Western European News Digest

Grim Perspectives for German-Russian Relations

Oct. 15 (EIRNS)—Commenting on the Oct. 13-15 meeting of the St. Petersburg Dialogue between Russia and Germany, held in Wiesbaden, Germany, a former Russian diplomat told EIR, that the panel on politics was "awful, we cannot go on like this, we're not making any progress." EIR reporters who attended, added that the panels were pathetic compared to the Sept. 15-16 conference of the Schiller Institute, founded by Helga Zepp-LaRouche, which was entitled, "The Eurasian Land-Bridge Is Becoming a Reality!"

These comments reflect the decision of the German government and mass media to join the London-centered neocon black propaganda campaign against Russia and in particular, against President Vladimir Putin—a strategic flaw that will greatly damage German interests in the future. (See InDepth for "Third World War or New World Economic Order?" by Helga Zepp-LaRouche.)

Brits Continue Obstruction on BAE Investigation

Oct. 17 (EIRNS)—Britain's Home Secretary will now have the power to block extraditions to the U.S., such as in the BAE case, under new powers that come into effect in November, the Sunday Times of London reported Oct. 14. Proponents of the new powers say that this could prevent a repeat of the "NatWest Three" case in which three British bankers were extradited to the United States to stand trial in Houston, Texas, in an Enron-related fraud case.

Meanwhile, Mike Turner, the CEO of BAE Systems, announced his retirement amid fears of a U.S. Department of Justice investigation into multi-billion-dollar corruption charges.

Nils Pratly, writing in the Oct. 11 Guardian, under the headline "Stench of Conspiracy at BAE Systems," asserts the real reason for Turner's early retirement could very well be the U.S. Department of Justice investigation in the BAE "Al-Yamamah" deal with Saudi Arabia, where up to $2 billion in bribes were paid into the U.S. bank accounts of former Saudi Ambassador to the U.S. Prince Bandar.

Scandals Heat Up French Politics

Oct. 16 (EIRNS)—Several scandals are rocking French President Nicolas Sarkozy's government; his approval rating has dropped by 5 points, according to the latest polls.

* A major insider trading scandal by the management of the European aircraft manufacturer EADS was revealed by Le Figaro, a paper belonging to the Dassault aviation group. (See Jacques Cheminade's statement http://www.solidariteetprogres.org/spip/article- imprim.php3?id_article=3402.) At the very same moment that the company's "Power 8" plan projects firing 10,000 members of its highly productive workforce, the management and staff stole hundreds of millions of euros.

* Police raided the office and home of Denis Gautier-Sauvagnac, the boss of the powerful Metal Industries Association (UIMM). French financial police have identified over EU17 million in cash taken out of secret slush fund estimated at over EU200 million. The fund, created to "fight labor strikes," is suspected of being used to "grease social relations," i.e., secretly financing the trade unions. Gautier-Sauvagnac, a leading figure in the national employers' association, MEDEF, recused himself as a negotiator in some of the talks with unions. According to today's Le Parisien, the police will raid the homes of five or six other people this week to track down the cash flows. The scandal throws suspicion on the unions two days before Thursday's planned national rail strike.

* Some 6,000 people, across all party lines, gathered this weekend in Paris to express their opposition to the new law that would allow DNA testing to regulate immigrant families.

IMF: European Housing Bubbles Worse Than Those in USA

Oct. 18 (EIRNS)—The housing bubbles in Britain, Ireland, Spain, and the Netherlands are even more extreme than in that in the United States before the recent crash, says the IMF World Economic Outlook, issued today. "Could a housing correction in western Europe be as deep as in the US? The extent of house price over-valuation may be considerably larger in some national markets in Europe than in the US, and there would clearly be a sizeable impact on the housing markets in the event of a widespread credit crunch," the IMF report says.

Additionally, the BBC is reporting that the Council of Mortgage Lenders (CML) said that gross mortgage lending in Britain fell by 12% from August to September, to £30 billion, although the overall amount was higher than September 2006. The monthly drop was higher than usual, which was 5% last year.

The Italian consumers association ADUSBEF reports that foreclosures in Italy have increased 27%, as a result of the resetting of adjustable-rate mortgages. About 120,000 families could face foreclosure this year, 3.5% of total mortgage borrowers.

The big debate in Spain, is which Spanish bank will be that country's Northern Rock, the collapsed British mortgage bank. According to the London Times, the real estate markets of Spain, Great Britain, and Ireland are all expected to collapse—the only question is when.

Reality Disagrees with German 'Upswing' Propaganda

Oct. 12 (EIRNS)— Rather than continuing with its "the upswing is here" propaganda, the government of Germany should take a look into the latest reports coming from the Federal Office of Statistics, which tell a quite different story. For example, private insolvencies jumped up by 50% in 2006 (against 2005), from 68,000 to 92,000. The number of welfare recipients increased by 8%, which translates into a quarter million Germans.

Also revealing about the state of the real economy, about which the government is in hysterical denial, is the development of consumer price inflation, especially of food products: a preliminary review of the first three quarters of 2007 done by the Office of Statistics notes an alarming inflation trend, especially during quarters two and three. Food prices are expected to increase by another 50% during the coming 12 months, experts forecast. Year-on-year, September featured an increase of 62.9% for cereals, seeds and feed grains; livestock and farming products increased by 33.8%; milk, milk products, eggs, and vegetable oil up 18.8%.