GlobalPost, September 11, 2012
BERLIN, Germany — As euro zone officials struggle to find a way out of the debt crisis, the fate of European Union unity on top of its common currency may come down to a decision by this country’s highest court.
The constitutional court’s eight red-robed judges are set to rule on Wednesday on a cornerstone of the effort to save the euro, the plan for a $630 billion permanent bailout fund called the European Stability Mechanism, or ESM.
Although most analysts predict the court will give the rescue fund a green light, a negative ruling could provoke panic on the markets and ultimately force the euro zone’s break up. Continue reading
GlobalPost, May 6, 2012
BERLIN — The fascination with the battle for the French presidency has overshadowed another crucial European election this Sunday. A weary and angry Greek people are going to the polls on May 6, in what is being described as the most important election in 40 years.
And the results are anything but predictable.
One thing seems certain though: The two big parties that have dominated Greek politics for four decades are in for a drubbing, something which is likely to make the already volatile political situation even more unstable after Sunday.
The question is whether, amid growing support for a plethora of smaller anti-austerity parties, they will muster enough seats to hammer together another coalition.
Otherwise, Greece could have difficulty fulfilling the terms of its bailout, ultimately risking its euro membership and even threatening the euro zone itself. Continue reading
GlobalPost, March 7, 2012
BERLIN, Germany — Europe is on the hunt for growth, but has little idea where to find it.
Many EU countries are being forced to follow a strict austerity path to slash their debts, but these measures seem to be sapping their ability to grow their economies and create jobs.
Some analysts warn that in the absence of measures to boost growth, more bailouts and debt write-downs could be in the cards.
The latest figures are certainly worrying.
The euro-zone economy contracted by 0.3 percent in the fourth quarter of 2011, the EU’s statistics office Eurostat confirmed on Tuesday, and unemployment reached an average of 10.7 percent in January, the highest since the euro was introduced in 1999.
That figure masks the huge discrepancies within the bloc. For example, while Spain’s unemployment is now at 22.9 percent, Austria’s is only 4 percent.
Most attention recently has focused on the drama in Greece, which has required a second bailout in two years to keep from defaulting on its debts.
The embattled country has been prescribed severe austerity in recent years to tackle its alarming public debt mountain, yet the medicine seems to be killing the patient. The Greek economy shrank by 6.8 percent in 2011. The bulk of the new 130 billion euro ($172 billion) bailout will go to lenders rather than being used for any measures to boost growth.
The Greeks are not alone. Ireland and Portugal, the other two recipients of bailouts from the troika of the European Central Bank, the European Union and the International Monetary Fund, have also had to sign up to reforms and punishing public-spending cuts as a condition for the funding. Continue reading
The Guardian, Nov. 18, 2011
Loss of sovereignty may be an abstract notion, but this week Irish people were confronted with what it means in reality. Revelations that draft proposals for the Irish December budget had been circulated in a German parliamentary committee were met with horror in Ireland. It has since emerged that they were sent to every finance minister in the EU.
Members of Irish opposition parties have been in uproar at the fact that parliamentarians in Berlin were privy to vital information, such as a proposed 2% hike in VAT. Meanwhile they and other elected members of the Dáil would have to wait with the rest of the population until budget day, 6 December, to learn where exactly the axe was to fall.
Europeans accuse Berlin of using the euro crisis to boost German power.
GlobalPost, Nov. 15, 2011
BERLIN, Germany — It may have been a bad idea to send a German. And his name certainly didn’t help matters.
When Horst Reichenbach arrived in Athens recently to head a new European Union task force to help the country deal with its debt, the Greek media instantly dubbed him “Third Reichenbach.”
Cartoons appeared of him in Nazi uniform. A Greek tabloid showed a photo of his office with the headline: “The new Gestapo headquarters.”
The Greeks are not alone in harboring suspicions toward Germany, which occupied the country during World War II. The British conservative press is up in arms. The Daily Mail went so far as to accuse the Germans of attempting to use the euro crisis to “conquer Europe” and establish a “Fourth Reich.” Meanwhile in Poland, Germany’s supposed imperial ambitions became an issue in the recent elections.
And as the euro crisis has deepened, German Chancellor Angela Merkel has pushed for the EU to have a greater say in the domestic governance of the euro zone’s seventeen members. Among other measures, she has called for real European power over countries’ budgets. Continue reading
The Sunday Business Post, April 10, 2011
The reaction in the political corridors of Berlin to the fact that Portugal has finally faced the music and asked for a bailout has been one of relief.
This is tinged with determination that this will be the last country to require a lifeline from its eurozone partners.
The German government, battered by a string of losses in key regional votes since the beginning of the year, is loath to be seen by the electorate as wasting yet more of taxpayers’ money on their profligate neighbours.
With just two years to go to federal elections, the ruling coalition of Chancellor Angela Merkel’s conservative Christian Democrats (CDU) and the pro-business Free Democrats (FDP) is fully aware that any further bailouts – of, say, Spain, Italy or Belgium- could spell electoral doom. Continue reading
By Siobhán Dowling in Budapest, Hungary
Hungary will assume the six-month rotating presidency of the European Union in January and the government is pledging to forge a policy for addressing the Roma in all of Europe. But the country has its own troubling history with the Roma, who have been deeply impoverished and pushed to the margins of society since the fall of the Iron Curtain.
Csaba Csorba is standing in scrubland beside the burned-out shell of a small house. He points to the spot amid the tall grass where he found his son Robert bleeding in the snow almost two years ago. Nearby lay the body of his four-year-old grandson Robi. The small boy had been shot through the head, his face was unrecognizable.
The murders of Feb. 23, 2009 saw the Hungarian village of Tatárszentgyörgy become synonymous with hate, hatred towards Europe’s Roma people. Robert Csorba, a 27-year-old father of three, had gathered up his young son in his arms and ran out to escape the flames that engulfed his house, the last one on the edge of the village. Unknown assailants had attacked under the cover of night, throwing Molotov cocktails at the door and then opening fire when those inside tried to flee. Robert was shot in the lungs and lived for another hour, dying on the way to the hospital. His six-year-old daughter Bianka was injured but survived, while his wife Renata and younger son escaped the blaze. Continue reading
As a group of international experts arrived in Dublin on Thursday, the Irish government finally seemed to admit that it was unable to cope with its massive banking crisis alone. Whether the talks result in a bailout from the EU-IMF rescue fund remains to be seen. But the Irish insist they are holding onto their low corporate tax.
Is a bailout by any other name still a bailout? The Irish government may have finally admitted that it requires help with its ailing banking sector but ministers are continuing to deny that the arrival of international financial experts to Dublin this week heralded any loss of national sovereignty. The mood in the country is now one of disbelief that Ireland, once the famed Celtic Tiger economic powerhouse, could have sunk so low, so quickly. And that it could be on the cusp of handing over some control of its governance to outsiders.
On Friday, members of the troika from the International Monetary Fund, the European Union and the European Central Bank, who held an initial round of talks on Thursday, began pouring over the books to get a sense of just what kind of assistance Ireland requires. The question now seems to be if a contingency fund for its banking sector will suffice or if the Irish state will have to apply for support from the European Financial Stability Facility, the fund financed by the EU and the IMF, which was created in response to the Greek debt crisis. Also at stake is whether Ireland will have to cede its low corporate tax rate, something that has long irked its European partners, before it can obtain any aid.
After a week of denials by government figures, by Thursday night Irish Finance Minister Brian Lenihan was admitting that the Irish government was no longer in a position to deal with the massive debts incurred by the country’s financial institutions that seemed to be sucking the rest of Ireland’s finances into a black hole. Continue reading
The Irish government insists it does not require a bailout, even as a team of EU and IMF experts heads to Dublin for talks. Yet aid could also come from another quarter, in the form of Ireland’s neighbor Britain. Meanwhile, the German press is divided on whether Berlin shares some of the blame for Ireland’s woes.
On Tuesday, embattled Irish Finance Minister Brian Lenihan fended off pressure from other euro-zone member states to seek a bailout package from the stability fund established by the European Union and the International Monetary Fund earlier this year. Yet Dublin may not be able to hold out for much longer.
The imminent arrival of IMF and EU experts in Dublin for what are being described as “short and focused discussions” starting on Thursday could see Ireland eventually tap into the fund, though on Tuesday night, following a meeting of euro-zone foreign ministers in Brussels, Lenihan was still insisting that such a bailout was “not inevitable.”
Speaking to public broadcaster RTE on Wednesday morning, Lenihan said Ireland would accept EU support if the banking crisis was too big for the country to fix on its own. “Ireland is a small country and if the banking problems in the country are too big for this small country to manage, Europe is making it clear that they will help and help in every possible way to secure the system,” Lenihan said. Continue reading