From Volume 38, Issue 24 of EIR Online, Published June 17, 2011

Western European News Digest

German Supreme Court To Hear Bailout Case

June 10 (EIRNS)—The German Constitutional Court in Karlsruhe announced today that it will hold a public hearing on three legal challenges against the Eurozone bailouts, on July 5. The challenges were filed a year ago; plaintiffs include Peter Gauweiler, a member of the German parliament, and the "four anti-euro professors"—Wilhelm Hankel, Joachim Starbatty, Wilhelm Noelling, and Karl Albrecht Schachtschneider—who went to court as long as 14 years ago against the euro, and again against the Lisbon Treaty in 2008.

The July 5 date indicates that a ruling will not be made before the Summer recess, more likely in the Autumn—which is bad for the bailout advocates, because the parliament is to debate and decide on the entire bailout package plus the rescue funds in late September. The announcement of the hearing, which has been anticipated for months, will enhance opposition to the bailouts, and, given the precarious situation of the Eurozone, one even rule out that the euro will be gone before the court rules.

ECB 'Increasingly Vulnerable' on Debt

June 7 (EIRNS)—A new report by the British think-tank Open Europe states that the European Central Bank is "looking increasingly vulnerable" and may face "hefty losses" as a result of the financial crisis. It calculated that the ECB has a total exposure of about EU440 billion in Greece, Ireland, Portugal, and Spain. The report, "A House Built on Sand?" asserts that the bank is now "23 to 24 times leveraged" as a result of bailing out these four countries—this is far greater than a "dodgy" hedge fund.

"Should the ECB see its assets fall by just 4.23% in value ... its entire capital base would be wiped out," the report states. "Hefty losses for the ECB are no longer a remote risk.... The ECB is ultimately underwritten by taxpayers, which means there is a hidden—and potentially huge—cost of the Eurozone crisis to taxpayers buried in the ECB's books."

Crisis Sessions on Coming Greek Default

June 9 (EIRNS)—The consensus among bankers who met in Koenigstein, Germany, yesterday, was that "Greece will not be able to avoid a restructuring of the debt," said Ingrid Hengster, CEO of the Germany branch of Royal Bank of Scotland. This will involve a certain "sharing of the burden by private creditors," added Michael Kemmer, president of the German Banking Association; an unnamed representative of JP Morgan said, "The banks and the creditors have to join in."

At a conference call yesterday, Eurozone finance ministers discussed the figure of "EU90-plus billion" in new bailout funds for Greece, as the German finance ministry's proposal for "soft" restructuring, including "haircuts" for private banks haircuts, accompanied by "new structural reforms in Greece."

E. Coli Epidemic Devastating Euro Agriculture

June 7 (EIRNS)—The Copa-Cogeca, a farm lobby group based in Brussels, said in a report released today that up to 80% of vegetables are being destroyed in parts of the EU because the market has been destroyed by fears over the E. coli epidemic. Farmers' losses could be as high as EU400 million euros ($580 million) a week, the group said. Vegetable growers in France, the Netherlands, Belgium, Portugal, and Germany are also taking losses.

Freshful, another farm lobby group, said that Spain alone could be losing $292 million a week. Cucumber sales fell 80-100% in some EU countries, while tomato sales were down 50-80% and lettuce by over 50%. Prices are well below production costs.

One German farmer told the BBC that "customers aren't buying vegetables at all. And so farmers can't sell their products—every day we lose EU1 million" ($1.46 million).

German Hospitals Need More Funds

June 7 (EIRNS)—German hospitals are struggling to cope with the thousands of people sickened by the E. coli epidemic, and the German Hospital Association (Deutsche Krankenhaus Gesellschaft, DKG) is calling for more funds to deal with the crisis, Der Spiegel reported today. DKG managing director Georg Baum said that DKG members were overwhelmed by the financial strain of the outbreak. "In light of the E. coli epidemic, I appeal to politicians to restore the financial cuts planned for hospitals," Baum told the Rheinische Post. The situation proves just how important it is to keep beds and personnel available at clinics, he said. Hospitals and other health-care institutions in the affected areas have only been able to cope because they are swapping staff. "The clinics are doing everything necessary for the care of the sick—without considering whether their services will be compensated by health insurers later," Baum said.

Doctors are having difficulty providing kidney dialysis to the more than 33% of patients who develop hemolytic-uremic syndrome (HUS), which can cause kidney failure. Hospital workers are reportedly working overtime to staff the institutions, and it is also feared that blood banks may run short.

French Food Speculators on Defensive

July 8 (EIRNS)—Nicolas Fragneau, manager of Amundi Funds Global Agriculture, gave a defensive interview to the French daily Le Figaro headlined: "We Are Not Taking Part in the Disappearance of Agriculture."

Fragneau lied that prices for food commodities are on the rise because world food production is lagging behind demand. Therefore, the solution is more public and private investment in agriculture, for which, of course, his Amundi fund is a key instrument.

Amundi, owned 75% by Crédit Agricole and 25% by Société Générale of the Inter-Alpha Group, manages EU690.5 billion in assets and has offices worldwide.

Coverup of Dr. David Kelly's Death Persists

June 10 (EIRNS)—U.K. Attorney General Dominic Grieve has ruled that there was no evidence that Dr. David Kelly, a British intelligence officer and specialist on nuclear proliferation, was murdered in 2003. Grieve also dismissed the charge of a cover-up, in a ruling on a request that the High Court order a hearing. Grieve told Members of Parliament yesterday: "I've concluded that the evidence that Dr. Kelly took his own life is overwhelmingly strong. Further, there is nothing I've seen that supports any allegation that Dr. Kelly was murdered or that his death was the subject of any kind of conspiracy or cover-up." Grieve produced a 60-page report, which purports to rebut 169 points made by those requesting an investigation.

Kelly was the covert source for the charge, reported on BBC before the Iraq War began, that the Tony Blair government had "sexed up" the facts to try to prove that Iraq's Saddam Hussein was developing a nuclear weapons program.

All rights reserved © 2011 EIRNS