Germany’s reponsibilities on the EU debt crisis

Where did the money go?

There are more than 200 billion euros stacked in bank accounts in Switzerland and evaded from Greece.
There are trillions more, from several EU Member States – including Portugal – which disappeared from companies, banks and from the European economies, and are stacked in many other tax havens, evading or defrauding national tax authorities.
There is even much more capital which, taking advantage of the fiscal rivalry inside the EU itself,  has taken refuge in the Netherlands, Luxembourg, Belgium, Ireland or in the City, deserting the investment much needed in the countries of origin.
What credibility and efficacy has the economic governance proposed by the Commission and the Council, if they have done nothing to control tax havens and recover the funds hiding therein? And also if they do nothing to actually harmonise fiscal policies in the eurozone?

These were questions that I posed to the President of the EU Commission and the Council in the Plenary Debate, today, at the European Parliament, on the economic crisis and the euro.
Their answer: none.

EU: Community method or directoire?

President Barroso has an unmissable opportunity to show that there is still European Union, that he really is the President of the European Commission and that the European Commission is actually doing what it was created for: to be the engine of the EU, defender the common European interest and the guardian of the Treaties.
He just needs to demand that Germany replaces Guenther Oettinger, the Commissioner for Energy.  Maybe then Chanceler Merkel and other EU leaders with a tendency to disregard the community method and embark in “directoires”, start understanding a few things…
Oettinger suggested in an interview to the newspaper “Bild” that bringing down flags of “sinner” countries to the middle of the flagpole by the facades of the EU buildings would have a “deterring effect”.
Oettinger no longer has the conditions to hold the position of Commissioner for manifest incapacity of understanding what is the process of democratic construction in Europe and what is the EU, despite all its problems and failures ( due to similar disfunctions and incapacities, albeit less insulting).
We already know the dangerous narratives to which Germany is prone: one starts by pointing out the “sinner” countries. And then imposing collective punishment on them (such as the recesssive austerity which sinks them down even more). Afterwards, come the flags in half pole, for public humiliation. What comes next? A black stripe around the arm or perhaps a yellow star on the chest, to prepare for individual atonement?
Oettinger out of office now!
President Barroso, be a president!

Subcontracting torture to Khadaffi

There is commotion in the UK regarding documentation caught by Human Rights Watch in Tripoli suggesting that close ties were established between MI6, CIA and the Khadafi regime. PM Cameron announced that he requested a judge to examine claims that such ties involved cooperation in torturing suspects of terrorism, under the  CIA extraordinary renditions programme.
The commander of the anti-Khadafi forces in Tripoli, Abdel Hakim Belhaj, revealed that he was tortured after he had been taken to Libya in a CIA/MI6 operation upon being arrested in Bangkok.
Abdelati Obeidi,  a former foreign affairs minister of Khadafi, confirmed to the BBC correspondent in Tripoli that MI6 was operational in Libya, arm in arm with the Khadafi thugs, under the pretext of fighting terrorism, until 6 months ago. It seems that wasonly interrupted by the Libyan popular uprising of February 17th…
British politicians, namely from the governments of Tony Blair, who knew that torture was being subcontracted to the hands of the Egyptian, Syrian, Moroccan, Algerian, Libyan and other repressive regimes, now behave like choir boys, pretending to be shocked and eager to find out the “guilty”. Possibly all secret services agents.  As if  government members, parliamentarians and high officials  did not bear responsibilities for the cooperation with the CIA renditions programme and  for the cover up and denial to which they dedicated so much effort, in the last years,  namely to obstruct the European Parliament investigations.
In Portugal the same occurred: politicians from the governments of Durāo Barroso to Sócrates  and from the parliamentarian groups  of PSD, CDS and my own party, the PS,  prevented and obstructed any serious enquiry about the level of knowledge and complicity of the Portuguese authorities with the “torture flights”.  Knowledge and complicity which materialized either by action or omission, as demonstrated by the lists of suspicious flights authorized to pass through air space or to land in Portuguese airports. Lists which I obtained, deciphered, submitted to government for
comments and made public in the framework of the enquiry developed in  the European Parliament, all lists having been confirmed as authentic. 
Looking at those lists of flights one can detect examples of trips to and from Libya which still today require  clarification.  Which entity authorized the passage or landing in Portugal  for those planes? (INAC, MNE, MND?).  How and  in which terms was the authorization requested (Diplomatic Note Verbale?). With Portuguese knowledge and verification of the purpose of the flight? With proper declaration of what was transported, cargo or passengers, with  eventual detainees declared or not? With customs and SEF (Borders and Foreigners Service) controls over passengers, crews and cargo? With full knowledge  and cooperation  of the Portuguese authorities in the rendition of prisoners for torture? Or were they fooled by the American (or other) authorities and entities operating the flights? With Portuguese intelligence and the Armed Forces knowledge or not? Out of connivance,  ignorance or sheer incompetence?  For example:
 
- Aircraft N85VM, GLF 4, civil flight, private, operated by Richmor Aviation, which was authorised by Portugal (INAC?) to fly on the 26th of July 2004 from the airport of Santa Maria (Azores) to Misurata, Libya.  The same plane was also authorised to come back from Misurata to Santa Maria on the 29th July, departing on the same day to Washington. In the first passage through Santa Maria, the aircraft was coming from Rabat and Washington. And following the second passage, it flew back on the 30th of July from Washington to Rabat and passed by Santa Maria again on the 31st, heading to Guantanamo.
http://www.anagomes.eu/PublicDocs/5002c959-1789-401e-89c9-b11aa1ab699c.pdf 

- Aircraft N8068V, GLF 5, (aircraft formerly registered as N379P, the  infamous “Guantanamo Express”, with dozens of passages through Portugal) in a private civil flight, operated by Premier Executive (another company used by the CIA),  which in 8/9/2004 flew from Mitiga, Tripoli, to Guantanamo.  And on 15/9/2004 the same plane flew from Guantanamo to Tripoli, with authorisation to pass through Portuguese air space (given by INAC?)
http://www.anagomes.eu/PublicDocs/ea8a0710-b093-4ba3-896e-a52a5c173fe1.pdf

- Aircraft UR82029, operated by ANTONOV DESIGN BUREAU, flew on 26/27 September 2004 from Tripoli to the Lajes Air Base (Azores), authorized to make a technical stopover there (INAC?).  From Lajes it flew to Port-au-Prince (Haiti). 
The same aircraft, operated by the same company, flew again from Benghazi to Lajes on the 8th of September 2005 and from Lajes to Port-au-Prince, with the indication (according to the INAC list) of  “dangerous cargo/UN flight”.  Really? Which cargo?  Dangerous for whom? For public health? For danger of explosion, contamination, terrorist attack?  Was it duly checked and secured while in Portuguese territory? Was Portuguese Air Force not consulted and involved in securing the “dangerous cargo” or  did it not care about this flight, despite the fact that  it landed right there under  it’s nose,  in the same airstrip of the Portuguese-American Lajes Air Base?http://www.anagomes.eu/PublicDocs/19ec1b2b-7146-42c0-93bc-ea322cea75ed.pdf

This not an exhaustive list. But aren’t the few above identified flights heading or coming from Khadafi’s Libya, worth of interest and full disclosure by Portuguese authorities? Well, they passed  through Portuguese territory and were authorized by Portugal to do so. Or were the Portuguese authorities too busy to check, possibly watching … birds?

If Europe fails, Germans will bear heavy costs

Michael Hanlon, a British science writer, wrote this interesting article on the arrogance and disrespect shown by some European instances towards Greece and the Greek people since the beginning of the financial crisis. He highlights the important role of the Greek resistance against the German occupation during WW2 and the economic vicissitudes that Greece has faced in the past century and which greatly contributed to its current economic situation.

The stigmatization of the Greek people in other European countries is, therefore, extremely unfair, in particular in Germany, a country which has never paid war compensations to Greece, as it should have.

European solidarity is required from Germany towards Greece and other European partners in financial difficulties today: their spending sprees in the last years were very much promoted by the first beneficiary of the Euro: Germany. And Germany was one the the first EU Member States to violate the Stability and Growth Pact criteria in 2004/2005: what is the morality in demanding now that other Eurozone Member States inscribe in their Constitution the “golden rule”, besides the economic and constitutional oxymorons?

The only way for Greece to reverse the speculation that has brought interest rates for its sovereign borrowing to the current outrageous levels, the only way to avoid contagion to Italy, Spain, France and else and the only way to avoid recession and social upheaval in Europe (Germany included), requires the Eurozone joint emmission of eurobonds.
Germany will have to agree to the mutualization of the sovereign debt via eurobonds, sooner or later, with or without Mrs. Merkel in the Kanzlerei.

And the later that will happen, the bigger the risks for Germany to kill its own golden goose: the Euro. And its own guardian angel: Europe.

If the EU is destroyed and if Europe falls back into a violent mess again, Germans will bear heavy costs. Much heavier than just financial costs.

EUFOR LIBYA, muddling-through, as EU for EURO

When I visited eastern Libya in mid-May, I saw Kaddafi’s wrecked tanks on the road just twenty minutes away from the city centre of Benghazi. A military strike was launched just before it was too late… and Libyans know it: I was greeted in the streets and at the frontline, near Adjabya, by young people shouting cheerfully: “Merci, Sarkozy!”. Two days after I left, the HR/VP Catherine Ashton opened an EU Office in Benghazi. The EU flag is now flying above the Courthouse in the newly-named Freedom Square, as a symbol of European solidarity. The EU also provided already more than €140 million in assistance to attend to humanitarian needs.
However, in the security sphere, the EU failed to act together, in a coordinated manner. Instead, EU Member States took action unilaterally and with limits, under the aegis of NATO.
EUFOR Libya is seen as an April fool’s joke – announced on the 1st of April, it was never launched, since it was made dependent on a request from the UN Office for the Coordination of Humanitarian Affairs (OCHA), which never came nor needs to come, since a broad UN Security Council mandate is there already.
The fact is that EU Member States could not reach agreement on a full-scale Common Security and Defence (CSDP) operation. So, EUFOR Libya was presented as a mission to support humanitarian assistance. This was a mistake: as a CSDP operation, it should have military and civilian components (for instance police, for supporting border management now and Security Sector Reform and Disarmament, Demobilisation and Reintegration operations in the next phase) and it should aim at the enforcement of the arms embargo, surveillance of borders and, chiefly, the protection of civilians in Libya, as determined by UN Security Council resolutions 1970 and 1973. Of course, Germany abstained shamefully in the latter, the one which determined the “no-fly zone” – and that explains a lot the difficulties for the EU to get their act together subsequently, namely on EUFOR Libya.
Portraying EUFOR Libya as an answer to humanitarian needs risks jeopardising real humanitarian operations, although EUFOR Libya could certainly help open up humanitarian space, namely by establishing humanitarian corridors, such as those needed for assisting the besieged villages in the mountains west of Tripoli.
NATO’s role in Libya must not serve as an excuse for EU inaction in the security field. The EU is missing a tremendous opportunity to act in a coordinated manner, within the CSDP framework and in articulation with NATO.
Short of other options in the meantime, EU members resort to unilaterally recognizing the TNC in Benghazi as the legitimate representative of the Libyan people, as did the UK now. Well, even Guido Westervelle, the German Foreign Minister, tried to atone by visiting Benghazi some weeks ago.
Were EUFOR Libya already operating and the stalemate on the ground, with Khadaffy in Tripoli and so many lives in at risk there and elsewhere, might already be over.
Ramadan is there, nobody could have ignored its predictable impact on the fighting in Libya. By dragging their feet under the uninspired, misguided and hesitant German direction of today (can it really be called “leadership”?), EU members muddle-through by aggravating the problems, instead of solving them: on Libya, as on the Euro and the economy crises.

The European crisis seen from the USA

I spent the week 10-17 July in Washington and New York in a EP delegation. One did not see much about Europe and the European crisis on the TV, there. Only the rating agencies’ attack on Italy was briefly mentioned, but just because of the Stock Exchange oscillations. Aside from the Murdoch empire scandal, nothing else European existed. Not even the devastating explosion in Cyprus, of which I heard, by chance,from a Cypriot friend.

On the other hand, in Congress, everyone asked about the crisis in Europe, everyone was speaking about Greece, everyone feared contagion – even the less informed Senators and Representatives knew that Portugal and Spain, and then Italy, were being targeted. They asked how it was, how it will be, what is Europe going to do.

Regulation, regulation, regulation for the financial sector – among EU and US legislators there was agreement that it is indispensable and that it has not happened yet. In the USA, the Dodd-Frank Act is being boycotted in its implementation, as everyone acknowledges: “too much money, too much lobbying” from the banks, finance companies, etc.

The control of tax havens/ the “Delaware question”, which I persistently raised with American colleagues, is indispensable. Everyone seems to agree on that. But few actually even try to explain why nothing has happened.

What indeed dominated the political and public discussions in that week in the USA – and that goes on – is the dispute between the Administration and Congress about the authorization to raise the debt ceiling, so that the USA does not default at the beginning of August. Something will be worked out right at the end of the deadline, everyone assured the European parliamentarians.

The tug-of-war goes on: ten days later, people seem to delight in the brinkmanship – in the USA, as much as in the EU: it was necessary for the alarm bells to ring on contagion to Italy and Spain, to make the EU Council finnaly take some minimally sensible measures to flexibilize the EFSF and to lower interest rates and extend maturities in the loans extended to Greece, Portugal and Ireland.

In the USA, the dispute shows that Republicans, who are now somewhat hostage of the elected Representatives from the ultra-conservative, populist, extremist and evangelicals gathered under the “Tea Party” umbrella, are already nastily campaigning to try to prevent the re-election of President Obama next year. He is becoming more and more unbearable to all these reactionnary forces; and to a few Democrats as well, worried about their own re-election….

In an incoherent way, the leader of the Republican minority in the Senate, Mitch Mcconnell, suggested that the President should assume alone the decision to raise the debt level, overlooking the House – the same House that weeks earlier censored the President for advancing militarily in Libya without consulting …the House. The suggestion seems incongruent, but it looks that it might provide the way out from the dispute. Which is seen by most Americans as an artificial dispute: actually, this is the first time that Obama asked a raise of the debt ceiling. Bush son asked seven times and always got away with it. That also happened more than fifty times since the 60s.

In fact, in the USA, as in Europe, the real dispute is all about who is going to pay for the crisis: the richer or the poorer and the middle class. The latter are the ones to feel the cuts in welfare and healthcare financing, as the right wishes, as it wants that no more taxes are charged on the rich. Or, indeed, that no tax breakes (namely those granted by Bush son) are withdrawn from the rich.

The system is terribly unfair, as the multimillionaire Warren Buffet admits. He is the main stock holder of Moody’s and points out that his secretary pays more than double than him in tax: she is taxed 33% for her salary, whereas he contributes with merely 14% of the millions of profit from the capital he invests.

MSNBC makes the case on how the resistance from the rightwing to raising taxes for the rich, instilled by media like FOX News, has a lot to do with the interests of the Murdoch empire, which has been earning fabulous profits in the last decades, since Rupert Murdoch naturalized himself American, taking advantage of all sorts of tax-exemptions.

In the USA, as in Portugal and in Europe, we always come back to the same old question: are we going to use the State to redistribute wealth and force the rich to share somehow with the poorer or, on the contrary, are we going to make the rich even richer, to the detriment of the poor and the middle classes?

Questioning the EU Presidents

“- President Van Rompuy,

As you said, the sovereign debt crisis demonstrates the interdependence of all our economies. But there is another lesson to retain: that austerity, alone, does not work. Just the opposite, as the Greek case shows. That prescription is ultimately burying the economies of Greece,Portugal, Ireland, Spain and else. Furthermore, it exposes the Euro to market speculation.

What is the Council then waiting to adopt truly European and solidarity measures? Such as eurobonds, to mutualise the  debt; a financial transaction tax to finance economic recovery and employment in Europe; and advancing economic governance, including harmonization of fiscal, industrial and trade policies to narrow the macroeconomic imbalances among EU Member States?

What is the Council waiting to force European banks to communicate to the Greek government all the Greek assets which they helped siphon off  to tax havens  in the last year, helping in this way to frustrate the European assistance plan?

- President Barroso,

What will the Council and Commission do if the Greek Parliament does not approve the the European Council plan tomorrow? What is the Council’s plan B?

Does the Council realize that, with the stupid and painful impact on citizens of its neo-liberal prescriptions, it is not only sinking Greece, but also the Euro, the European construction, and democracy in Europe itself, in addition to triggering a global crisis which may be  worse than the one  caused by the Lehman Brothers’ collapse,  as our American allies have been warning?”

These are questions that I addressed this afternoon to Presidents  van Rompuy and Barroso, at a debate in the European Parliament.

Both replied they were confident that the Greek  Parliament would approve the new package of austerity measures.
Barroso denied, therefore, that there is a Plan B…  (so, if the Greek Parliament does not pass the measures, is the EU going to let Greece fall in bankrrupcy?).
Barroso admited, however, that Greek money is,  indeed,  being shiphoned off abroad.  He did it with visible exasperation, commensurate with the exposure of  the incapacity of the EU to prevent it.

And that tells a lot about the efficiency of the measures so far conceived  by the European Council to react to the crisis!

Portugal leaving the euro? An assisted suicide

I have a lot of respect for Professor João Ferreira do Amaral as an economist, despite the fact that we disagreed since ever on the interest of Portugal in joining the Euro,  which he has consistently opposed .

Yet I acknowledge the accuracy of the many warnings  Prof. JFA is making  on the inadequateconditions  under which Portugal joined the Eurozone and its implications  for disarming the Portuguese authorities in controlling and managing  the national economy.

I also agree with his overall analysis  - on yesterday’s discussion with José Gomes Ferreira,broadcasted by SIC Notícias -  about the virtues, insufficiencies and mistakes he detects in the MOU signed by Portugal  with Troika,  including the negligeable impact he points out in the PSD/CDS Government plan to reduce the TSU (Taxa Social Unica, the corporate tax) with the purpose of  stimulating the production of exportable goods.

But I do not agree, fundamentally, with the stand of  Prof. JFA proposing that Portugal should leave the Euro”orderly”  and seek to be assisted in that process by the EU, as the only way to trigger significant economic growth again, to decrease public debt and to return toborrowing in the markets.

Prof. JFA himself  recognizes that his proposal neglects possible political implications. Which would be tremendous and horrific, for Portugal and for Europe.

Indeed, leaving the Euro would determine Portugal’s abandonment of the European project.And that would represent a dramatic  failure of the European Union.

And, in fact, there is and there will be no guarantee that the EU would ”assist”  Portugal  in leaving  the Eurozone ”orderly”, regardless of how much one could ask for it.  Even assisted, a departure  of Portugal from the Euro would be… an “assisted suicide”,  with  the public and private debts skyrocketing.

Any initiative from Portugal - or Greece, or Ireland… - promoting the abandonment of the Euro, in the current context of  European crisis, would constitute a fatal political blow not only to the Euro’s sustainability, but also to the sustainability of the European Union itself.

I know that it took 80 years of excruciating discussions and a civil war to have the USA move into agreeing on a common currency, the US dollar, and into a federal State. All that happened in a different historical and strategic context.

But in the globalised era we live in, giving up the Euro after having come this far,  would mean giving up the  European Union: nothing less than unassisted suicide for all EU Member States and peoples.

Giving up the Euro and Europe cannot,  in any way, serve the interests of Portugal and the Portuguese people.

Portugal, Greece and the European Council

National interest will only be served if, at the European Council beginning today, Portugal aligns with those who are demanding a European solution to rescue Greece from the ever deepening financial crisis.

A European solution should not just be one more package of intergovernmental assistance (thereby subjected to veto from any national parliament), like the one offered to Greece last year and similar to the one extended to Ireland and Portugal.

The Greek crisis is a European crisis. And it is also a political crisis, not just an economic or financial one:

- It is the crisis of the European governments and the European institutions which let Greece accede and remain in the Eurozone, turning a blind eye to the fake accounting and fraudulent methods, in addition to the continuous deviation from the rules which the Euro and the Internal Market should have imposed;

- It is also the crisis of the European governments and institutions which never regulated, nor supervised, the financial system and thus gave rise to irresponsible lending from German, French, English and other banks to Greece (and Portugal, and Ireland, and Sapain, etc…);

- Finally, it is the crisis of the governments and European institutions which have not been able to agree and find suitable answers to the economic and financial crisis, and quite the opposite, seem to entertain themselves with cacophonous declarations which only aggravate the crisis, by spurring the speculators in the financial markets against the peripheral countries, as weakest links of the Euro, with a view to target the Euro (Ms. Merkel and “su Schauble” take the lead with their pitiful threats of “haircuts” for the private sector and the crappy call for a “soft “, ” orderly” or “voluntary” restructuring, to which the rating agencies vultures reply with more downgrades and a new wave of speculative attacks…).

The Greek crisis, like the Portuguese or the Irish crisis, is in fact a crisis of the Euro, for the EU lacks the instruments to sustain it and to ensure the economic governance of the Eurozone. It is a crisis produced by this Europe, currently incapacitated by the dominance of the neo-liberal ideology.
As many in the European Parliament have been for long proposing, a European solution for the crisis, aside from the fiscal and budgetary reforms which are also needed, demands

1) “eurobonds” to mutualize the debt,

2) additional resources to relaunch economic growth and employment, such as those to be obtained from a European Tax on Financial Transactions and

3) more stringent European economic governance, with harmonized and coherent fiscal, industrial and trade policies, which will narrow the macroeconomic imbalances between EU Member States.
To save Europe one must save Greece first. And saving Portugal means saving Greece, the Euro and Europe.
That is why the Portuguese Prime Minister seating at the European Council will only defend Portuguese interests properly if he will demand and contribute for a truly European solution for the Greek troubles. Only in this way will Portugal avoid “turning Greek”, i.e., facing similar despair as the one now inflicted on the Greek people.