demanded another €3 billion in spending cuts, even though unemployment is tipping 20 per cent and the economy shrank by 7 per cent in the last quarter.

What sense does that make? You don’t have to be a genius to see that Greece won’t reach its budget targets if tax revenue continues to fall, because everyone’s either been sacked or taking a pay cut.

It will just make a bad situation even worse. But the troika doesn’t worry about these types of things.

They don’t care that their economic theories have failed miserably so far, or that their “austerity” measures have been a complete flop.

They just keep plugging along, making the same mistakes over and over again, impervious to the criticism of reputable economists, oblivious to the abysmal results.

They remain steadfast in their commitment to belt-tightening, convinced that a strict diet of breadcrumbs and water is the best way to nurse an ailing economy back to health. It doesn’t bother them that the facts prove otherwise.

The Fitch ratings agency isn’t convinced that austerity will work; in fact it lowered Greece’s rating, saying that they now think a default is “highly likely.”

Similarly, a “confidential report” that was given to euro-zone finance ministers suggests that there’s a high probability that the slump in Greece will get worse and that the country’s debt-to-GDP ratio will still be 160 per cent by 2020, a full decade after the implementation of austerity measures.

So even if Greece sticks with the hairshirts and follows the troika’s diktats to the letter, its debt could still be at “unsustainable” levels eight years from today.

Why? An article in the high-circulation German weekly Der Spiegel puts it clearly:

Of course, the €130 billion would not solve the problem. It is only intended to buy time. Time until the financial markets have stabilised to the extent that they can handle the actual bankruptcy of Greece without a chain reaction. Without bank failures, no knock-on effects through the loss of credit insurance and no interest for the remaining problem of explosion of the Euro-zone countries.

They’re all heart!

Here we go! Next stop NATO

Irish soldiers are participating in an Austro-German battle group, beginning on 1 July. There are 175 personnel involved, and they will be on standby at Cathal Brugha Barracks, Dublin.

The Dáil will be asked to approve a memorandum of understanding covering Ireland’s participation. The memorandum will be between Germany, Austria, the Czech Republic, Ireland, Croatia and the former Yugoslav republic of Macedonia and will set out principles in relation to the operation, deployment and management of the battle group. It defines Germany as the framework state and Austria as the logistic lead state.

The standby costs are €380,000, and the estimated additional cost for a maximum 120-day deployment of the group is €10.7 million.

The purpose of the EU battle groups is to undertake operations as outlined in the Amsterdam treaty —the Treaty on European Union. These operations, known as the Petersberg Tasks, include tasks of combat forces in crisis management, including peacemaking. In the Lisbon Treaty these tasks were expanded to include joint disarmament operations, military advice and assistance tasks, conflict prevention, and post-conflict stabilisation.

In the words of Alan Shatter, “Ireland’s active engagement in EU battle groups enhances our capacity to influence the ongoing development and evolution of the rapid-response capacity of the EU.”

So much for our policy of neutrality!