From Volume 7, Issue 29 of EIR Online, Published July 15, 2008

Western European News Digest

Economic Collapse Continues Apace in Europe

July 5 (EIRNS)—Figures released in a number of countries show that the economic collapse is accelerating. In Germany, the government reported a decline in industrial orders for the sixth month in a row. Industrial orders fell by 0.9% in May following a 1.7% drop in April. Ireland reported 10,100 new jobless claims in June, above the average of 7,100 seen in the first five months of the year and total unemployment has risen by 54,400, or 33%, in the last 12 months.

In Italy, consumption fell, in May, by 2.7% compared to one year ago, according to the national traders association Confcommercio. May was the seventh month in a row that consumption has fallen, for an overall decline on a yearly basis of 1.9% for the first five months of 2008. When services are excluded, demand for goods dropped 3.8% in May. Mobility goods and services plunged 13.5%, food 3.3%, and clothing and shoes 2.3%.

Sarkozy, Mandelson Spar in Widening Rift Over Free Trade

PARIS, July 4 (EIRNS)—The European Voice, a Brussels-based mouthpiece of Britain's Economist, notes with anger the growing clash between French President Nicolas Sarkozy on the one side, and EU Trade Commissioner Peter Mandelson and World Trade Organization (WTO) Secretary General Pascal Lamy, on the other.

At the June 20 European summit, Sarkozy had blamed Mandelson for having been responsible for the Irish "No" vote on the Lisbon Treaty. Irish farmers rejected the treaty, said Sarkozy, because Mandelson wants the EU to accept a WTO deal committing the EU to a 20% reduction of its farm output and a 10% reduction in farm exports. The deal, currently on the table and totally opposed by France, would lead to at least 100,000 job losses.

Then, on June 25, a desperate WTO chief Lamy convened an extraordinary meeting of the EU's foreign ministers in Geneva for July 21, in a bid to revive the flagging talks, before the U.S. election calendar pushes the WTO Doha Round into political oblivion.

While Sarkozy again attacked Mandelson and the WTO on July 1 in a televised address, Mandelson and the EU Commission members came to Paris for talks on July 2. EU Commission president José Manuel Barroso and others were received by French Prime Minister François Fillon. Making his case even worse, Mandelson refused Sarkozy's invitation for talks at the Elysée Palace, saying he had a previously scheduled appointment in Marseille. In a rapid countermove, Sarkozy named French Trade Minister Anne-Marie Idrac to preside over a meeting of EU trade ministers, on July 18 in Brussels, to discuss Mandelson's EU mandate at the upcoming WTO Geneva meeting.

Serious Fraud Office Moves to Stop Reopening of BAE Case

July 8 (EIRNS)—Speaking before the British House of Lords on behalf of the government's Serious Fraud Office (SFO), Queen's Counsel Jonathan Sumption went out of his way to defend Saudi Prince Bandar, in his effort to convince the Lords to overturn a High Court decision against the SFO, in the latter's illegal dropping of its investigation of the BAE Systems fraud case.

Last April, the High Court ruled that the SFO acted illegally when it dropped the bribery and corruption investigation into the £43 billion Al-Yamamah arms contract with Saudi Arabia. The SFO dropped the case in December 2006 after former attorney Lord Goldsmith said the case would jeopardize national security. The High Court later upheld the claims by the Campaign Against Arms Trade (CAAT) and the Corner House that the case was dropped for commercial reasons, because the Saudis threatened to block new arms deals.

Nonetheless, according to the Daily Telegraph, both CAAT and Corner House will present a new witness statement by a CAAT researcher, with evidence that it was Bandar who lobbied the British government to drop the case.

EIR has exposed this case as one generating huge amounts of cash to be deployed as a British Intelligence slush fund, and as being at the center of what Lyndon LaRouche has identified as the "floating-exchange-rate petroleum oligopoly of BAE et al.," which the British are now using to drive down the dollar and blow out the U.S. economy.

As of this writing, the case continues to be heard in the House of Lords.

Czech Republic Signs Missile Deal; Polish Minister Flies to U.S.

July 7 (EIRNS)— U.S. Secretary of State Condoleezza Rice and the Czech Foreign Minister signed an agreement July 2 for the deployment of U.S. anti-missile radar facilities in the Czech Republic. Negotiations with Poland and Lithuania on the anti-missile component are ongoing, with Poland's Foreign Minister Radoslaw Sikorski having flown to the United States for talks on the deployment of U.S. interceptor missiles on Polish soil with Presidential candidates Barack Obama and John McCain.

Warsaw has been pushing Washington to provide billions of dollars of investment for Poland's air defenses, in exchange for allowing the deployment of the missiles, citing heightened risks to the country following Russia's threats to target its missiles at U.S. facilities in Europe.

U.K. Report on Biofuels: Blame the EU for World Starvation

July 7 (EIRNS)—Struggling to get out in front of the world debate on biofuels after the near revolt at the Rome Food and Agriculture Organization (FAO) summit last month, the British government has suddenly produced a report saying that conversion to biofuels should be restrained, but not stopped. The conclusions are contained in the "Gallagher Report," produced by a team of "government experts," under the direction of "U.K. scientist" Ed Gallagher.

Advance leaks in today's Financial Times said the report is "highly critical of the European Union's 10% target for biofuel use in transport by 2020." (The EU backed down on this requirement today, replacing it with the generic "renewable" energy.) Secretary of Transport Ruth Kelly addressed the House of Commons, saying she agreed with the report, and that her department would amend its biofuel recommendations accordingly.

On the same day, World Bank president Robert Zoellick called for a similar reform of biofuel policies in rich countries, urging them to grow more food instead.

Renault CEO Fears Inflation, Zero Net Profits

PARIS, July 7 (EIRNS)—Le Figaro headlines the fact that Carlos Ghosn, the CEO of the French car maker Renault, is extremely worried about the current economic crisis.

As for the French economy, Ghosn says things will get tough after the summer. Two indicators are worrisome. There exists a strong correlation between the consumer confidence index of the French office of statistics and auto sales (which have been falling for three months), leading Ghosn to think car sales will drop soon. The other big worry, says Ghosn, is the "inflation of costs." In three years, the cost of steel for the company has increased by 1 billion euros, the equivalent of 50% of the net profit of the entire company.

More Germans Warm Up to Nuclear Power, Again

July 9 (EIRNS)—Skyrocketing fuel prices have provoked a positive counter-reaction among Germans towards a revival of atomic power, to an extent that the exit-from-nuclear policy passed in 2000 is being put into question by leading politicians and some industrial institutions. Indicative of the changed circumstances is a prominent story in today's issue of Bildzeitung, the nation's leading mass-circulation daily, on the "seven truths" about nuclear power. One of the truths is that since 2005, even in Germany, public support for the technology has increased by 8%, to 46% today, which is almost as much as the 47% of Germans who still are against.

Real Estate Collapse Hits Her Majesty's Property Holdings

July 9 (EIRNS)—Her Britannic Majesty's Crown Estates announced a writedown of the value of its commercial property holdings based on a 15% to 20% drop in commercial property values. They posted a slight profit, because their agricultural holdings have increased in value as a result of the food shortage. Crown Estates dates from 1066, when it administered all the property holdings of William the Conqueror.

Meanwhile, the British real estate collapse is gaining steam. Bovis and Redrow, among the four top British homebuilders, will cut close to 1,000 jobs, bringing the total job losses in the housing construction industry to over 5,500 this year. Because of a 40% drop in demand for mortgages, Barclays Bank closed down its Firstplus loan subsidiary to new business, as well as cutting three quarters of the divisions staff. It has £4.7 billion in outstanding loans.

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