From Volume 5, Issue Number 39 of EIR Online, Published Sept. 26, 2006

Western European News Digest

Chirac Says Negotiate with Iran Unconditionally

French President Jacques Chirac seemed to break ranks when he stated that an agenda should be set for negotiations with Iran over its nuclear program, negotiations should proceed, and only in the course of those talks, should the issue of uranium enrichment be addressed. Chirac stated: "During that negotiation, I propose that, on the one hand, the six [the 5+1, the five UN Security Council permanent members plus Germany] refrain from referring the issue to the Security Council and that Iran renounce during the negotiation the enrichment of uranium."

"We can find solutions via dialogue," said Chirac, who about to leave for New York for the annual UN General Assembly which began Sept. 19. Meanwhile, President Bush's position is that Iran is stalling. "My concern is that, you know, they'll stall; they'll try to wait us out," Bush said. "So part of my objective in New York is to remind people that stalling shouldn't be allowed."

Chirac, in an interview with CNN, said: "There is a lot more potential to dialogue and I would like us to go the end of that particular road before we decide to go any further in any other direction. I very much hope that dialogue will get us out of this crisis and I believe it will." Chirac also referred to the Iraq war and said he was convinced that his objections to the U.S. push for war on Iraq were right. "I adopted a stance on Iraq and I have to say that the way things panned out, it certainly didn't go against the stance I took," Chirac said, adding, "What I said has been borne out and I remain very pessimistic about Iraq and its future."

Maastricht Austerity Contributes to Hungarian Tensions

Major riots broke out in Budapest last week, as a result of the broadcast of a confidential speech, which indicated that top officials had lied to the population during the election campaign, and had accomplished nothing during their stay in office. The speech, which was taped, was leaked by someone to Hungarian Radio.

The speech, by Prime Minister Ferenc Gyurcsany to his inner circle, had been given at the end of last May, shortly after the elections. Gyurcsany, who had just been elected for a second term, had told a closed-door meeting with the party leadership: "We lied to the public for four years. For four years the government did not do anything. There is not much which could be done to improve the situation, because we ruined it dramatically." In Europe there was no country which acted as stupidly as Hungary, he continued, and it was obvious that "what we said was not true."

In reaction to the broadcast, several thousand people demonstrated on Sunday evening Sept. 17 in Budapest. On Monday again, several thousand demonstrated in front of the Parliament and demanded that President Solyom dissolve it. From Monday night to Tuesday, the demonstrators marched to the building of the TV station, where a group of up to 100 right-wing ultra-nationalists provoked riots, attacking the police, storming the building, and setting cars on fire. One hundred fifty people were wounded during the riots.

Sources tell EIR that tensions are growing over the austerity measures which the Gyurszany government—which faces a 10% budget deficit—has announced, in an attempt to bring the deficit down to 3% in the next few years and to fulfill the notorious Maastricht convergence criteria. This includes tax increases, such as an increase of the value-added tax from 15 to 20%; a solidarity tax for enterprises; and a profit tax. In addition, 300,000 public service jobs are to be cut as well as cuts made in the health and education sector, and for pensioneers. (For more on the crisis in Hungary, and throughout Europe, see InDepth: "LaRouche Organizes a Dialogue for a New World Economic Order," by Helga Zepp-LaRouche.)

Hungarian Rioting Continues, Makes Headlines Across Europe

The Hungarian riots which continued in the night of Tuesday Sept. 19 and beyond, have become the front-page story in most of the European press. The events are characterized as the most dramatic social upheaval since 1989. The Financial Times Deutschland wrote Sept. 20 that the EU Commission fears that Hungary's "budget consolidation will be made more difficult." One of the EU Commission speakers is quoted having said, "The Commission is conscious about the fact that the measures for reducing the budget deficit are painful—but it is in the interest of the citizens that the deficit be reduced."

The financial markets also reacted. The Forint was devalued by 1% while the stock market lost 2%. S&P warned that Hungary may be downgraded again, from A to BBB+. Die Welt, in its lead editorial, compared the Hungarian situation to that in Mexico. Prime Minister Ferenc Gyurcsany gave a press conference and a speech on TV, in which he said that he absolutely will not resign, and that he is committed to continue with the reforms. It is reported that in 15 cities there are demonstrations, and that they are continuing. Under the country's constitution, President Solyom cannot call for new elections. If Guyrczany were to be removed, the call for his dismissal would, as commentators say, have to come from within his own party, by way of a vote of no confidence. The party, however, has given him full backing. Important to watch will be the upcoming Oct. 1 communal elections.

Russia Offers Hope to Hungary

As the Budapest riots continued, Prime Minister Gyurszany met with Russian President Vladimir Putin in Sochi, where Putin told Gyurszany that despite Hungary being member of the EU and NATO, Russia looks forward to improving cooperation with her. In the field of energy, Russia and Hungary are already working closely together. Given the difficulty which Hungarian farmers are facing with their products on the EU market, more exports of Hungarian agricultural products to Russia would be in the interest of Hungary.

Polish Coalition Collapses—Again

Parallel to the crisis in Hungary, the government coalition in Poland, which consists of PiS (Party of Law and Justice), tied to the Kaczynskis, Lepper's Samoobroona, and Giertych's Liga Polska, also broke apart. It happened as result of Prime Minister Jaroslaw Kaczynski firing Vice Prime Minister and Agricultural Minister Andrej Lepper from Samoobroona. The reason given was a major feud which had erupted among the coalition partners in recent days over the 2007 budget. Lepper not only wants more money for the peasants, but also demands more social expenditures and strictly opposes any major Polish troop deployment to Afghanistan which Jaroslaw Kaczynski had promised during his visit in the U.S.

The Polish zloty fell—like the Hungarian forint has in the last few days—as investors, who had poured billions into EU newcomers' assets, feared that there will not be convergence with the euro.

Prime Minister Kaczynski told a news conference that he will try to form a new government, and the backroom maneuvering is proceeding at a feverish pitch. If this maneuvering were to fail, then there would be new elections end of November. The background to the crisis in Poland is both economic but also geostrategic—given the attempt by U.S. Vice President Dick Cheney to pit Poland against Russia and Germany.

Germany Would Be Smashed by UN Sanctions Against Iran

The president of the Federation of German Wholesale and Foreign Trade Anton Boerner said that if there were sanctions against Iran, Germany would be pushed out of trade by India and China. The German Chamber of Commerce and Industry (DIHK) said that if there were sanctions, more than 10,000 Germans could lose their jobs. German exports to Iran, its largest market, ahead of the UAE and Saudi Arabia, were down 10% in the first half of 2006 compared to last year. German companies exported 4.4 billion euros worth to Iran, in industrial machinery, cars, steel, and chemical products. Fifty German firms have branch offices in Iran, and over 12,000 have trade representatives in the country.

In a certain sense, UN sanctions against Iran would be equivalent to trade war against Germany. One may suppose that the British are aware of that.

Intelligence Expert Debunks 'Liquid Explosives' Hoax

Lt.-Col. (ret) Nigel Wylde, former senior British Army Intelligence officer, who was awarded the Queen's Gallantry Medal for his command of the Belfast Explosive Ordinance Disposal Unit in 1974, recently said the liquid explosives threat featured in the August "terror plot" in Great Britain is a "fiction" and part of a "pattern of lies and deceit."

The idea that these people could sit in the airplane restroom and simply mix together normal household fluids to create a high explosive capable of blowing up the entire aircraft is untenable. So who came up with the idea that a bomb could be made onboard? Not al-Qaeda, for sure. It would not work. Bin Laden is interested in success, not deterrence by failure. This story has been blown out of all proportion, according to Wylde.

In order to create an explosion, the liquids would need to be carefully distilled at freezing temperatures, then mixed together, a process which produces significant amounts of heat, and vile fumes which "would be smelt by anybody in the area," he said. The whole process, would take between 12 and 36 hours, far longer than even the longest international flight.

If there had been a conspiracy, he said, "it did not involve manufacturing the explosives in the loo," as this simply "could not have worked." The question then remains, why was such an extreme response created to an alleged conspiracy which the authorities knew, or should have known, could not have worked?"

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