Global Economic News
EU Bailout Means Brutalized Greece Will Go on the IMF Auction Block
May 30 (EIRNS)The front-page headline in today's London Financial Times reads, "Greece Set for Severe Bailout Conditions." The article reports that the European Union is drafting a new bailout that has even more brutal conditions, including "international involvement in tax collection and privatization of state assets." The deal would involve another EU60 billion, half of which would come from privatization of state assets. Reuters also reports that the EU held emergency talks with the Greek government over the weekend on the issue.
The FT makes clear that all of this is theoretical, since it has to not only pass the Greek parliament, but also the parliaments of the 16 other Eurozone countries. Greek Prime Minister George Papandreou canceled a meeting, without giving a reason, he was to have had with the majority PASOK party leadership, which was supposed to rally the party behind the new austerity proposals. This follows Papandreou's failure to get an all-party backing for the new proposals, which was demanded by the EU.
In its lead editorial, "Putting Greece Up for Auction," the FT writes that while privatization of Greek government assets would be good for Greece, there might be few takers, for fear that a default would wipe out the value of the assets. Moreover, the idea of putting foreigners in charge, "risks detonating an explosion of protest at lost sovereignty." The City of London mouthpiece then suggests that all this talk of privatization by the EU leaders is "a cloak for their inability to agree on broader solution to Greece's problems," especially, the restructuring of its debt.
The IMF-EU Commission-ECB troika, which is now reviewing Greece's performance in implementing the policies dictated to them, are expected to make public their verdict this week. If the troika refuses to sign off, this means the next EU12 billion tranche of funds from the EU110 billion bailout fund, will not be released. Meanwhile ECB board member Lorenzo Smaghi wrote in the FT that any restructuring of Greek debt is out of the question, saying the idea of an orderly restructuring is a "fairy tale."
The Greek international security website, RIAS, in a leading comment on the EU and IMF demands, writes sarcastically:
"First the Hellenes need to make sure that their entire population descends into abject poverty for generations to come through massive austerity that fulfills no purpose other than the satisfaction of creditors;
"Secondly, these Hellenes also need to promise, upon penalty of eternal damnation, that they will continue to disembowel their economy for as long as their barely breathing carcass allows, so that ... financial markets suffer the smallest possible damage after Greece's inevitable foundering;
"And, thirdly, the Hellenes must also do this smiling, and with the frame of mind of genocide would-be victims, who have no idea what awaits them other than noticing the long columns of men, women, and children being led away by the guards into the wilderness."
RIAS concludes that the whole misguided "Eurovision" has doomed Greece "to suffer a disaster that would dwarf those that crested over us throughout recent history because of wars, invasions, and direct foreign occupation."
(See EIR InDepth for more on the Greek/Spain/Euro crisis.)
Germany Will Import Rather than Produce Nuclear Energy
May 30 (EIRNS)The lunacy of the German government's announcement that it will abandon production of nuclear energy completely by 2022, is not being lost on some European energy officials and nuclear advocates. Italy, which closed down its existing nuclear facilities by 1990, now imports about 10% of its electricity from France, which produces 80% of its electricity with nuclear power. Germany will have to do the same, along with increasing its use of relatively more polluting fossil fuels.
"Germany will be even more dependent on fossil fuels and imports and its electricity will be more expensive and polluting," French Industry Minister Eric Besson said in a statement today. Electricity is twice as expensive in Germany than France. Anne Lauvergeon, CEO of Areva SA, the world's biggest maker of nuclear equipment, said on BFM radio: "It's hard to see how they will replace the energy. I'm not sure there is enough Polish coal, and it creates carbon problems. Alternative energy sources are intermittent sources. I think they will do what Austria did in its time: import nuclear electricity from neighboring countries. This will result in higher electricity costs in Germany, with consequences for industry."
For much of last year, Germany exported energy to France, but last month, the trend was reversed, after Berlin decided to begin shutting down nuclear reactors. France is building two new nuclear plants to make up for shortfalls of power production.
Other nations are also making the point: "In the case of [German] closure, it will be necessary to import energy probably from France, in other words produced by the nuclear sector," Belgium's Energy Minister Paul Magnette was quoted by AFP today. Belgium has seven nuclear reactors.
British nuclear power advocate Malcolm Grimston, who advises the government on nuclear energy, told the BBC that the German decision "will create new export opportunities for the French nuclear industry in Germany. The Czech Republic will be another source of the replacement imports. Most of that will be as a result of coal but the Czech Republic itself has a vigorous new nuclear program [with six plants operating]. So this does create a new market for nuclear electricity and, as long as that is what has happened, then the environment will not be damaged."
Grimston also pointed out that the German "economy is already very severely crippled by its enormous renewable subsidies and, of course, in hot weather the wind farms tend not to work at all. In Germany they had about 1.5% output for three weeks in 2003 because of the heat."