WASHINGTON – Washington Post economic analyst, Ezra Klein, argues in his column in the Dec. 10 edition that Deutsche Bank and other giant German banks are big winners in the new economic treaty that would impose Europe-wide fiscal austerity, forcing Europe’s working people to shoulder the burden of “saving the euro.”
Writing under the headline, “There’s More to this Mess than Debt,” Klein reports that he spent the last weeks in Germany talking to policymakers, business leaders and bankers.
“One thing has become clear,” Klein writes. “This isn’t a debt crisis. This is a crisis first of growth, then of institutions, and only then of debt.”
He points out that the biggest and most prosperous nations, including the U.S. and Britain, have higher debt-to gross domestic product (GDP) than Spain, yet can borrow for the next 10 years at interest rates slightly above two percent — practically “free” investment capital. Spain, “which has the lowest debt-to-GDP ratio of the bunch is paying more than double that.”
This outright financial discrimination has placed Europe’s so-called “periphery,” nations like Greece, Portugal and Ireland under heavy pressure to accept sweeping austerity measures, including cuts to vital social services and mass layoffs of public employees, as a condition for receiving billions of dollars worth of bailouts from the German banks and the European Central Bank.
The cutbacks and layoffs have touched off huge street protests, general strikes, and the collapse of governments. Now those draconian austerity measures are being clamped on the working people of the larger economies like Italy, Spain and the UK where similar fightback movements have sprung up.
Adds Klein, “This is about much more than debt, and the Germans and the European Central Bank know it. They could stop the run on the European periphery. But they don’t want to. They see it as an opportunity. The run is…putting the periphery economies under enormous pressure and that’s giving Germany and the European Central Bank the leverage they need to make the changes to the currency union itself.”
Klein doesn’t go so far as to state it, but the aim is to break the back of national sovereignty of all the 27 member nations of the EU and give the biggest banks sweeping, supra-national powers to dictate fiscal and budget policies. Financiers he interviewed openly confirmed their intention of seizing sweeping veto powers over member states’ budgets for health care, public education, and social and physical infrastructure. He quotes them as saying, “You can’t have a currency union without a fiscal union.”
Yet even with those powers, Europe can “still fail” because the root of the crisis, Klein says, is “slow growth.”
The Organization for Economic Cooperation and Development projects that “continent-wide, Europe will grow 0.6 percent in 2012 and 1.7 percent in 2013.” Remove “strong performers” like Germany and the Netherlands, Klein writes, and the “growth prospects for Europe are grim.”
He warns that the austerity packages Italy and Spain are now implementing “will cut growth prospects further.” The “weak” nations, he says, are caught between their dependence on bailouts and their people’s demands for a decent living standard. They “worry that without better growth prospects, joining in the fiscal union means giving up sovereignty over their budgets and accepting economy-crushing austerity.”
The Europe-wide mass revolt against this austerity explains why the new EU treaty has been greeted with cheers by the bankers but angry jeers from the people. Britain’s recent nationwide general strike was a major factor in Tory Prime Minister David Cameron’s refusal to participate in the treaty.
Eight other nations, Sweden, Latvia, Lithuania, Poland, Czech Republic, Hungary, Romania, and Bulgaria, conditioned their participation in the treaty on approval by their parliaments that are likely to face mass protests against the austerity in coming weeks.
The 99 percent of the people of Europe are saying no to policies that benefit only the wealthy one percent.
Photo: A protest against spending cuts in Catalonia’s public healthcare system, in Badalona, near Barcelona city, Spain, Dec. 9. The leaders of the 17 countries that use the euro, plus six others, have tentatively agreed to a new treaty that enforces stricter budget rules. (AP Photo/Emilio Morenatti)