Monday, 15 October 2012

The EU And That Peace Prize

There has been a lot of media discussion, over the weekend, about the decision of the Nobel Prize committee, to award the Peace Prize to the EU. One of the frequently made arguments as to why they made that decision is that it was done to encourage the EU to do more to ensure that peace continues in Europe, given the current tensions. Given the forces being unleashed in Europe, and on its borders, it needs all the encouragement it can get.

Look across the EU, and everywhere you see the building centrifugal forces. Today, there is the announcement of the decision on the referendum for Scottish independence. In recent weeks, the question of Catalonia becoming a separate country has become a serious matter in Spain. In Belgium, Flemish nationalists are gaining ground, with their win in the mayoral election for Antwerp, providing support for their drive in next year's elections for splitting up Belgium. All of these, developments are being fuelled by the Debt Crisis across Europe, and the policies of austerity that right-wing populist politicians are foisting on people's who feel they have no real say in the decisions being imposed upon them. That in turn is a function of the lack of democracy not just in the EU itself, but within the individual nations states themselves. That opens the door for demagogic nationalist politicians to gain ground on the basis of blaming all the problems on the “others”, whoever they may be.

That is more than apparent in Greece, where, as Paul Mason reported, the police appear to be increasingly infiltrated by, and working with the fascists of Golden Dawn. Greece has clamped down on immigrants coming to the country, while Golden Dawn has launched its own pogroms against foreigners living in the country. That is likely to intensify as the economic problems being imposed on Greece get worse in coming months. Similarly, Italy is clamping down on refugees flooding into its Mediterranean islands, escaping from the conflicts spreading across the Middle East and North Africa. Those conflicts too are only likely to intensify further, turning that flood into a tsunami.

The Muslim Brotherhood at the moment have the upper hand in Egypt and Tunisia. They are now turning their attention to Jordan. More extreme Sunni Islamists have control of the streets and the weapons in Libya, and in Northern Mali. The uprising of the Syrian people against Assad, has been hijacked by the Sunni Jihadists, backed by the Sunni Gulf tyrannies, Turkey and the US. At the same time, the Salafists are pressing the Muslim Brotherhood to become even more extreme in Egypt. Already, the Brotherhood have come out to say that they intend to ensure that Jerusalem as a whole is secured for Arabs, a venture that will only be achieved via a war against Israel, who the US seems to have now abandoned, in favour of its alliance with the Gulf tyrannies, upon which it relies for oil, and for forces to oppose Iran, and its Russian and Chinese backers.

At the same time, Turkey, whose Empire once stretched across the Balkans and into the Middle East and North Africa, is flexing its own muscles, as it seeks to establish its own Neo-Ottoman Empire. Turkey has a huge army. It is second in size, within NATO only to that of the United States. As the saying goes, countries do not develop huge armies unless they intend to use them. Turkey seeks to become a regional super power, and to both crush the Kurds, and take over their territory and mineral wealth across Kurdistan. That will entail taking those territories from Syria, Iraq, and Iran.

An economically and militarily powerful, Islamist regime in Turkey, combined with the Sunni Islamist regimes in Tunisia, Libya, Egypt, and in future, Syria and Jordan, together with the Sunni Gulf tyrannies would be a powerful force across one of the world's most important and strategically significant areas of the world. It would be a long way towards the Islamists declared intention of establishing a Caliphate. It would be a powerful attractive force, given the existing links between these states, and the jihadist forces in Pakistan, and Afghanistan, and across Central Asia. On the back of a defeated Iran and Iraq, and Israel, it would hold sway across the region able to bargain from a position of strength, against US and European Imperialism, that ironically will have helped it into power.

That level of conflict would undoubtedly spread wider than these confines. Already, the same kinds of fault lines existing in Syria, are materialising in Lebanon, and more importantly in Turkey itself. Any strengthening of the Islamist forces in Turkey is likely to provoke a reaction from within Turkey by Christian and other forces, that will threaten to bring in other Christian forces from Greece, Cyprus, and Italy, once more opening up the potential for a new Balkan War.

The current developments within the EU, do not give confidence for believing that the present EU politicians are up to the job of dealing with such eventualities on the borders, and the potential for them to flow over into the EU itself.

Angela Merkel is reported to have said that there will be no uncontrollable events within the EU. That is reminiscent of the Bank Managers, who always have to come out to assure savers and investors that the bank is safe, just before it closes its doors. At the same time, Switzerland has announced that its army is ready to close and secure its borders in the event that the EU does begin to break up, and people flee Southern Europe, seeking a safe haven!!!

A theatre manager interviewed by Paul Mason described
attacks by Golden Dawn recently as the equivalent of Kristellnacht.
As the centrifugal forces intensify, and as the external events threaten to overwhelm European politicians and institutions, the economic crisis within Europe intensifies due to the austerian economic policies being implemented. Those policies have all but destroyed Greece, and are on the way to doing the same thing with Spain. The only potential saving grace for Spain is that, unlike at the time of the Civil War in the 1930's, there are millions of Northern European who either live, or who own property in Spain. There are something like 5 million Britons living in Spain, and around 10 million who own property there. The numbers of Germans is likely to be greater.

The Spanish Civil War was
prolonged and bloody.
As Paul Mason has set out, for the first time since Franco's death, people in Spain are once more discussing the Civil War. Rich people are taking billions out of Spanish banks, as they did previously in Greece. Sections of the Spanish military – within the officer corps, which is where coups always come from – is openly saying they will not let Catalonia secede, and large sections of the population elsewhere in Spain support that sentiment. Its unlikely that Northern European states would then stand by whilst a fascist regime simply came to power in Spain. They would be forced to intervene. But ultimately, that means not a Civil War, but a national war! It means conducting the same kind of military operation in Spain, that Imperialism has implemented in Yugoslavia, in Libya, in Iraq, and in Afghanistan.

There are historic precedents. In the 19th century, the Egyptian regime of Ismail Pasha ran up huge debts due to its colonial wars against Sudan and Ethiopia, as well as large investments in the Suez Canal, in railways etc. As today, with Greece and Spain, Egypt could not repay these debts. An international alliance of lenders, therefore, got together and imposed external rule on Egypt under Britain. It was not, particularly that Britain wanted Egypt as a colony, but it did want its money back, and it did want to ensure the security of the Suez Canal. Engels wrote at the time,

The Egyptian business is a Russian diplomatic manoeuvre. Gladstone is to take Egypt (which he does not have and if he had it, would not keep for long), so that Russia can take Armenia; which of course, according to Gladstone, would again be the liberation of a Christian country from the Mohammedan yoke. Everything else in the case is pretence, humbug, subterfuge. Whether this little plan will succeed will soon be seen.”

In fact, the current plans for establishing a fiscal and political union across Europe, are probably predicated on something similar in content if not in form. Germany and Northern Europe, will not agree to bankroll the whole of Europe unless the peripheral economies give up control of their budgets, which means surrendering political sovereignty to a central EU State. That would be historically progressive, provided it was based upon a genuine coming together of European peoples. But, the whole EU project has been based not upon building unity of the peoples of Europe on the basis of consistent democracy, but on the basis of bureaucratic manoeuvring, and decision making over the heads of the people. That is why it is falling apart, and the centrifugal forces are asserting themselves.

At the present time the politicians, particularly the right-wing populist politicians are clinging to nothing but faith. As in Britain, their austerian economic dogma has sent the European economy into a downward spiral, just at the time when, still recovering from the effects of the 2008 Financial Meltdown, the global economy has gone into a cyclical downturn. They have put all their faith in Monetarism, in the hope that printing ever larger quantities of money will somehow lead to a revival, when in fact, all it is doing is bailing out the banks, and squeezing everyone else between rising prices, and falling wages. They have to hide the increasingly zombified nature of their economies behind a welter of fake figures, and delusional projections.

The latest of these was provided today by the Ernst and Young Item Club. Their previous declarations that the UK economy was recovering have proved false, and this one will be no different. They declare that inflation is declining at the very moment that its announced that food prices will be rising by around 15%, and energy companies are increasing prices by around 9%! They say that real wages are rising at the very time when millions of workers in the Public Sector are facing yet another year of wage cuts, and pension contribution rises, and when pay in the private sector is not moving as the economy shrinks. They say unemployment is falling, but everyone knows that its real jobs being replaced by part-time, low paid, zero hours jobs, or self-employment which often pays those engaging in it next to nothing above what they would get on the dole. They pin their hope in people rushing out to spend in the shops, when in fact, people are trying to reduce their existing debts. They pin their hopes on house prices rising, which would only freeze more people out of the housing market. They talk about the Government's various schemes to get the banks to lend out for mortgages, but all the figures show that like all the other Government schemes, it has been a dismal failure.

But, that is just the latest example of this kind of approach. It is just the same approach that the EU politicians have used in their endless rounds of meetings and summits. It is the same approach used by the ECB in announcing grand plans that always disappoint, and fail to deal with the real problems. It is the same approach that has been used with the Bank Stress tests that no one has believed, and whose latest manifestation, estimate the level of property debt at probably only a quarter of the real figure. (In fact, today Bloomberg reports that the worst case scenario for Spain's Banks assumed in those stress tests has already arrived, as Spanish Banks Bad Loans ration has soared to 10.%%). It is the same approach that has been used by the Spanish Prime Minister in continuing to claim that Spain does not need a bail-out – the same approach that every other national leader has taken until reality imposed itself so powerfully that they had to join the real world. It is the same approach that is taken in Britain in regard the property market bubble, which vested interests continue to claim is not falling significantly, and can continue at its current stratospheric levels!

When Richard Cookson, CIO at Citi Private Bank, said on CNBC last week that UK house prices were in a massive bubble, and that they need to fall by 40%, it was as though someone had farted in a lift. But, he is right, except that on previous experience they need to fall by 80% not 40%. The same is probably true of other asset prices such as shares, which bubbled up on the back of easy money in the 1980's under Thatcher's Financial Big Bang, and Reagan's deregulation of the US money markets. It is certainly true of Bonds, which are in a massive bubble waiting to pop. And, when all of these bubbles do burst, then as happened in 2008, everyone will say, why didn't anyone see this coming? Why didn't somebody do something? The reason is no one wants to see that these things are unsustainable, nobody wants to do anything to bring them down, because their existing policies depend on them continuing.

But, that kind of approach only leads, as happened in 2008, to an even bigger crisis, an even more difficult problem to resolve, precisely because it gathers its own momentum. Who knows what the Lehman Brothers event will be. There are any number of potential sparks from an Israeli attack on Iran, sending oil up to $200 a barrel or more. Turkey downing a Russian jetliner heading for Syria leading to retaliation from Russia. Iran coming to the assistance of Bahrainis being murdered by the Gulf tyrannies, sparking a Gulf War. The Muslim Brotherhood being pushed by the more extreme Islamists to provide open support for the Palestinians. A default by Greece, the bankruptcy of a big Spanish bank, a decision by the Bond vigilantes to move out of Bonds, causing global interest rates to rise, a rapid collapse of the UK housing market bankrupting UK banks, the US fiscal cliff. Take your pick from these and many more. Is it any wonder that people are worried, and sitting on whatever money they have? Is it any wonder the Nobel Prize Committee might feel that the EU needs all the encouragement it can get to keep the peace in Europe?

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