Western European News Digest
Maastricht EU Deficit Rule Is Officially Dead
Nov. 22 (EIRNS)The European Union officially lifted the 3% deficit straitjacket yesterday, which forbade government credit creation by limiting fiscal deficits to 3% of GDP for each member country. This was done by using the current treaty, which allows this in "extraordinary circumstances." The decision is the result of Germany finally agreeing to the change, while, however, rejecting French President Nicolas Sarkozy's more ambitious demand that the Maastricht Stability Pact rules be rewritten, according to the Nov. 21 Financial Times.
The decision was taken because, if the EU wants to implement a stimulus package, even a limited one, where each member-state puts in 1% of its GNP, there are already four major countries which cannot do it without violating the 3% cap: France, Italy, Great Britain, and Spain. A member of the French EU chairmanship is quoted in the Financial Times Deutschland; saying: "We must act. The budget balancing will be postponed to a later date."
Calls for a Mittelstand Support Fund in Germany
Nov. 20 (EIRNS)Two-thirds of Mittelstand (small to-medium-size) firms in Germany, a Price Waterhouse Cooper poll found, now expect sinking profits for 2009; half a year ago, 54% still did not feel affected at all by the crisis. The situation has alerted several state governments of Germany, notably of Baden-Württemberg and Bavaria, which are home to many firms in the automobile supplier sector and in machine-building.
In his meeting with managers of Bavarian carmakers yesterday, Bavarian Gov. Horst Seehofer called for a banking umbrella also for the Mittelstand, to deal with its present acute liquidity problems. Seehofer said he thought of an increased role of the state banks here, like the Kreditanstalt für Wiederaufbau (Reconstruction Credit Agency) and the LfA Bank of Bavaria. Guenter Öttinger, governor of Baden-Württemberg, said he sees a special role of LBBW, that state's bank.
But given the world systemic crisis, insular financial initiatives will not help the Mittelstand. The LBBW lost at least Eu350 million in the speculative bubble in Iceland.
New Terrorist Threats Against France
PARIS, Nov. 19 (EIRNS)A French foreign ministry official said the government is taking seriously threats from the Taliban that it will attack France, if it doesn't pull its troops out of Afghanistan. The official told reporters in Paris today that France takes the threat "seriously," but is not increasing security measures, because anti-terrorist vigilance is already high. The official said a video broadcast this week by Arab satellite television "Al-Arabiya," purportedly from the Taliban, appears to be "a few months old." He said it included threats to attack France.
"Al-Arabiya" showed a video Nov. 17, supposedly from the Taliban, claiming responsibility for the ambush near Kabul three months ago, which killed 10 French troops and left 21 wounded. The authenticity of the video couldn't be verified, but it shows weapons, uniforms, and medals taken from the French soldiers.
As far back as Jan. 3, 2008, a message promised to "bring to an end the ambitions of French President Sarkozy in North Africa," and to provoke "the economic collapse of the French economy on an international level." Two days later, new threats were found on the Internet by a U.S. intelligence unit monitoring al-Qaeda's communications. The threats were aimed "against Paris and against its Mayor Bertrand Delanoe," in order to bring about "the fall of Nicolas Sarkozy." Other personalities and densely populated locations such as the Eiffel Tower, the Champs-Elysées, Charles de Gaulle Airport, or the Paris business district of La Defense, were also threatened.
Unemployment in Britain Could Hit 2 Million
Nov. 22 (EIRNS) According to London Times deputy business editor Ian King, publicly held companies in Britain have announced 45,000 job cuts in the last two weeks, but "these job losses are only the ones we know about," as job cuts by smaller firms are hidden from public view.
The Real 'Bad News' Is Frau Merkel
Nov. 22 (EIRNS)German Chancellor Angela Merkel promises "a year of bad news," while handing out billions to banks. In an interview with this week's issue of Welt am Sonntag, Merkel sticks to the G-20 line, saying that the financial markets have been "stabilized," but the interbank market has not restarted yet. Measures are being prepared, but, Merkel said, "We must expect that the coming year, at least in the first months, will be a year of bad news."
More interesting are the five pages of readers' comments which follow Merkel's remarks: One says: "The bad news is Frau Merkel"; another: "Is this the same person who told us a few months ago that the crisis had to do with the U.S.A. and not Europe?" A third contrasts Merkel's "corrections" policy with German President Horst Köhler's recent discussion about a new Bretton Woods, which he said means "replacing the Anglo-Saxon economic system."
While Merkel's words foretell sacrifices for the citizen, the German government is handing out billions to banks. Hypo Real Estate has announced that it will apply for Eu20 billion from the government guarantee fund, SoFFin. This is in addition to the Eu15 billion HRE had received at the end of October.
Swedish Parliament Votes Up Lisbon Treaty
STOCKHOLM, Nov. 22 (EIRNS)Just before the midnight hour, Nov. 20, the Swedish parliament voted to attempt a resurrection of the corpse of the Lisbon Treaty, which had been killed by the Irish referendum. The left and the green parties voted against it, together with one MP from the government coalition. The Social Democrats made a solo pirouette to defend the labor rights of the "Swedish model," but then all voted for the Treaty. Had the trade unionists among the Social Democrats voted "No," the Treaty would have been stopped, as there was a three-fourths majority requirement. The treaty requires unanimous approval by all EUR member countries in order to pass, and Ireland already turned it down.