Fernando Fuster-Fabra's Blog

EUROPE’S UNION IN THE CROSSROADS: DO OR DIE

November 15, 2011
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Problems cannot be solved by the same level of thinking that created them.

–       Albert Einstein

 

 

 

 

Spanish version:  http://wp.me/pRlnf-4D

 

The G-20 Summit of world leaders was held in Cannes a few days ago. As expected, no decisions were taken to resolve the economic crisis that affects the stability of a great number of countries. Not a word was said about establishing restrictions to speculative abuses that crop up based on ratings of agencies prone to cause alarm with their presumptions. Assisting the summit were the principal European leaders representing the EU as well as Germany, France, Italy and United Kingdom as full-pledged members, with Spain and The Netherlands as guests.

Just a few miles away, in Brussels, the Greek crisis with a call for referendum warning and the forthcoming Italian tempest had been left unsolved. Today, the Greek crisis remains unsolved although Greece’s elected Prime Minister (Papandreou) has had to step down and a new one (Papademos) appointed in his place without any elections.  Something similar went on in Italy just a few hours ago, with the forced resignation of Berlusconi after the approval of the demanded reforms and the appointment of Monti to replace him.

Two new figures, not elected by their respective citizens, assume their respective tasks; technocrats, as they are called, but without analysing their close links to the financial structures that, in my opinion, have been the root of this entire regrettable situation. Lukas Papademos was Vice-President of the ECB from 2002 till 2008 when Jean Claude Trichet was President whilst Mario Monti not only was a European Commissioner but also a consultant of the notorious American bank, Goldman Sachs.

Furthermore, in November, the turnover at the ECB has also taken place, with an Italian, Mario Draghi, taking over the chair occupied by Trichet from 2003 till late October. He is another figure related to the bank (Goldman Sachs) that caused more than a single financial quake, amongst which it is worth mentioning its advisory role to the Greek Government in the times of the conservative, Kostas Karamanlis, precisely when the state accounts were falsified in the reports to Brussels.

The irony of this entire circus is that a legitimately elected Papandreou was forced out of office for calling a referendum to approve his proposals but no one has said a word about prosecuting neither Karamanlis nor Goldman Sachs por having intentionally lied, causing the domino effect on the weaker Eurozone economies.

Thus, not only has a chance been lost in Cannes to set up global regulating and supervisory measure of the larger banking entities as well as the rating agencies but also it has allowed a slow transfer of previous bank executives and personalities linked to these entities to occupy relevant posts in the hierarchical big-shots of the EU and in the government of its member states.

Likewise, the American stance has taken a 360 degree change from Pittsburgh to Cannes. With elections in 2012, Obama does not wish to risk any confrontation with potential donors for his campaign funds, amongst which we may mention the larger U.S. banks and the powerful Jewish lobby. He abandons Europe to its fate, above all because he does not share the curt German stance in some questions of procedure and timing. Not even the goodwill efforts of the French President and proud father of a baby girl served to ease the tense atmosphere. Furthermore, Obama is aware that in spite of the Euro crisis, the currency has a strong quotation, benefitting the U.S. Dollar and facilitating its exports to the Old Continent while decreasing European countries competitiveness in world trade.

What seems to have gone unnoticed in all this week of European tension after the Cannes summit is that Munich  prosecutors ordered a search in the Deutsche Bank offices in relation to the famous ‘Kirch affaire’. In spite of the death of communications magnate, Leo Kirch, the lawsuit against Deutsche Bank continues its course, with outgoing CEO, Josef Ackerman, in the midst of the storm. The matter must have been of such importance that Ackerman announced his decision not to seek the appointment to the bank’s presidency, a rather difficult manoeuvre after the German banking law reforms in 2009. Said reforms establish a two-year grace period before a former CEO can aspire to the presidential post of a bank, with the only exception that 25% of the stockholders so demanded.

Angela Merkel has covered many inside details of the decisions taken in relation with the German banking system between 2005 and 2011, as well as her personal pact with Gerhard Schröder, with regards such a vital issue as energy, disguised under the so-called ‘grand coalition’. Few are conscious of the of Merkel’s stubborn tenacity that has brought her from that membership in the communist youth movement in her younger years in the extinguished GDR to become ‘my girl’ for conservative, Helmut Kohl. Her rise to power came by pure chance after a scandal caused the downfall of Kohl’s chosen successor, Wolfgang Schäuble, actually the Economic Minister in Merkel’s cabinet.

Perhaps that is the reason that one has given due importance to the very recent announcement of the inauguration of start-up of Operation Nord Stream, the gas pipeline agreed upon between Russia and German, with the blessing of France, The Netherlands and United Kingdom. Said pipeline will go from Vyborg in Russia to Greifswald in Germany in a submarine line across the Baltic Sea. In Russia’s behalf the participations is headed by state-owned Gazprom as natural gas supplier and Nord Stream AG, a German enterprise has been set up to handle constructions and operations. It is interesting to observe that former Prime Minister Schröeder has been involved in the Nord Stream project and with Gazprom since December, 2005, roughly a month after stepping down in favour of Angela Merkel.   

What makes this affair even uglier is the fact that the powerful EU members will share the spoils of Russian gas without sharing a bit with other Baltic member states, namely – Poland, Estonia, Lithuania and Latvia – nor seem to have offered a gas link to the Scandinavian states for the moment. Nevertheless, said gas will indeed go across the English Channel to the United Kingdom.

This project is contrary to the interest of the pan-European Nabucco project which had set the goal of constructing a gas pipeline from Erzurum in Turkey to Baumgarten in Austria, precisely with the intention of breaking EU dependence on Russian gas supply. The problems generated with Gazprom gas supply through Ukraine have left Central Europe and Italy without a reliable supply in more than one occasion whilst Turkey had offered its facilities in a sign of goodwill in its bid to join the EU. Germany has again vetoed a state that has been accumulating more merits to join the EU than some who already are in.

With partners who demand from the south sacrifices but will not share the favourable agreements with other non-EU states, it is no wonder that the Union of 27, each day, is turning into a more difficult endeavour.  In addition, those who impose the terms & conditions interpret the Stability & Growth Pact in such a manner as to oblige members to apply solutions thought out in conventional terms, in precisely the same line as those that created the problem.

Whilst our present-century ‘Medea’ is bossing around in Europe, the route travelled will be the wrong one and the estrangement amongst members each day larger.  How much must we wait before Merkel is sent into exile?     

Fernando Fuster-Fabra

Barcelona, Spain     

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G-20 TORONTO SUMMIT: LAST CHANCE TO SEE THE CRISIS FROM ANOTHER ANGLE

June 23, 2010
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Spanish Version              http://wp.me/pRlnf-1a


After a futile Busan meeting of economic ministers earlier this month, hopes of progress and consensus amongst world leaders at the G-20 Summit are scarce.  One inevitable question crops up – Are these government leaders governing their nations and the world for the citizens that elected them or for the financial markets that sway their fragile decisions?

Just as Obama was about to take over at the White House and Spain was first invited into the group, the G-20 met in Washington D.C. under a retreating George Bush. Two other summits, London https://fernandofusterfabra.wordpress.com/2009/04/19/hello-world/ & Pittsburgh https://fernandofusterfabra.wordpress.com/2009/09/26/the-pittsburgh-summit-the-world’s-future/ , have been held since then with practically the same futile results. Chances are that the Toronto summit will be more along the same line.

Whilst the USA has flirted with China in what was dubbed ‘G-2 formula’, the EU has been incapable of having a solid single stance towards international economic policies in the successive summits. Furthermore, the White House is cautious about withdrawing public expenditure hastily meanwhile recovery is hardly convincing. On the contrary, German chancellor, Angela Merkel, has whipped other EU leaders with French President Sarkozy’s consent towards drastic public debt cutbacks in the 27-member club. This opposed views will make it difficult to come to a common ground in the truly indispensible actions G-20 leaders must take without further delay.

Canada’s Prime Minister and summit host, Stephen Harper, is precisely against the only common point between US and European leaders – the levy on bank operations. His posture will probably be used by other leaders from emerging economies to delay any actions that may endanger their respective growth rates. However, this very growth may well be the cause of economic overheating in Brazil, China and India that could put any recovery in serious trouble. Harper, who boasts of Canada´s economy y banking solvency seems to forget that he heads a nations that has steadily lost relevance in worlds affairs and whose banks are too conservative to be a reference as institutions for the New Millennium.

Moreover, China may have apparently made a concession to the USA with regards the Yuan but it would prove naive to consider such tactical move as a definite trend towards Chinese permanent cooperation in all economic and political international issues. On the contrary, this move may well be countered by a rather steadfast stand against any of the US–EU proposal at the Toronto summit.

In a similar manner, Brazil’s outgoing President, Lula Da Silva, in an effort to impress Brazilian electors and assure his proposed successor’s victory will probably play a hard-line strategy against US proposals.

I feel that world leaders continue being incapable to think big https://fernandofusterfabra.wordpress.com/2009/12/29/world-leaders-uncapable-to-think-big/ nor are they creative enough to view the crisis issue from another angle. It is evident that the G-20 meet must start off by recognising the main cause of this sneaky situation. No solutions will ever be effective if free-trade and globalisation isn’t governed by global financial & investment regulations agreed by world leaders and implemented under strict authorized international supervisors. The care-free ways of liberal monetary flows has been unleashed for three decades to produce the existing crisis that may well pervade another decade or so.

Is any world leader brave enough to put the warning bell leash on the market’s unscrupulous misdoings?

Fernando Fuster-Fabra

Barcelona


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