WESTERN EUROPEAN NEWS DIGEST
Russia To Bill European Oil Transactions in Euros, Not Dollars
The German business daily Handelsblatt reported on June 3 that, in oil export deals with Germany and Europe, Russia will no longer bill in dollars, but in euros. This commitment was signalled by the Russians immediately after the Moscow EU-Russia summit, and was certainly not unrelated to events at the summit. The new policy is especially designed for the 30 million tons that Russia is annually exporting to Germany (about one-third of Germany's entire crude oil imports) at present. Talks have begun that also involve German banks, to discuss trading that crude oil via the energy exchanges at Leipzig or Frankfurt, said Handelsblatt. Russia wants to reduce its dependency on the dollar value, and to gain a long-term, safe-planning perspective for its oil sector. A well-placed European market source confirmed the policy shift in a discussion with EIR, stating that it is his impression from looking through various reports, that the policy shift at the expense of the dollar role in the oil branch of Europe is on, although officially, the shift has not been confirmed yet.
Is a Showdown Brewing Over Maastrict Criteria?
Foreshadowing a potential major clash at the upcoming European Union Summit in Seville, Spain on June 22, France's (interim) Finance Minister Francis Mer refused to assert his loyalty to the EU target of reaching a "balanced budget" by the year 2004. He said that his own government was trying to balance as much as possible, but not at the expense of an economic growth dynamic that was required to keep the French economy afloat. "What is important is to keep the policy course. It is not important to fulfill the criteria by the letter.... The aim is what counts, not the way toward it," Mer told journalists after the conclusion of a somewhat turbulent EU finance ministers' meeting in Luxembourg June 4.
His remarks were read as confirmation that President Chirac's earlier remarks (that the 2004 target date was not binding for the French) in fact reflected a broader debate among the French elites about modifications of the Maastricht criteria.
German States' Financial Emergency Finally Makes Front Page in FAZ Newspaper
In an article that filled one and one-half pages of the June 1 edition of the Frankfurter Allgemeine Zeitung, the situation of the 16 German was reviewed, with profiles of the disastrous state budget situations. Readers of EIR and EIW were informed of these emergency conditions more than a month ago.
FAZ reports that wrong conjunctural prognoses by the "experts," as well as drastically sinking real tax revenues and increasing debt service (most visible in the case of Berlin), have turned all budget projections into garbage. Reality is that, with the current fiscal year just half over, 10 of the 16 states have been forced to impose budget freezes.
Some of these (like Berlin and Saxe-Anhalt) are faced with a situation that might force them to declare open budgetary emergency, which would prevent the state governments from stopping crucial payments for social welfare and related budgets. The 10 states in question are Schleswig-Holstein, North Rhine-Westphalia, Rhineland-Palatinate, Hesse, Thuringia, Saxony, Saarland, Brandenburg, Lower Saxony, and Berlin.
Three other states are coming close to declaring a budget freeze: Bremen, Hamburg, Saxe-Anhalt. Only two of the German states are still viewed as sound enough to be able to avoid a freeze: Bavaria and Baden-Wuerttemberg. However, the fact that the special compensation fund of the states, which arranges transfers from the richer to the poorer states, has paid 15% less this fiscal year to the eastern state of Thuringia, suggests that payments from the "rich" states of Bavaria and Baden-Wuerttemberg into this fund have been reduced. This trend will acceleratein the last few months, Bavaria has seen unprecedented rises in corporate defaults, unemployment, and drops in tax revenues.
German Grand Coalition May Be Needed To Govern in Economic Crisis
With incoming data on an acutely worsening economic depression in Germany over the coming months, some in the German policy-making establishment have begun to think about a Grand Coalition Government. Economic realities seem to be forcing to the fore, the necessity of having a new government with a large majority in power, after the Sept. 22 national elections. Germany may even need a government that commands a two-thirds majority, in order to invoke emergency economic policy measures to keep the banking, industrial, and farming sectors running. A combination of Social Democrats and Christian Democrats would most likely hold such a majority, in the newly elected Parliament.
Michael Sommer, the newly elected national chairman of the German Labor Federation (DGB), was the first to moot such a Grand Coalition, in Berlin a week ago, at a private meeting with CDU-linked union delegates to the DGB national convention last week. What makes it even more interesting, is that Sommer is considered a "left-wing Social Democrat." Brandenburg Governor Manfred Stolpe, a Social Democrat who heads a Grand Coalition in his state government, joined Sommer with similar remarks at the SPD election campaign convention in Berlin, on June 4.
Both Sommer's and Stolpe's trial balloons have been met with a chorus of official and semi-official denials, but the issue is likely to remain on the agenda, and become even more prominent, over the next days and weeks.
FDP Leader Refuses To Oust Critic of Sharon's Fascist Policies
Neither increased pressure from among other leaders of the Free Democrats, nor the personal intervention of FDP national party chairman Guido Westerwelle, who met with the party section of North Rhine-Westphalia on June 3, could force Juergen Moellemann, chairman of the North Rhine-Westphalia party, to expel Yamal Karsli from the party's group in the State Parliament.
Karsli came under immense pressure from rightwing Israeli lobby forces internationally for opposing the Nazi-like attacks the Sharon government of Israel levelled against Palestinian areas. Moellemann said "no" to the demand for Karsli's expulsion, and Westerwelle had to accept it. Even the chorus of three former FDP national party chairmenHans Dietrich Genscher, Otto Count von Lambsdorff, and Klaus Kinkelcalling for Karsli's expulsion, did not help Westerwelle break Moelleman's resolve. Moellemann had the backing of the state party organization, which, after all, commands about 40% of the entire party membership.
Macedonia's Major Media Feature LaRouche as Leading Scholar
In a major essay appearing in the June 1 edition of the leading daily publication in Macedonia, Vecer, U.S. Presidential pre-candidate Lyndon LaRouche was reported as one of "the famous scholars of global and Balkan policy." But the circulation of LaRouche's ideas in Macedonia goes far beyond this one significant article. The name of Lyndon LaRouche is mentioned almost daily in the printed or electronic media in Macedonia. Over the past week, for example, LaRouche was presented as the "wise teacher" in a televised interview on his professional life by TV anchorman Slobodan Tomic. LaRouche was also mentioned in a televised interview with a LaRouche collaborator; and LaRouche was again cited in a similar interview with the leading weekly ZUM.
The reference to LaRouche in the Vecer essay is especially significant because the piece constitutes a sort of declaration of war against the many NGOs (UN-recognized non-governmental organizations) and foreign-financed groups that threaten to trigger a "soft coup d'etat" in Macedonia.
The article, which mentions the names of an insidious power group entrenched around President Boris Trajkovski (a U.S. Methodist minister), is entitled "The reasons why the public should try the gang of ten." Some excerpts in English have been made available to EIR, and can be reported here: "Over the past ten years, ad hoc military and financial centers have been working to create in this region conditions of governmental instability, so that governments would be subject to pressures and eager to bargain with those financial centers. Because when sovereign governments are weak and the financial centers are powerful and mighty, then the authority and power does not come from the people, the law, and the elections, but from the support of this financial [speculative] centers. The financial centers that control political, military, but also criminal interests, frequently intertwined, are neither new, nor local phenomena. For years they have been recognized, defined and followed by a large number of journalists, accompanied by famous scholars of global and Balkan political and social movements...."
Here the article mentions Lyndon LaRouche. The article was published as Prime Minister Ljubco Georgievski continued to reject ultimata by the IMF and NATO. The IMF demanded that the minimum wage not be increased, that salaries not be paid to bankrupted firms' employees, and that families ruined by the collapse of a financial pyramid scandal not be compensated. Georgievski said "no" to all demands. The IMF delegation left Skopje saying they will be back after the September elections to talk to the next government.
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