Western European News Digest

EU Demands Austerity for Ireland and Greece

April 4 (EIRNS)—Eurozone finance ministers meeting in Prague over the April 3-4 weekend, unanimously agreed that Ireland and Greece must get their budget deficits under control or face the possibility of sanctions or fines. The Wall Street Journal notes that this means that as many countries are trying to use stimulus measures to restart economic growth, Ireland and Greece will have to explore austerity measures.

All of the eurozone countries have deficits exceeding the EU's Maastricht limit of 3% of GDP, but only Greece and Ireland are being threatened with punishment. Because of the depth of the economic collapse, it is these two that threaten to bust the Maastricht trap and so have been singled out.

Summers Compared to Louis XVI 'Court' Advisor

PARIS, March 30 (EIRNS)—Dominique Moïsi, a French guest professor at Harvard, reporting in Les Echos on the growing anger of Americans against Wall Street after the Madoff and AIG bonus scandals, compares Obama's top economic advisor Larry Summers to the "entourage" of French King Louis XVI. While the current situation of the U.S. cannot be compared to pre-Revolutionary France, one is tempted to replace the lack of bread in France with the lack of homes in the U.S., the aristocrats with the traders and bankers, and the "privileges" of the nobility then, with the tax breaks and bonuses now. Moïsi reports how angry citizens filled buses in Connecticut to stage demonstrations in front of lavish homes of AIG executives who kept their bonuses, and to congratulate those who gave them up. In France, "At the end of the 18th Century, they burned the wealthy estates; we're not yet at that point, thank God."

Obama's economic team, he says, citing Treasury Secretary Geithner and Summers "like the King's entourage in the Ancien Régime, have inherited all the bad reflexes of the court,' combining an excessive understanding of the old logic of the world of finance with the same ignorance and incomprehension for the emotions and suffering of the people."

German Machine-Building in Deep Crisis

April 2 (EIRNS)— The German machine-building sector has entered its worst crisis in decades. As the VDMA, the machine-builders association of Germany, said yesterday, the sector reported February as the third successive month with a drop above 40% in new orders, year-on-year. February showed a 49% drop. The average of the three-month period December-February is a 44% drop.

And that is only the average: for example, producers of machines for wood-cutting, and the iron and steel industries, report drops by 70% and more, in February year-on-year. The forecast of the VDMA, that 2009 will see a net drop in production output by 20%, is still rather optimistic. "Nobody knows what we will be faced with, in connection with the global financial crisis," Olaf Wortmann of the VDMA said. Ten percent of the machine-building workforce of 976,000 are on short work already.

New Financial Scams in Austria

April 2 (EIRNS)—Julius Meinl V, CEO of Meinl Bank, was arrested in Austria today, on charges of defrauding clients, embezzlement, and kickbacks in connection with Meinl European Land (MEL), which today operates under the name Atrium European Real Estate (controlled by Citigroup and Israeli Gazit Globe). Meinl, although he is the scion of an old Austrian firm dealing in fine foods, is a British national, and press reports cite Austrian law enforcement authorities saying they feared he was a flight risk. The Atrium real estate firm, based in the premier British "tax haven" of Jersey, specializes in building, owning, and operating shopping centers in Eastern Europe. Among the frauds that Meinl Land was involved in, was secretly buying back its own shares to bolster the falling price, in order to keep its investors.

Austrian banks are very weak in any case, due to their massive involvement in Eastern Europe; the Medici bank in Vienna was also a central player in the Madoff scandal, and is about to dissolve itself.

European Discord Evident at NATO Conference

April 4 (EIRNS)—Celebrating its 60th birthday at a double event in the twin cities on the Franco-German border, Strasbourg and Kehl, NATO did not present itself in good shape. This was visible in Turkey's blocking of the nomination of Danish Prime Minister Anders Fogh Rasmussen as NATO secretary-general, until almost the end of the summit, because of his anti-Islam stance in the "cartoon affair" two years ago. The state of the Alliance was also visible in the lack of commitment among the Europeans to send more troops to the NATO task force in Afghanistan.

Britain will send several hundred more soldiers; France is sending none, but will send police and civil administrative advisors; Belgium is sending 60 soldiers plus two F-16s; Spain only 12 soldiers. Germany will increase its mission by 600, but that was already agreed to almost a year ago, and these are not troops for direct combat, but assigned to protect the Afghan elections in the Summer. A couple hundred more soldiers may be assigned by the East Europeans, but that most likely will, as in the case of Spain, go along with a reduction of troops in Balkans peacekeeping units.

Financial Times Demands Dope Legalization

April 4 (EIRNS)—The London Financial Times today editorialized for the legalization of drugs, blaming the U.S. war on drugs policy for the crisis now confronting Mexico. The editorial charged that the success of the U.S. war on drugs effort to shut down smuggling routes through the Caribbean into southern Florida in the mid-1980s, opened northwest Mexico as the only available smuggling route, leading to the current crisis. While calling for U.S.-Mexican cooperation to "take down the ultra-violent drug mafias," the FT concluded, "The problem is that the economics of illicit drugs ensure new criminal gangs emerge to take their place." The FT solution: "Surely it is time for a debate on whether a tightly regulated and internationally agreed decriminalization of narcotics, along with greater effort to curb demand, is the way to destroy the financial basis of the industry—and take it out of the hands of organized crime."

Are IMF Reforms Intended To Bail Out Britain?

April 4 (EIRNS)—The real basket-case at the G20 Summit was clearly Great Britain, where the financial collapse of the City of London is sinking the island nation. One might ask whether the call for reforming the International Monetary Fund was a ploy by British Prime Minister Gordon Brown to have it bail Britain out. This is reflected in a headline in today's Daily Telegraph, "Britain Should Not Fear Asking IMF for Cash," which reports that the intention to reform the IMF was to take the "stigma" out of accepting funds from the World Bank, which only fueled further speculation that Britain will seek an IMF bailout.