The weirdness of immigration controversies in European politics

The immigration issue continues to be exploited by far-right radical and anti-EU groups in Europe. The situations in Germany and Austria are the ones with which I'm most familiar.

What I continue to find astonishing is how divorced from pracitcal and realistic solutions the public debate often is.

The current solution to the mass immigration problem originating from the Middle East and North Africa was established by Angela Merkel in early 2016 in negotiations with Turkey's authoritarian President Tayyip Erdoğan. The deal in simple terms was that Turkey would hold the refugees coming across the Mediterranean in exchange for the EU paying them to do so.

The EU outsourced its most difficult border control problem to Turkey, which currently holds three million or so refugees in conditions that are very likely not the best. A smaller number are also held in Italy and Greece.

In politics, a "solution" that holds for two and a half years is easy to count as a success. But this was always a delicately balanced arrangement that could fall apart at any moment if, for instance, Erdoğan's government decides it serves them better to start sending massive numbers or refugees north than to keep holding up their end of the deal. Italy's new government, in which the far-right Lega party led by Interior Minister Matteo Salvini controls immigration policy, is already posturing against EU agreements and international law to show how much his party hates foreigners.

It's a standard Angela Merkel extend-and-pretend solution.

And it can be thrown out of kilter by a Syrian military push into the Idlib province. Michael Peel reports (EU steps up planning for refugee exodus if Assad attacks Idlib Financial Times 09/14/2018):

The situation in and around Idlib, which borders Turkey, has added urgency because several million people are estimated to be gathered there.

The UN Office for the Co-ordination of Humanitarian Affairs said this week that 30,000 people had been displaced from their homes by air and ground attacks by the Syrian regime and its allies on the opposition enclave, while a full assault could drive out 800,000.

Jean-Claude Juncker, European Commission president, this week warned that the “impending humanitarian disaster” in Idlib must be a “deep and direct concern to us all”.

So it's not as though the EU governments and leaders don't know that they are facing a longterm, ongoing immigration crisis. But, as Peel also reports, the immediate goal is to clear current immigration camps in Greece by accelerating settlement of their current occupants to make way for new refugees.

But from his report, it appears that even that preparation is something ongoing for other reasons, "The proposal is primarily aimed at dealing with what 19 non-governmental groups on Thursday branded 'shameful' conditions at the island migrant centres." Greek Prime Minister Alexis Tsipras is meeting next week with the EU "migration minister" to discuss ways to free up 3,000 spots in the current camps.

Yes, with the imminent prospect of up to 800,000 refugees coming out of Syria to Turkey in the next few weeks, Greece and the EU are looking to free up 3,000 spots in current camps. The current camps that NGOs are criticizing, with good reason, for already bad conditions.

If this were a problem that appeared suddenly due to, say, an asteroid striking the Middle East, the EU's lack of preparedness might be more understandable. But the asteroid was the American invasion of Iraq in 2003 and the subsequent destablization of Iraq and Syria, along with the NATO intervention in Libya in 2011 which left Libya a failed state. That meant that Libya, which had previously absorbed large numbers of African refugees as workers, was no longer able and willing to do so. By virutally all Western news accounts, conditions in the current camps in Libya are genuinely horrific.

Since 2011 - the year of the NATO intervention in Libya - there has been a visible crisis of large numbers of refugees making their way on the very dangerous trip across the Mediterranean toward Europe. That was seven years ago. In 2018, the EU is struggling to free up 3,000 places in Greek refugee camps in face of the impending exodus of up to 800,000 refugees from Idlib.

That's what an extend-and-pretend solution looks like.

There is actually a practical, resonable, and humane way for the EU to handle this problem. Its basic elements are well known and have been discussed for years:

• Establish individual country quotas for the reception of non-doucmented immigration flow. In the case of an Idlib situation, that could mean parceling out hundreds of thousands of refugees in a few months time. In less acute years, like most of 2016, 2017, and 2018 to date, the numbers would be radically lower.
• Set up pro-active training programs and recruitment of immigrants for jobs which are not being filled by already-legal EU residents. In Germany and Austria, home assistance for the elderly is a job of which there is and will continue to be a growing demand. They are currently being filled mostly by immigrants, many of them from eastern EU countries. And for the same reason that agriculture in the US is completely dependent on immigrant labor, including massive numbers of undocumented workers: they can't get native workers to do it at any feasbile wage level.
• Provide expanded development assistance to African countries in particular to provide local opportunities for people there.

Another measure that is much discussed is establishing asylum centers in Libya or other places outside of the EU borders where refugees can apply for asylum in Europe. This is known as the "Australian" solution.

But we don't need to know much about what Australia is doing to see that the latter proposal is only barely more than pure fantasy. And that's probably putting it too generously. No African country has agreed to such a scheme, and none are likely to do so. The proposal as it is being discussed runs into all sorts of problems in international and EU law. The only way the EU could insure that such camps would provide minimally humane and secure conditions in countiries like Libya would be to run the camps themselves. The PR problems of the EU setting up camps in Africa in which refugees could be, uh, concentrated, is actually the least serious problem involved.

The rightwing nationalist parties in EU countries are flatly opposed to a new system of refugee settlement and assimilation ("integration" in the official jargon in Germany and Austria). The weakened center-left parties have also been timid at best in validating this approach.

In Austria and Germany and other EU countries, the native birth rate is below the replacement rate, which means that population is expected to decline in coming decades. In order to have growing economies in the sense we currently understand economic growth, they will need significant numbers of immigrants. Several former Eastern Bloc countries are already suffering serious negative economic impacts because so many younger workers have already immigration to other EU countries.

Expanded developmental aid to African countries like Niger is certainly a worthy goal. Also a difficult one to pull off. And that talking point does nothing to address what will happen if another 800,000 refugees come into Turkey in the next few months. Politicians advocating this typically don't bother to reference the fact that the biggest development aid some African countries are currently getting comes from their citizens working in Europe who send money back to their families. And since those amounts are going to individual famililies, much of it presumably gets spent on consumption which boosts their economies. And is also, I assume, less vulnerable to massive diversion of funds than some traditional aid projects might be. In other words, African workers in Europe are a major foreign aid provider.

Much of the actual political rhetoric around immigration, though, is frivolous. The Austrian government has been taking various measure to make life for asylum-seekers in Austria more difficult, which does have the real effect of hurting real people. The rest is largely posturing. In one sense, Austria is a "free-rider" on border issues, because it doesn't have a Mediterranean coast. The current Chancellor Sebastian "Wunderwuzzi" Kurz likes to talk about boosting the presence of the border patrol Frontex, which the EU is currently doing. But if a situation like 2015 occurs again, which could happen at almost any time, and refugees are sent north to Hungary and Austria, what is Chancellor Wunmderwuzzi actually going to do? Gun them down at the border? And, if not, he's going to need a whole lot more than empty rhetoric about asylum centers in North Africa.

He rose to be Chancellor at age 31 because he skillfully exploited and fed xenophobic fears and, as Foreign Minister in 2015-16, did a lot of posturing against Germany and Angela Merkel which in the context, had no real downside for him politically. But if the current -house-them-all-in-Turkey solution doesn't work, he's like to find that chest-beating is a limited practical use in a new acute phase of the immigrantion crisis.

Meanwhile, Putin's government in Russia currently sees an advantage in weakening the US and a very useful instrument to promote it in the immigration issue. Viktor Orbán's government in Hungary is currently the main European model for the anti-EU parties from Austria to Czechia, Solovakia, Poland, Sweden, Germany, Italy, and France. Some of those parties like the FPÖ in Austria have formal friendship/cooperation agreements with Putin's United Russia party, an arrangement that seems to be a rightwing reflection of the arrangements the Soviet Communist Party had with affiliated Communist parties in Europe. Not surprisingly, the Putin-allied parties are agitating over immigration issue, which they polemically call a "migration" crisis, in ways that align with Putin's foreign policy goals.

Germany actively explores new international policy options in the face of Trump's erratic foreign policy

Other nations around the world are obviously faced with making significant adjustments in their foreign policy in response to the new orientations and the high level of uncertainty in the Trump Administration's foreign policy.

Christoph Schult writes about German moves in "Allianz der Gleichgesinnten," Der Spiegel 28.07.2018. He takes as a starting point a meeting that German Foreign Minister Heiko Maas (SPD) had with Japanese Prime Minister Shinzō Abe. Haas, writes Schult, proposed to Abe:

... stellt Maas dem japanischen Regierungschef seine Idee eines neuen Staatenbundnisses vor. Sie konnte das weltpolitische Vakuum fallen, das Trump hinterlässt. In den kommenden Monaten soll ein Netzwerk global orientierter Staaten geknüpft werden, das sich in der Außen-, Handels- und Klimapolitik eng abstimmt. »Wir brauchen eine Allianz der Multilateralisten«, sagt Maas, ein Bündnis also, das für jene globalen Regeln und Strukturen der Nachkriegsordnung eintritt, die Trump ablehnt. >»Der Klügere gibt nach< ware in diesen Zeiten die falsche Maxime«, sagt Maas.

{ ... his idea of a new alliances of states. It could fill the political vacuum that Trump has left. In coming months, a network of globally oriented countries that agree with each other in foreign, trade, and climate politicies will be liked together. "We need an alliance of mulitilateralists," say Maas. Meaning an alliance that will engage for the global rules and structures of the postwar [post Second World War] order that Trump rejects. "'The cleverer give in', would be the wrong maxim in these times," says Maas.}

Trump's recent statements represented a turning point, in Schult's reporting:

Spätestens seitdem der US-Präsident den Nato-Partnern beim Brüsseler Gipfel mit dem Rückzug aus der westlichen Verteidigungsallianz gedroht und wenige Tage später die EU als »Gegner« bezeichnet hat, hat sich in Berlin, Brüssel und Paris die Hoffnung zerschlagen, dass Allianzen Trump überhaupt etwas bedeuten. Die USA hatten sich vom »Ordnungsgeber« zum »Ordnungszerstorer« gewandelt, heißt es in der Bundesregierung.

{At least since the US President threatened the NATO partners at the Brussels summit that he would withdraw from the Western defence alliance and a few days later described the EU as an "enemy," hope has been destroyed in Berlin, Brussels, and Paris that alliances mean anything at all to Trump. The US has changed from being a "provider of order" to a "destroyer of order," say people in the German government.} [my emphasis]

This article reads very much like a trial balloon floated intentionally by government officials, not so much like actual investigative reporting. That's how the press works. But it's another public indication that EU and NATO governments are moving to protect themselves from Trump's European policy, which - intentionally or not - is very much in line with the efforts of Vladimir Putin's Russia to undermine both NATO and the EU.

Schult's piece mentions several countries that the German government considers possibly important partners in this effort: Canada, Mexico, France, South Africa, Australia, and Argentina. It's strikes me that Canada and Mexico have a strong national interest in taking some part in this effort. Martin Hesse writes elsewhere in the same Spiegel ("America first, Dollar second") notes that Trump's currency policy (or just blundering actions) could destablize the world financial system. So countries all over the world have reason to be carefully considering options.

Also in the same issue, Defense Minister Ursula von der Leyen gives a suggestion that a sort of stalling for time is also part of the Merkel government's perspective:

Diese Fixierung begleitet ihn ja schon über Jahrzehnte. Lange bevor er Präsident war, hat er bereits über deutsche Autos und deutsche Exporte gesprochen. Seine oft abfällige Art gegenüber Deutschland ist aber alles andere als typisch amerikanisch. Ich war bei meiner letzten US-Reise im Abgeordnetenhaus und im Senat und habe erfahren, mit welcher Leidenschaft sich die Amerikaner über Parteigrenzen hinweg zur Nato bekennen und wie sehr ihnen an der deutschamerikanischen Freundschaft liegt, die für viele nicht nur schone Erinnerung ist, sondern vor allem ein wichtiges Element der Zukunft unserer freien und toleranten Gesellschaften.

{This fixation [on Germany as an antogonist] is something that [Trump] has held for decades. Long before he was President, he had already spoke about German cars and German exports. But his often disparaging manner toward Germany is anything but typically American. On my last trip to the US, I was in the House of Representative and in the Senate and experienced with what passion the Americans across party lines recognized NATO and how much they valued the German-American friendship, which for many is not only a beautiful memory, but above all an important element of the future of our free and tolerant societies.}

She mentions that in those meeting with the Members of Congress, they made a point of recalling that Germany was the country that took the lead in formally invoking the NATO alliance over the 9/11 attacks and in support of the Afghanistan War.

She also has this to say about Russia's current position toward Europe:

Helsinki hat wieder gezeigt, dass Russlands Präsident Putin eine klare Strategie hat. Seine wirtschaftliche Schwache will er dadurch überspielen, dass er sich als globaler Player positioniert. Ein Mittel dafür ist auch, den Konsens der Atlantischen Demokratien, die Nato und die EU zu spalten. Eine klare Strategie des amerikanischen Präsidenten im Umgang mit Russland ist nach dem Treffen indes nicht zu erkennen.

{Helsinki [the Trump-Putin meeting] showed again that Russia's President Putin has a clear strategy. He wants to gloss over its economic weakness by positioning himself as a global player. One means for that is to try to split the consensus of the Atlantic democracies, the NATO and the EU. A clear strategy on the part of the American President in dealing with Russia, however, is still not apparent after the meeting.}

Von der Leyen also notes that Germany gets 9% of its energy from Russia. Considerably less than the 70% Trump claimed in one of his endless tweets.

Italy and the refugees rescued from the Mediterranean Sea on the Aquarius ship

Italy is still refusing to let the ship Aquarius with refugees rescued from the Mediterranean dock in Italy. (Steve Scherer and Massimiliano Di Giorgio, Italy and France try to patch up migrant row, draw papal rebuke Reuters 06/14/2018)

This is the new Italian face on immigration, and a grim, ugly start for the new left/right coalition government of Five Stars and the League. Interior Minister Matteo Salvini of the League is the public face of the policy. But the new Prime Minister Giuseppe Conte is going along with it. And, as reported by Dominik Straub und Irene Brickner in Nach geschlossenen Grenzen nun auch gesperrte Häfen Standard 13.06.2018, the ban on letting the ship with people in distress rescued from the ocean, a illegal position in international law that is the way it is for good reasons, could not have been implemented without the consent of the Five Stars Transportation Minister.

This is not a question of national security at all. It's a very cynical, bad-faith posture by the Italian government seeking to exploit nationalist hatreds as a basic part of its political project. As Reuters notes, "The [Italian Prime Minister and the French President] confirmed a lunch meeting on Friday to discuss 'new initiatives' on immigration, a day after Italian Interior Minister Matteo Salvini announced an 'axis' with Germany and Austria to fight illegal migration." (my emphasis)

Salvini's talk has to be taken seriously, though like our American xenophobes, we can't assume they have any particular devotion to accuracy in their public claims. Austria does have an anti-immigrant government, a coalition of conservative Christian Democrats and hard-right Putinists, i.e, the Freiheitliche Partei Österreichs (FPÖ), which has a formal "working agreement" with Putin's Russia United party. (Rechtspopulisten und Putin-Partei rücken enger zusammen FAZ 19.12.2016) The FPÖ/Russia United agreement commits them to the "strenthening of friendship and raising the young generation in the spirit of patriotism and joy in labor." Kind of an "Arbeit macht Frei" kind of thing, apparently.

But whatever political "axis" there may be among the Italian League and the Austrian governing parties, both Italy and Austria are EU members and both are still bound by general international law. In Germany, Interior Minister Horst Seehofer, a rightwing leader from Bavaria who is from the CSU, one of the parties in Angela Merkel's national coalition, has been playing footsie lately with Austria's Christian Democratic Chancellor Sebastian "Babyface" Kurz on anti-foreign politics. But, for all of her government's failings on immigration issues - and the general impression in the US that Merkel is very pro-immigration is a mistaken one - she isn't making a "axis" with Italy to drown immigrants in the Mediterranean Sea. The strange courtship between Chancellor Babyface and is actually aimed politically against Merkel.

(Dont' even try to shoehorn the mixing of internal and external policies in the EU into the framwork of the discussion on the Russian meddling in the US elecitons; you'll just give yourself a headache.)

Not to understate what a prick Seehofer is being on the subject. He is claiming that as Interior Minister, he has the authority to turn back refugees at the border, Angela Merkel and international law be damned. (Asylstreit: CSU droht mit Alleingang und Ultimatum ORF 147.06.2018) So far, this looks more like a weird political stunt than an actual move on immigration policy. But I wouldn't want to underestimate the possibility of it turning into something worse.

Immigration and the eurozone are currently the two biggest threats to the future of the EU. Both have been hampered by nationalist posturing by EU countries. Although as the de facto leader of the EU, Germany, and Angela's Merkel's governments in particular, bear the heaviest responsibility for it. I think of the both as chronic crises, both of which hit acute turns in 2015. Both are currently "solved" by classic Merkel extend-and-pretend non-solutions, forcing Greece to become Bangladesh via draconian austerity policies, on the euro front, and by contracting out the solution of the Mediterranean refugee problem to Turkey, Italy, and Greece. Both are highly unstable solutions.

The sad part is that the general shape of realistic solutions are very clear. The eurozone either has to be unwound with a return to national currencies, or change it into an optimal currency area with a common budget, shared public debt obligations, and "transfer union" structures.

With immigration, the broad solution is also clear: stop supporting wars in the Middle East, whether by direct intervention, facilitating American or Russian intervention, or selling arms to belligerent parties; get real about the fact that mass immigration to Europe is for all practical purposes a permanent situation that requires a structured, systematic sharing of burdens, i.e., accepting refugees, including, yes, the richer countries like Germany and Austria; and, systematic development work in North Africa to provide safer conditions and better opportunities there. Did I mention that to stop supporting wars in the Middle East is a critical part of this? Oh, and getting emergency services in shape to handle entirely predictable future surges in immigration.

But the obvious eurozone and refugee solutions aren't being undertaken as they should be, largely because too many political parties and groups and business lobbies like weapons manufacturers in particular find it advantageous to demagogue the issues.

But reality does have a nasty way of catching up with wishful thinking and flat-out denial. Facts do matter, despite being singularly inconvenient for narrow nationalists and xenophobes. Turkey, Italy, or Greece could change the calculation overnight by just sending a bunch of the refugees they are holding to parts northward. That would be irresponsible in itself absent real practical agreements on how to do it. But Hungarian, Austrian, and German politicians would have to respond with more than slogans about "close the borders." Austrian Chancellor Babyface likes to claim credit for "closing the Balkan route," but that's a joke. Angela Merkel's agreement with Turkey is what mitigated the acute phase of the immigration crisis of 2015, not any whizbang diplomacy by Austria.

And there's this fact-based reporting from Straub und Irene Brickner, illustrating how cynical and dishonest it is for the Matteo Salvinis of the world to conjure up phony claims to justify xenophobic cruelty:

Frage: Wie viele Flüchtlinge haben die Mittelmeerstaaten heuer bisher aufgenommen?

Antwort: Italien hat in diesem Jahr bis zum 12. Juni insgesamt 14.441 Bootsflüchtlinge aufgenommen; hinzu kommen die 932 Migranten, die am Mittwoch von der italienischen Küstenwache in Catania an Land gebracht wurden. Insgesamt knapp 80 Prozent weniger als im Vorjahr. Spanien hat im laufenden Jahr bisher 11.308 Flüchtlinge aufgenommen, Griechenland 12.065. Es kann also keine Rede davon sein, dass Italien die ganze Immigration allein schultere. Wahr ist aber, dass die nördlichen Grenzen Italiens – jene nach Frankreich, in die Schweiz, nach Österreich und Slowenien – für Flüchtlinge seit langem faktisch geschlossen sind.

[Question: How many refugees have the Mediterranean states taken on up until now?

Answer: Italy has taken 14,441 boat refugees; that includes 932 migrants who were brought to land by the Italian Coast Guard in Catania on Wednesday. In all, 80% less than in the previous year. In the current year, Spain has accepted 11,308 refugees, Greece 12,1065. So that can be no claim that Italy is shouldering the whole immigration alone. But what is [true], is that the borders north of Italy - that to France, in Switzerland, to Austria and Slovenia - have in fact been closed to refugees for a long time. [my emphasis in italics]

The Skripal attack in England (Expanded 03/27/2018)

Craig Murray calls attention on his blog to a development in the Skripal attempted murder case that is the most prominent issue in the latest round of European, US, and NATO diplomatic actions against Russia, Boris Johnson A Categorical Liar 03/22/2018. His post is about the fact that the British High Court had authorized a new blood sample to be taken from Sergei and Yulia Skripal to be sent to the international Organisation for the Prohibition of Chemical Weapons (OPCW), "the implementing body of the Chemical Weapons Convention (CWC), which entered into force in 1997."

The High Court decision of March 22 by Mr. Justice Williams has a couple of passages that Muray flags. One is, "The application came before me on 20 March 2018. It was made on an urgent basis. The OPCW wished to collect samples in the near future. The evidence is that samples taken from living individuals are of more scientific value than post mortem samples." Murray takes this as another indication of the gravity of the Skripals' conditions.

Murray also calls attention to the way the High Court describes the findings of Porton Down, a science complex, but in this case used to refer specifically to the Defence Science and Technology Laboratory (DSTL). (Gordon Corera, Russian spy: Inside UK lab that identified nerve agent BBC News 03/23/2018) The decision states:

On 4 March 2018 Sergei Skripal and Yulia Skripal were admitted to hospital in Salisbury. Tests carried out by Defence Science and Technology Laboratory at Porton Down concluded that they had been exposed to a nerve agent. Both Mr and Ms Skripal remain in hospital under heavy sedation. The precise effect of their exposure on their long term health remains unclear albeit medical tests indicate that their mental capacity might be compromised to an unknown and so far unascertained degree. ... [p. 3]

Blood samples from Sergei Skripal and Yulia Skripal were analysed and the findings indicated exposure to a nerve agent or related compound. The samples tested positive for the presence of a Novichok class nerve agent or closely related agent. [p. 10; my emphasis]

Murray takes the "or closely related agent" phrase means that Porton Down was not definitely saying the nerve agent was Novichok, which much of the reporting on it has treated as a given. And, he says, "a 'closely related agent' could be manufactured by literally scores of state and non-state actors."

Marcy Wheeler writes about the Skripal case in Does NSC Consider the Spripal Assassination Attempt To Be Election Related? Emptywheel 03/26/2018:

While most observers do not question that Russia was behind the attack, and while Russia certainly seems to be flouting their role in it, I’ve seen no substantiated explanation for why Russia would carry out the attempt in the way they did. It’s not just that Russia conducted another apparent assassination operation in the UK even as recent press attention has focused on a series of similar attacks. But they did so using a nerve agent, justifying the kind of elevated response we’re seeing from Europe and being contemplated in the US.

Her post looks at the possibility that Skripal may have been connected in some way to Christopher Steele's investigation of Trump's Russia ties.

Marcy is reading tea leaves, tugging at some interesting threads in the story, not offering some definitive theory on the motivation behind the attack.

Kim Sengupta reports on the current diplomatic escalation, If Moscow did order the attempted assassination of Skripal, it is proving very costly for Vladimir Putin Independent 03/27/2018. The German and French diplomatic rhetoric strikes me as more cautious than that of Britain, Australia, and, yes, the Trump Administraion:

The German foreign minister, Heiko Maas, asked for more “clarification” from London and suggested that what happened was essentially a “bilateral issue” between Russia and Britain.

It remains to be seen what other punitive steps the West is willing to take. The European Council President, Donald Tusk, held that “additional measures including further expulsion are not excluded in coming days, weeks.”

One obvious and effective step would be for Mr Macron to cancel his planned visit to Russia due to take place in two months’ time. That would certainly be a statement of disapproval to President Putin.

Germany, meanwhile, can pull out of its involvement with Russia in a pipeline project which will take Russian gas to Germany. Berlin maintains that the €10bn (£8.75bn) Nord Stream 2, will buttress Europe’s energy security by ensuring steady gas supplies at a time when the continent’s energy resources are dwindling.

Although Germany is also expelling Russian diplomats, four in this round. (Mike Szymanski und Daniel Brössler, USA und Deutschland weisen russische Diplomaten aus Süuddeutsche Zeitung 26.03.2018) Germany are acting in concert with their NATO allies, but employing a distinct diplomatic framing.

Germany has its own recent grievance with Russia over a recent cyber-attack for which it holds Russia responsible. (Georg Mascolo et al, Die Geschichte eines Cyber-Angriffs Süuddeutsche Zeitung 22.03.2018)

Once again, examples of why it's so important in a democracy for the public to have actual confidence in official intelligence agencies.

Austria's Chancellor "Babyface" Kurz has maintained a more explicitly neutral policy in the EU-Russia dispute. This is at least superficially in line with Austria's traditional neutrality since the Second World War. But Kurz' junior coalition partner, the FPÖ headed by H.C. Strache, has a formal cooperation agreement with Putin's United Russia party. (Austrian far right signs deal with Putin's party, touts Trump ties Reuters 12/19/2016)

Given the sometimes genuinely hysterical tone in the US press over everything Russia, it's worth noting that there is nothing inherently sinister about a formal political relationship between parties in different countries. Center-left parties participate in the Socialist International and the Progressive Alliance. But knowing about Putin, United Russia, and the FPÖ, I find their formal association more than a bit dubious. As Reuters reported in 2016:

The FPO has long taken a pro-Russia stance, calling for an end to European Union sanctions against Moscow imposed over the annexation of Crimea and the conflict in eastern Ukraine. It has also denied allegations that it receives funding from Moscow.

On a recent visit to the United States, FPO officials met people close to President-elect Donald Trump, including his pick for national security adviser Michael Flynn, the FPO said in a statement announcing the Russian deal.

“The FPO is further gaining influence internationally,” its statement said, without specifying the agreement’s content. A spokesman for the FPO - which this year achieved a record election score but failed to secure the Austrian presidency - said he did not know the deal’s details.

“It is particularly important to Strache that the U.S. and Russia stand shoulder to shoulder,” the statement added, saying that could improve the situations in Syria and Crimea and lead to a lifting of sanctions on Russia.

The following is an update of 03/27/2018 adding to the original post.

thuis is a March 8 program from Aljazeera on the Skripal case from March 8 that covers some of the issues. There is an interesting exchange Bill Browder of Hermitage Capital Management who was declaring Russia definitely guilty and Annie Machon, a former MI5 officer who was more cautious about jumping beyond the information available in the public record. He tries to verbally bully her into shutting up and she manages to calmly insert the fact that Browder has some particular personal axes to grind. Who poisoned ex-Russian agent Sergey Skripal and his daughter? Inside Story 03/08/2018:

The discussion over Russia issues is often high-adrenaline and sometimes frivolous. (Why, yes, I was thinking of Rachel Maddow, why do you ask?) But nothing that I'm referencing her or have seen elsewhere has made me think that Russia should be excluded as the author of the Skripal attack. And I'm assuming that the Putin government was responsible. But I'm also aware that we the general public have incomplete information right now. And that the question of motive is still an open one, even assuming that Russia was behind the murder attempt.

Germany and the future of the EU

This Politico EU article by Matthew Karnitschnig provides a succinct statement of a basic problem with the real existing European Union In German GroKo talks, not much love for Europe 02/02/2018:

The dirty little secret of German politics is that the population doesn’t really care that much. Europe has become a rhetorical prop — everyone is for it, at least in the abstract.

In a survey last month of Germans’ views of the most pressing political issues, the question of fixing Europe didn’t even register.

That may be because many Germans don’t think the EU is broken. Germany, with its strong economy and perpetual export surpluses, is the prime beneficiary of European integration.

While most in the country welcome measures to strengthen the EU’s external borders and other efforts aimed at keeping migrants at bay, they have less time for proposals such as one for a Europe-wide bank deposit insurance. Reforms that could put German treasure at risk remain politically difficult, even outside conservative circles.

The repercussions of the euro crisis may have convinced Europe’s elites that closer integration in the eurozone is the only way forward, but the bailouts in Greece and periphery countries have only deepened the German public’s skepticism.

This lack of a sense of European citizenship is one aspect of the "democratic deficit" in the EU. As long as German politicians in both the CDU/CSU and the SPD see the EU as an instrument for narrow German nationalism, the EU will contine to stumble it's way from crisis to crisis, with failure of the Union at the end of the road.

A look back at how German unification appeared in 1993

I just came across something I wrote dated 11/08/1993 about the state of German unification at that time.

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A report in the 11/15/93 Business Week provides a good illustration of the wishful thinking about European competition so common in the American business press. The article, "Germany: Is Reunification Failing?" by several staff writers, talks about how eastern German economic performance has disappointed the Kohl government's early predictions of a fast transition for the eastern states.

Contrary to the optimists' hopes, the article accurately notes, industrial production in the old East Germany was far worse than the west had estimated, and environmental problems far more severe. Then, it offers its diagnosis of the policy failures in terms common to American economic policy disputes:

But west German leaders were also to blame. They exported their high wages, generous benefits, and stifling regulations to the east - just when this brand of capitalism was beginning to flag under global competition. They also wrongly assumed billions in public investment would spark a big private investment boom. Moreover, the privatization of old state-run companies didn't create a new entrepreneurial class as quickly as hoped. It often shut down factories and wiped out jobs. And western Germans argue that their new compatriots cling to an entitlements mentally developed under 40 years of communism.

This capsule version of the business press' conventional wisdom about German unification suffers from some serious defects, from the standpoint of American leaders evaluating Europe's competitive strengths:

1. "They exported their high wages, generous benefits, and stifling regulations to the east - just when this brand of capitalism was beginning to flag under global competition."

It seems to be a eternal conviction among business writers that well-paid workers are a bad thing for a country to have. But businesses in practice base their hiring on the reality that, if Worker X produces 10 widgets at $10/hour, and Worker Y produces 30 widgets as $20/hour, Worker Y will produce more bottom-line profit ford the company. Worker Y's labor-costs per widget is $.67. Workers X's cost per widget is $1, even though Worker X is paid 1/2 the salary of Worker Y.

In economists' terms, labor productivity (output of product per unit of labor input) is more important for profitability than absolute wages. Yet here we have America's leading business periodical pushing the simplistic notion that high wages are bad for the economy.

In fact, productivity has been more of a problem in eastern Germany than absolute wages. In new eastern factories, like Opel's state-of-the-art Eisenach plant mentioned later in the article, productivity is extremely high, in which case western-scale wages are economically justified. If Opel's expectations that the Eisenach plant can be 50% more productive than the best western German plant, even higher wages could be justified.

There is also the very practical reality that, if German workers in the east must expect drastically lower wages for the indefinite future, many of them will migrate to the west, exacerbating social and economic problems in old and new states alike. In fact, emigration from the old eastern states to the west has slowed dramatically, which has be counted as a policy success.

How relative wage rates affect a country's international standing is indeed a real issue for Germany, as it is for the United States. North Carolina is happy to have Mercedes Benz putting facilities there to take advantage of their relatively cheaper labor. Yet, do Americans really want to become like a Third World country, marketing ourselves as cheap labor? Germany, like America, is grappling with a dilemma of development: as the economy develops, unskilled labor tends to migrate to lower-wage regions and lower-wage countries.

This produces some very real economic and social problems. But do either Americans or Germans want to solve them by trying to turn their country into a low-wage haven for foreign investment? In any case, Germany's economy is heavily export-oriented and has been remarkably successful at it in the recent past. German capitalism has indeed "flagged" since 1992 - due to a serious cyclical recession. But for Americans to assume that Germany's brand of export capitalism is failing in international competition would be wishful thinking of a high order.

2. "They also wrongly assumed billions in public investment would spark a big private investment boom."

This notion is true in one sense, but over-simplified to the point of having little meaning. The huge transfers of public money to the new (eastern) German states have not produced as large an investment boom as expected.

The problem had to do with several major factors, including the law on property claims and the method of currency conversion (see below). There was a real problem with the public investment program, namely, most of it was not investment. Most of the transfers have been to subsidize consumption, like compensation to the large numbers of unemployed. A more .accurate conclusion would be that massive public subsidy of consumption has not produced an private investment boom. Had these same amounts been spent on public infrastructure or used to directly leverage private investment, there is every reason to think different results would have occurred.

3. "Moreover, the privatization of old state-run companies didn't create a new entrepreneurial class as quickly as hoped. It often shut down factories and wiped out jobs."

This statement is more puzzling than anything, suggesting that the writers confused Germany with other former Communist countries like Russia or the Czech Republic, where a new capitalist class had to be encouraged. German has plenty of successful companies and capitalists , and privatization could and did proceed at a very rapid pace in Germany.

But investment in eastern Germany has failed to meet early hopes. One of the most serious problems in this regard was the way the law on compensation for previous property owners was written. A company can scarcely risk large amounts of capital buying a factory to use or retool if they don't have clear title to the property. But the law governing post-unification property claims allowed former owners, not only from the pre-Communist period, but from the pre-Nazi period as well, to actually take possession of the property. The resulting long-range uncertainties over land titles has proved a major hindrance to outside investment in the east.

And privatization itself did not cause the massive layoffs. One of the Kohl administration's key mistakes in unification was to allow the old east German mark to be translated into the western mark in 1990 on a one-to-one basis. Economic studies at the time indicated that the Ostmark was worth only about one-third of the Deutschmark in the world market . Converting on a one-to-one basis meant that huge sections of east German industry became uncompetitive in world markets overnight. Converting the mark on a basis closer to market reality would have meant that many eastern companies could have sold their goods at much lower prices, and therefore continued to operate.

4. "And western Germans argue that their new compatriots cling to an entitlements mentally developed under 40 years of communism."

Much has been written on the mutual suspicions between "Ossis" and "Wessis" in the new Germany. The "Ossis" are accused of being lazy, undisciplined, unambitious, looking for handouts, etc. The "Wessis" are accused of being arrogant, greedy, and materialistic. It's a little reminiscent of Californians' contempt for the "Oakies" in the 1930s. No doubt, in a few years some German popular singer will be proclaiming, "I'm proud to be an Ossi from Jena" or something similar. And the Ossi/Wessi conflicts will be largely forgotten.

Americans in the wake of German reunification sometimes seemed to think that West Germany had annexed Bangladesh. In fact, eastern Germany was an industrialized country with a well-trained, highly literate workforce. When east German industry is modernized, unified Germany and the European Economic Community stand to reap the full competitive advantages of their strong human capital base.

The "bottom line" is that American business writers waiting for the United States' European competitors to self-destruct are indulging more in wishful thinking than in realistic economic analysis. And some stale cliches - low wages are good for the economy, government spending never helps private investment - add to the confusion.

Russia, Ukraine and parsing politicians' positions on foreign affairs

Wolfgang Münchau's Eurointelligence (How to think about Russia 03/10/2017) links to a nearly three-year-old article by Karl-Heinz Kamp at the Carnegie Europe center, Bad Idea, Vladimir! 04/04/2014, that looks at the standoff between Russia and NATO over Ukraine and Russia's annexation of the Crimea that year. He argues that from the Russian viewpoint, re-annexing the Crimea (which was part of Russia from 1783 until 1954), may have taken on more of a burden than a blessing:

In the context of Russian President Vladimir Putin’s goal to reestablish at least parts of Russia’s bygone empire, the annexation of Crimea looks like a smart move. Yet so far, the cost-benefit analysis of this illegal step seems to leave Russia in the red.

Before the Anschluss, Moscow controlled the whole of Ukraine through the compliant regime of former president Viktor Yanukovych. In the future, Russia will be able to sway only parts of a country that is on a slippery slope toward disintegration. Unwittingly, Putin added another source of instability to his already shaky Russian empire.

The downsides, of course, have a lot to do with the reaction of NATO countries. Kamp describes the lines of confrontation:

However, what looks like a negative cost-benefit analysis for Russia raises concerns in many NATO member states. Since Putin appears too smart to strike a bad deal, it is fair to assume that Moscow assesses costs and benefits differently from the West. If that is the case, Russia might be ready to take even bigger risks than just occupying Crimea to score points at home. The long-standing axiom that Russia would never dare commit an act of aggression against a NATO member because the repercussions would be too dangerous for Moscow could prove hollow.

Baltic governments anxiously ponder the scenario of Russia stirring up unrest among ethnic Russians in their countries to have a pretense to “protect” its citizens abroad. For instance, how would NATO react if Russian forces occupied a 30-mile-wide strip of Estonian border territory as a “safe haven” for ethnic Russians and provided them with Russian passports? Would it send in the NATO Response Force and start a major war over 30 miles of land? Doing nothing would mean the end of NATO as a functioning alliance. [my emphasis]

This is a real dilemma, even if our neocons and "humanitarian hawks" see it as an opportunity, adding the Baltic states to the NATO alliance in 2004 was a reckless move. Or at minimum, not well considered.

Bulgaria, Romania, Slovakia, and Slovenia were also added to the alliance in 2004. Albania and Croatia followed in 2009. But unlike former Warsaw Pact members Albania, Bulgaria and Romania, the Baltic nations of Estonia, Latvia and Lithuania were directly incorporated into the old Soviet Union. It's not hard to understand that, whatever the moral or legal claims may be, the closer NATO's borders get to the border of Russia, the more concerned any Russian policymaker would be about it.

The post-World War II Western decisions about policy toward Russia are still debated today in the historical sub-field of Cold War Studies. The post-1989 Western policies toward Russia will no doubt be debated for a long time, as well. But in 2017, we are where we are.

Kamp links to a Reuters report from 2014 that discusses the position of three former German Chancellors on Russia and the Ukraine/Crimea crisis (Erik Kirschbaum, Putin's apologist? Germany's Schroeder says they're just friends 03/27/2014):

[Gerhard] Schroeder is hardly alone with his criticism of the West. Two other former chancellors, Helmut Schmidt and Helmut Kohl, have also questioned the treatment of Putin and Russia.

Schmidt, a Social Democrat like Schroeder, has called sanctions against Russia "dumb", saying in the latest edition of Die Zeit: "It would be better, in the interest of peace, to sit down and talk instead of threatening sanctions."

Kohl, a Christian Democrat (CDU) like Merkel, told Bild newspaper in mid-March: "The upheaval in Ukraine was not handled intelligently. There's also been a lack of sensitivity with our Russian neighbours, especially with President Putin."

Schröder does have an obvious financial interest in defending Russian foreign policy positions. But that doesn't necessarily mean his advice is bad on the topic. Especially since two other former Chancellors were expressing similar concerns in 2014. It's worth noting that Schröder's Foreign Minister, former Green leader Joschka Fischer, also worked for Russian energy interests after he left office. But he was far more critical of the Russians' actions in Ukraine in 2014. In fact, he leans toward the hawkish side on NATO affairs in general. (See: Ralf Neukirch,
The Eternal Rivalry of Joschka Fischer and Gerhard Schröder Spiegel International 02/15/2010)

The following also notable, in light of current news in the US. A green Member of Parliament is quoting as calling the former Chancellor as basically a Russian stooge:

"Schroeder is spreading the Kremlin's propaganda and everyone should understand that he's now a paid spokesman for Russia," said Manuel Sarrazin, who sits on the European affairs committee of the German parliament for the opposition Greens.

"He's in the service of Russia with a big conflict of interest," Sarrazin told Reuters.

Kirschbaum's report also refers to a TV report, "An ARD TV investigation, called 'The dubious activities of the ex-chancellor on Putin's behalf', said Schroeder took part in a secret meeting at the Russian embassy in Berlin on March 4, three days after Putin announced his right to invade Ukraine."

It's worth mentioning here that Chancellor Willy Brandt had to resign in 1974 after it was discovered that one of his closest staff, Günter Guillaume, was exposed as an East German spy. But he really was a spy. It wasn't a matter of him having some undisclosed meeting with an East German diplomat during a political campaign.

My point here is that we need to take conflicts of interest into account in the position officials or major public figures take on foreign policy. For instance, our ExxonMobil Secretary of State, Rex Tillerson, was previously the CEO of a company that once had a deal for $500 billion worth of business with Russia, a deal that was put on indefinite hold by the Obama Administration's sanctions on Russia over Crimea. It would be foolish to disregard that aspect of his experience.

But having political positions that match up to those of a foreign government or political group isn't a sign of corruption or treason. Though either could lead to that result. Foreign policy is largely about deciding which countries to favor and which to oppose. And on which issues.

And Germany has its own particular national interests with Russia: "Berlin's economic links with Moscow are much stronger than those of other big Western powers. Germany is the biggest buyer of Russian natural gas exports, and its government has tended to tread more carefully than the United States, Britain or France."

Various people harshing on Germany over Greece

Bob Kuttner presumably isn't responsible for the Huffington Post headline, The German Menace 08/02/2015.

But the article does come off to me as making some careless generalizations. E.e., "a newly hegemonic Germany took only one lesson from its economic history -- avoid debt. Forgotten were the lessons of Versailles, the allied generosity, the perverse folly of austerity. The German view of debt became part of the European constitution."

But he is right in saying:

... the EU itself is in jeopardy. The perverse dominance of the austerity mongers in Brussels and Berlin has left Europe entering its seventh year of near-depression, and created a backlash of nationalist rightwing parties all over the continent that rejected the EU. The crushing of a freely elected leftist government [in Greece] shows the sheer brute force of the unholy alliance of Germany and global finance.

The EU was created to expand democracy, boost economic growth, and contain Germany within a democratic whole. Instead, it is destroying democracy, crushing growth, and leaving Germany's most churlish impulses to rule Europe.

In another interview, Yanis Varoufakis gives another take on Merkel's government's priorities (Christos Tsiolkas, Greek Tragedy - yeah, it's a trite title! MONTHLY Aug 2015, accessed 08/03/2015):

But for Varoufakis the ruthlessness of the austerity measures is part of a political game the European Commission is playing in order to frighten other member states.

“This is [German Finance Minister Wolfgang] Schäuble’s way of exacting concessions from France and Italy, that was what the game always was. The game was between Germany, France and Italy, and Greece was – not so much a scapegoat – we have an expression in Greece ...”

We have been conducting the interview in English but on his hesitation I prompt him to speak in Greek. He answers, and though Varoufakis’ tone is that of an educated Athenian and he speaks English with the cosmopolitan accent of someone who has studied in the UK, and worked in Australia and the US, for a moment I hear my father’s voice; for a moment the rural and the urban conflate, the past and the present are one: The jockey strikes the whip for the mule to hear.

Then the urbane voice returns.

“It is a clear strategy for influencing from Paris and from Rome, particularly from Paris, the kind of concessions towards creating a disciplinarian, Teutonic model of the eurozone.” [emphasis in original]

In other words, Varoufakis thinks France and Italy are the "mules" in the analogy that Merkel and Schäuble are trying to threaten. And in speaking of those two countries, he says:

These are important countries, frontline states of Europe, and the way I would characterise it is that their finance ministers neither believed in austerity nor had they practised it seriously. But what they feared was that if they sided with us, if they are seen to be sympathetic to the Greeks, they would encounter the wrath of the Teutonic group and maybe austerity would be imposed on them. They didn't want to be seen supporting us in case they would be forced to suffer the same indignities.”

Economist Jeffrey Sachs also harshes on Germany in Germany, Greece, and the Future of Europe Project Syndicate 07/20/2015. And he's right about this:

Germany’s demands have brought Greece to the point of near-collapse, with potentially disastrous consequences for Greece, Europe, and Germany’s global reputation. This is a time for wisdom, not rigidity. And wisdom is not softness. Maintaining a peaceful and prosperous Europe is Germany’s most vital responsibility; but it is surely its most vital national interest as well.

He also writes about Greece and Germany in Death by Debt - My Response to The German Finance Ministry Süddeutsche Zeitung 07/31/2015; German version Tod durch Schulden.

But Joachim Jahnke argues in Auch Jeffrey Sachs' "Tod durch Schulden" wird der griechischen Krise nicht gerecht Infoportal 02.08.2015 that Sachs' comparisons of Greece to Germany in the past don't hold up so well.

Sachs writes:

It was wrong in the case of Weimar Germany in the 1920s and early 1930s, when Germany was pushed into hyperinflation and then depression. Germans pleaded to the US for long-term financial relief from reparations and debt payments, but didn’t get it in time. First came the hyperinflation; then mass unemployment; then a banking collapse; and then a full run on the German banking system in 1931, leading to a closure of the banks (as in Greece today). President Herbert Hoover eventually granted a debt moratorium but too late: Hitler came to power in January 1933.

Jahnke holds up some important reservations about making an easy analogy out of that situation. He notes, for instance, that Greek unemployment, horrible as it is, hasn't reached the level it did in Germany during the Great Depression: 26% in Greece now, 44% in Germany at the 1932 high point.

Although I was bothered a bit by the following in Jahnke's piece, in which I wondered on the "background" part if he was partially dismissing the named economists as Jewish:

Besonders die Erinnerung an die deutsche Vergangenheit wird bei einigen amerikanischen Professoren mit großem Namen und ähnlichem Hintergrund wie Sachs zur immer größeren Keule gegen die deutsche Politik, wobei sie sich bewußt sind, daß Deutschland mit seiner Vergangenheit besonders verletzlich ist und auch die Mehrheit der Deutschen so am stärksten zu beeindrucken ist.

[Recalling the German past is especially with some American professors with big names and similar background as Sache becomes and bigger and bigger club against the German policy. Because they are aware that Germany is particularly vulnerable on its past and with it can the majority of Germans be impressed most strongly.]

Jahnke isn't defending Germany's Greek policy. On the contrary, he's very critical of it.

The "ugly German" question

Former German foreign Minister Joschka Fischer warns about the consequences of The Return of the Ugly German Project Syndicate 07/23/2015. (German version: Ist der „hässliche Deutsche“ zurück? Project Syndicate 07/23/2015). In his judgment:

During the long night of negotiations over Greece on July 12-13, something fundamental to the European Union cracked. Since then, Europeans have been living in a different kind of EU. ...

In terms of foreign policy, Germany rebuilt trust [after the Second World War] by embracing Western integration and Europeanization. The power at the center of Europe should never again become a threat to the continent or itself. Thus, the Western Allies’ aim after 1945 – unlike after World War I – was not to isolate Germany and weaken it economically, but to protect it militarily and firmly embed it politically in the West. Indeed, Germany’s reconciliation with its arch-enemy, France, remains the foundation of today’s European Union, helping to incorporate Germany into the common European market, with a view to the eventual political unification of Europe.

But in today’s Germany, such ideas are considered hopelessly “Euro-romantic”; their time has passed. Where Europe is concerned, from now on Germany will primarily pursue its national interests, just like everybody else.

Of course, these turns don't happen overnight. But Greece's fight under Alexis Tsipras' government against Germany's austericide economic policies dramatized for the world what an ugly turn Angela Merkel had effected in Germany's foreign policy, especially in the European Union.

Merkel grew up in East Germany. And her success in politics has been entirely a product of German unification, i.e., the German national project. She doesn't operate under the assumption that previous German Chancellor's did that overt German nationalism toward other countries was a destructive and counter-productive thing. In the worldview she has shown us by her actions as Chancellor, the eurozone and the EU exist for her to serve German interests. Period, full stop.

Anything else is simply a collateral benefit accruing to other countries as a side-effect of German nationalism successfully applied.

The word "nationalism" has a negative connotation in German politics. It's actually scarcely used in American politics in reference to the United States. All politicians advertise their patriotism. "Hyper-patriotic" or "super-patriotic" carries the kind of suggestion of stigma similar to what "nationalism" has in German politics.

It's not that Germany wasn't pursuing a "national" or even "nationalist" policy before Merkel, if we take that to mean pursuing German national interests. It's just that postwar German foreign policy very specifically conceived of German national interest as pursuing German unification as part of a strong orientation toward European cooperation. As Fischer notes, "The foundation of the second, unified German nation-state in 1989 was based on Germany’s irrevocable Western orientation and Europeanization."

The previous "European" orientation is sadly lacking in Merkel's vision, despite the required ritual rhetoric praising European unity. Fischer puts it this way, "The path that Germany will pursue in the twenty-first century – toward a 'European Germany' or a 'German Europe' – has been the fundamental, historical question at the heart of German foreign policy for two centuries. And it was answered during that long night in Brussels, with German Europe prevailing over European Germany."

Matthias Naß of Die Zeit (Der hässliche Deutsche ist wieder da 29.07.2015) regards this with the smug tone we're so used to hearing from American politicians and commentators about our "exceptional" country:

Das Erschrecken über die Rückkehr des "hässlichen Deutschen" ist groß. Dabei kann sie niemanden, der das politische Geschehen nüchtern betrachtet, wirklich überraschen. Schließlich war der Machtzuwachs Deutschlands in den zurückliegenden Jahren offenkundig. Macht und Popularität aber entwickeln sich in aller Regel umgekehrt proportional zueinander. Wieso also das Erstaunen?

[The alarm over the return of the "ugly German" is great. No one who views political events soberly will really be suprise. In the last analysis, the growth of German power in recent years was obvious. But power and popularity normally develop in inverse proportion to each other. Then why the astonishment?]

Naß basically repeats that theme in minor variations in the whole column, finding nothing to criticize in Angela Merkel's euorzone policies there. But he does suggests that Germany needs to take account of the whiny foreigners' resentments in its public propaganda.

Fischer realizes that the problem is much more serious than the need for smiley-face propaganda:

To dismiss the fierce criticism of Germany and its leading players that erupted after the diktat on Greece, as many Germans do, is to don rose-tinted glasses. Certainly, there was nonsensical propaganda about a Fourth Reich and asinine references to the Führer. But, at its core, the criticism articulates an astute awareness of Germany’s break with its entire post-WWII European policy.

For the first time, Germany didn’t want more Europe; it wanted less. Germany’s stance on the night of July 12-13 announced its desire to transform the eurozone from a European project into a kind of sphere of influence. Merkel was forced to choose between Schäuble and France (and Italy). [my emphasis]

I can't say that Anne-Marie Slaughter's description of Greece's "identity" reasons for wanting to stay in the eurozone quite make sense to me, at least not without considering the real economic fears of what a Grexit would mean. (Europe’s Civil War Project Syndicate 07/21/2015) The title seems a bit over the top, but she does use the phrase: "The EU is now facing its own civil war, though one that, fortunately, is free of physical violence." Well, there's a bit of st of street violence in Greece, but no troops are mobilizing on the borders.

Her description of Germany's role in this makes sense, though:

Whereas [Greece's] stance reflects the vision of an "ever-closer union" that motivated the EU’s founders, Germany’s narrower, economic understanding of European integration cannot inspire ordinary citizens to support the compromises necessary to keep the EU together. Nor can it withstand the inevitable attacks directed against EU institutions for every action and regulation that citizens dislike and for which national politicians want to avoid responsibility. [my emphasis]

Germany's economic problems and the eurozone

Philippe Legrain (The Eurozone’s German Problem Social Europe/Project Syndicate 07/27/2015) writes about how Germany's own short-sighted economic policies for itself damage the eurozone even beyond the fanaticism of the Merkel/Schäuble austericide program for Greece:

Germany’s immense current-account surplus – the excess savings generated by suppressing wages to subsidize exports – has been both a cause of the eurozone crisis and an obstacle to resolving it. Before the crisis, it fueled German banks’ bad lending to southern Europe and Ireland. Now that Germany’s annual surplus – which has grown to €233 billion ($255 billion), approaching 8% of GDP – is no longer being recycled in southern Europe, the country’s depressed domestic demand is exporting deflation, deepening the eurozone’s debt woes.

Germany’s external surplus clearly falls afoul of eurozone rules on dangerous imbalances. But, by leaning on the European Commission, Merkel’s government has obtained a free pass. This makes a mockery of its claim to champion the eurozone as a rules-based club. In fact, Germany breaks rules with impunity, changes them to suit its needs, or even invents them at will. [my emphasis]

And he reminds us of how much German so-called assistance to Greece has been shaped by calculations of narrowly-conceived German national interests:

Beyond refusing to adjust its economy, Germany has pushed the costs of the crisis onto others. In order to rescue the country’s banks from their bad lending decisions, Merkel breached the Maastricht Treaty’s “no-bailout” rule, which bans member governments from financing their peers, and forced European taxpayers to lend to an insolvent Greece. Likewise, loans by eurozone governments to Ireland, Portugal, and Spain primarily bailed out insolvent local banks – and thus their German creditors.

To make matters worse, in exchange for these loans, Merkel obtained much greater control over all eurozone governments’ budgets through a demand-sapping, democracy-constraining fiscal straitjacket: tougher eurozone rules and a fiscal compact. [my emphasis]

Dieter Wermuth notes in Warum die deutsche Wirtschaft nicht in Fahrt kommt Die Zeit 28.07.2015 notes that despite obviously good conditions for economic growth, such as very cheap credit, German GDP growth for 2015 is expected to be in a modest 1.5-2.0% growth range.

Higher German growth would be good for Germany and good for the eurozone. But Angela Merkel's economic dogma doesn't allow it.

Germany and the eurozone depression

"I woke up this morning/And none of the news was good" - Steve Earle, "Jerusalem"

The business press is paying more attention lately to the euro crisis. A report by Stefan Riecher and Simon Kennedy, The European Central Bank May Have to Defy Germany Bloomberg Businessweek 10/09/2014 provide an interesting example of reporting stuck in a narrow model - though not as narrow as German Chancellor Angela Merkel's "ordoliberalism." They seem to think that only central bank action counts as legitimate public stimulus:

The ECB boss [Mario Draghi] ended Europe’s sovereign debt crisis by promising in 2012 to do “whatever it takes” to save the euro. Investors ask if he’s willing to do the same to save the economy. That leaves Draghi under pressure to introduce a full-bore quantitative easing program, one that would make more money available for cheap lending by having the ECB buy government bonds held by the banks, companies, and others. [my emphasis]

What the ECB ended in the summer of 2012 was an acute phase in the euro debt crisis, not the whole thing. Greece, Portugal, Spain and probably Italy are likely to have to take debt haircuts, in the case of Greece about as certainly as such things can be, with the debt-to-GDP ratio up in the 170%-plus range.

They recognize that an economic solution for the eurozone depression would involve an increase in inflation. Duh! They're on the verge of deflation if not already into it. But Riecher and Kennedy seem to think only the mystical arts of the central bank can bring such needed inflation that would accompany economic growth:

An ECB program of government bond buying, by making even more cheap credit available, would promote spending, which in turn would nudge inflation upward. Because of the lower yields on sovereign debt, ECB bond purchases would encourage a weaker euro as investors seek higher returns elsewhere. A soft euro would make exports more competitive and increase the likelihood of inflation as imported commodities such as oil became pricier. It would also help improve the balance sheets of banks. Draghi may have to act soon: How many more back-to-back recessions can Europe take?

Of course, the main barrier to even that modest kind of effort is Merkel and her Herbert Hoover/Heinrich Brüning economics:

The stumbling block is Germany, which doesn’t want the ECB conducting bailouts in disguise. Buying sovereign bonds — as the U.S. Federal Reserve and a string of other central banks have done — is anathema to the Germans. The ECB, by buying sovereign debt from the member states of the European Monetary Union, would come very close to financing individual governments, something the founding treaty of the EMU bans. And if the ECB did buy that debt, it would also likely lessen the pressure on countries such as Greece and France to put their budgets in order and make their economies more productive. , president of Germany’s Bundesbank, has already spoken out against bond purchases and objected to some of the ECB’s recent stimulus steps. If Germany’s economic weakness worsens, the resistance to the program may diminish. The latest data from Germany show a severe contraction in its manufacturing sector. [my emphasis]

Jens Weidmann was an Angie-bot, but he now may be more hardline than Merkel, though not because Merkel has started acknowledging basic macroeconomics.

This is a Euronews report on Germany pressuring France to tighten austerity, EU finance ministers aim to defuse Paris, Berlin row 10/13/2014:

Interest rates on Greek bonds spiked last week, after the ruling New Democratic Party staged a confidence vote as a political stunt to boost their pitiful standing. Niels Kadritzke refers to polls showing that SYRIZA is showing more support right now than the two government parties combined. SYRIZA party leader Alexis Tsipras has made it clear that as head of government he would push for a relief from the draconian economic policies that Merkel has imposed on Greece via the shamelessly compliant EU.

Elaine Moore et al report for the Financial Times (Market turmoil casts further doubt over Europe revival 10/16/2014):

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For the first time this year, Greece’s benchmark bond yields rose above 9 per cent as mounting political instability raised doubts about Athens’ ability to sustain its heavy debt burden. European countries hit hardest by the eurozone debt crisis also saw their borrowing costs jump at rates not seen for a year. ...

Across wider Europe, global investors moved to reallocate their money away from debt issued by countries at the region’s periphery into German bonds, considered the safest and most liquid debt market.

The move sent the yield on 10-year German Bunds to 0.72 per cent during the day – a historic low. Yields on equivalent Italian, Spanish and Portuguese debt rose by about 30 basis points in the morning before falling back.

But Angie loves her some Hoover/Brüning economics, so she's demanding that the eurozone stay the course, as Old Man Bush and Shrub too liked to say when they were Presidents. Stefal Wagstyl and James Politi report (Financial Times 10/16/2014):

“All member states must accept in full the strengthened rules,” she told the German parliament.

As well as rebuffing French president François Hollande and Italian premier Matteo Renzi, who are demanding that Brussels allow them more budget flexibility, Ms Merkel seemed intent on calming the world’s financial markets, which saw some of their sharpest sell-offs of the week on Thursday, including a steep drop in Greek bonds. ...

Paris and Rome have argued that their embrace of structural reforms, such as a recent Italian move to overhaul a sclerotic labour market, should afford them some relief from the fiscal rules.

As the EU’s biggest economy, Berlin has always had the key say in that debate and has privately been urging the European Commission to take a tough line. Ms Merkel said the financial crisis in Europe was “not permanent” but neither had it been “sustainably overcome”.

Merkel is worried about fighting the bond vigilantes and further slam down the purchasing power of eurozone citizens to coax the Confidence Fairy into her long-delayed arrival.

Fighting the eurozone depression? Not so much.

That report gives the Italian debt-to-GDP ratio as 134%. Possibly sustainable with economic recovery, unsupportable in a continued depression.

Horand Knaup and Christian Reiermann write about pressure on Merkel in Out of Balance? Criticism of Germany Grows as Economy Stalls Spiegel International 10/14/2014:

[Finance Minister Wolfgang Schäuble:] "In Germany, we have shown in recent years that solid finances and better growth are not contradictory -- they are necessary complementary elements," he said on Monday in Luxembourg, where he was for a meeting of euro zone finance ministers. He added that calls for state spending were "old fashioned."

Criticism of Schäuble's position is also mounting in Germany. "The decision to balance the budget is a risky one," says Marcel Fratzscher, the head of the German Institute for Economic Research (DIW) in Berlin. "If the economy continues to weaken, that goal will no longer be sustainable."

If the government were to stick to its guns, he argues, it would have to implement budget cuts that would further hasten the crisis. Instead, he argues, the finance minister should take advantage of the "wiggle room" provided in the balanced budget amendment to Germany's constitution "to increase public investments." Under the law, which was approved by parliament in 2009 and goes into full effect in 2016, the federal government is permitted maximum annual borrowing of 0.35 percent of gross domestic product, the equivalent of about €10 billion next year. "That would send a strong message to the German business community and to Europe that Germany takes its responsibility seriously," Fratzscher says.

But Merkel's government seems set on achieving a balanced budget. Even worse, the current government made the very decisions that are now robbing it of the means it would need to counter a possible economic downturn. [my emphasis]

Post-World Cup politics and propaganda

Business Insider seems to have the hots for the vulture funds that are trying to crash the world bond market over defaulted Argentine debt in cahoots with Nixon-appointed federal zombie judge Thomas Griesa.

But this is just dumb as dirt: Linette Lopez, Argentina's President Welcomed Her Country's Losing World Cup Team Home In The Coldest Way Imaginable 07/16/2014. Linette, if you lose your gig writing trash for Business Insider, you can probably go on wingnut welfare at the National Endowment for Democracy or some other neocon outfit that looks for foreign governments to destabilize for the convenience and profit of outfits like the ones the Nixon zombie judge is in bed with over the Argentine debt.

Luis Bruschtein reports the actual news from Argentine President Cristina Fernández in “Se gana cuando se juega en equipo” Página/12 15.07.2014. Thanks to that fool Nixon zombie judge Griesa, Argentina is looking at the real possibility of another default on its national debt in two weeks. To a frivolous twit like Linette Lopez, that's cause for FOX News-level dishonest snark.

But to the actual President of Argentina, it was an occasion to be sober in congratulating her country's second-place team and staging a welcoming event at the Ezeiza airport. She acknowledged, jokingly it seems to me, her own well-known lack of interest in soccer as a sport, while using the occasional to praise the exemplary teamwork of the players, holding it up as an example for national solidarity among Argentinians facing difficult national challenges and expressing her "immense pride" in the team and its performance. This is a Spanish-language news report on the reception, Visión 7 - Orgullo nacional por la Selección TV Pública argentina 15.07.2014:

Meanwhile, in Germany the World Cup winning team managed to show bad sportsmanship by being dickheads, singing a popular soccer song "So gehen die Gauchos" that may not be obnoxious in itself but presumably any sentient adult could understand in the context would look like they were denigrating the second-place Argentinian team. Here's a YouTube video of it, So gehen die Gauchos, die Gauchos, die gehen so. So gehen die Deutschen, die Deutschen, die gehen so 07/15/2014 (embedding not available on this one). The lines mean, "This is how the gauchos walk, this is how the Germans walk." This version has embedding available as of this writing, So gehen die Deutschen (Gauchos) 07/15/2014:

TV Pública argentina reports on the homecoming celebration in Germany, Visión 7 - Violencia y burlas en el festejo alemán 16.07.2014:

Maybe Linette Lopez would have been more impressed with Cristina's presentation if she had asked the team to stage a dance and sing, "This is how dumb the Germans are, the Germans are this dumb." But Lopez is just a hack.

Tags: argentina, cristina fernández, germany, world cup 2014

Gauck and German foreign policy

I had a much better imporession of Joachim Gauck before her became President of Germany!

Lately he's been beating the drums for more military intervention by Germany. And not so much in a particular place. He just wants Germany to do more military actions!

Annika Breidthardt reports for Reuters in President urges Germany to take more military responsibility 06/14/2014:

Europe's largest and the world's fourth biggest economy has faced criticism from allies for not taking a more active role. Gauck said he had repeatedly heard such pleas during his travels.

"That's what I want from Germany, too" Gauck said in an interview with Deutschlandradio Kultur after a trip to Norway.

"I have the feeling our country should maybe drop the reluctance that was in order in past decades in favor of a stronger sense of responsibility." ...

"Sometimes it is necessary to take up arms in order to fight for human rights or for the survival of innocent people," Gauck said.

In 2010, remarks by a previous president, Horst Koehler, justifying military action to back Germany's commercial interests sparked criticism that prompted him to step down.

Gauck, who took office in 2012, said taking a stronger international role did not imply being dominant. "I don't mean the behavior that Germany put on in past centuries or in the decade of the war: a demeanor of German dominance. The opposite is what I mean," Gauck said. [my emphasis]

It was unacceptable coming from Köhler in 2010. But after four years of nationalistic posturing by Chancellor Angela Merkel in the euro crisis, Gauck's demands are yet creating the same kind of uproar.

This is a sad turn of events. When Horst Köhler stepped down in 2010, Gauck was backed by the SPD and the Greens in the campaign for his replacement. Merkel's preferred choice Christian Wulff was selected instead. Gauck is from the DDR, the former East Germany. A pastor there, he managed to stay away from being tainted by involvement with the ruling Communist Party. After unification, he was the director of the archives of the Stasi, the former East Germany secret police. And as such, he was a prominent and influential figure in shaping the public conversation over the history of the DDR after unification.

But like Merkel, who grew up in the DDR, Gauck doesn't seem to have acquired the same sense of a need for foreign policy restraint that politicians in the former West Germany developed.

That's not meant to be a broad generalization. There are definitely former residents of the DDR who aren't in favor of a nationalistic policy by today's Germany. But it is striking that the Chancellor and the President both have taken their lessons from the DDR's past and assimilated it to a more nationalistic foreign policy than former West German leaders were inclined to display, certainly in relation to the Western European countries.

Klaus Stuttmann captures this side of Gauck's public persona in this cartoon of 06/17/2014:

"Germany Onward!"

Gauck has actually been as crass as Köhler was in his comments. What got Köhler in hot water was that he made it sound like Germany should be ready for military interventions for its own national convenience and commercial benefit. (Stefan Berg und Christoph Hickmann, Horst Lübke Der Spiegel 22/2010 31.05.2010) This would sound unexceptional from an American politician. But the German public wasn't quite so content with that kind of thinking from their President. Gauck has managed to avoid sounding quite so crass.

Köhler was Merkel's pick. And once he got himself in trouble, she was quick to dump him. Merkel knows about Dolchstoß, the knife in the back. She's good at it. When her next pick, Christian Wulff, beat out Gauck for the Presidency in 2010 and then got embarrassed with a scandal about taking expensive benefits from a German plutocrat, she dumped him as well and brushed the dirt off her hands. Then she was okay with having Gauck as President.

The postwar German Constitution set up the office of President as the head of state, although with limited powers, due to lessons learned from the mischief made by President Paul Hindenburg during the Weimar Republic that contributed so mightily to its well-known demise. The office's incumbents established it over the years as a moral and humanitarian voice defending democracy in a generally non-partisan way.

Stefan Berg et al in a Spiegel article from 2012, the year Gauck took Wulff's place as President, Apostel der Freiheit 19.03.2012, noted that Gauck could be expected to be a spokesperson for "freedom" in the form of economic liberalism, i.e. free markets:

Seine Gegner, darunter alte Weggefährten aus der DDR, werfen Gauck vor, er lasse über sein Bekenntnis zur Freiheit die Begeisterung für die Gerechtigkeit fehlen. Gauck hat dagegen eingewandt, ihm liege auch die Gerechtigkeit sehr am Herzen. Aber im Kern ist der Befund so falsch nicht. Man darf vermuten, dass das Wort „sozial” für den neuen Bundespräsidenten nicht den Wohlklang hat, den es bei den meisten Bundesbürgern auslöst. Dazu ist es ihm im Sozialismus ein paarmal zu oft um die Ohren gehauen worden.

[His enemies, among them old acquaintance from the DDR, accuse Gauck of leaving justice out of his profession of faith in Freedom. He has objected in response that justice is also very dear to his heart. But at its core, the claim is not so wrong. One may assume that the word "social" doesn't have the harmonious sound that it triggers by most German citizens. He's been whacked on the ears with a few times too often in socialism [i.e., East Germany}.]

Berg seems to be speculating a bit much there.

But Jesuit social ethicist Friedhelm Hengsbach also points to Gauck's East German experience as limiting his realism about the present-day Federal Republik. In "Kapitalismus kann töten" domradio.de 17.01.2014, Hengbach commented on a speech Gauck gave in January in praise of some the notions of "ordoliberal" economic doctrine of the "Freiburg School," a doctrine to which Merkel adheres rather dogmatically in her eurozone policies:

Natürlich hat diese Rede Schwachstellen, sie lebt aus den Erfahrungen in der früheren DDR und ist begeistert von der Freien Marktwirtschaft wie Frau Merkel, bevor ihr Handy abgehört wurde. Da klingt einerseits eine bestimmte Freude über die Freiheitsgeschichte und über das, was der Freie Markt in einer Demokratie bedeutet, heraus. Auf der anderen Seite greift der Präsident die Ideen von Walter Eucken und der Freiburger Schule auf, und da wird eigentlich ganz deutlich gesagt, dass der Wettbewerb gefährdet wird durch private Macht. Als Beispiel dient die Weimarer Zeit. Aber das ist ja heute genauso durch die Lobbyisten in den Banken und den Großkonzernen. Und da heißt es auch, dass der Wettbewerb natürlich auch gefährdet wird durch staatliche Macht. Also: Immer dort, wo Machtballung auftritt, die nicht kontrolliert ist, da sieht er große Gefahren.

[Of course this speech has weak points; it lives from the experiences in the former DDR {East Germany} and is enchanted by the free-market economy, like Frau Merkel {was} before her mobile phone was tapped {by the NSA}. So on the one hand, a definite joy sounds out over the story of freedom and over what the free market means in a democracy. On the other hand, the President pick up the ideas of Walter Eucken and the Freiburg School, and there it is actually said very explicitly that the competition is endangered by private power. The Weimar time serves as an example. But that is the very same today through the lobbyists in the banks and large concerns. And there it is also said, of course, that competition is also endangered by state power. Therefore: Always there, where concentration of power emerges that isn't controlled, there he sees great dangers.]

Hengback compares Gauck's perspective unfavorably to that of Pope Francis I, referring again to Gauck's DDR experiences:

Man muss immer den konkreten Kontext sehen, aus dem die Menschen kommen, und ihr Erfahrungsmilieu. Gauck hat das Erfahrungsmilieu des real existierenden Sozialismus in sich aufgesogen. Er sieht natürlich immer den glänzenden Schein der Bundesrepublik, der aber in Wirklichkeit ein Glanz ist, hinter dem sich entregelte Arbeitsverhältnisse und zunehmende bzw. stabil gleichbleibende soziale Armut verbergen. Und beim Papst ist es genau umgekehrt: Der Papst kommt vom Ende der Welt, wie er sagt, nämlich aus Argentinien, aus einem Milieu von Armut und Ausgrenzung, und von daher kann er sagen: Ein Kapitalismus, der Menschen in diesem Maße ausgrenzt und die Verteilung von Einkommen und Vermögen systematisch so asymmetrisch gestaltet, der gefährdet Menschenleben. Dann kann Kapitlaismus töten.

[One must always look at the concrete context out of which someone comes, and his milieu of experience. Gauck has absorbed the experience milieu of real existing socialism {an ironic term in this context for East Germany] into himself. He naturally always sees the shiny appearance of the Federal Republic {Germany}, which in reality is a shine behind which are hidden deregulated working conditions and social poverty that is increasing or at best remaining stable. And by the Pope is it the exact reverse: The Pope comes from the end of the world, as he says, namely from Argentina, out of a milieu of poverty and exclusion. And from that perspective he can say: a capitalism that excludes people to this degree and the division of income and wealth is shaped systematically in such an asymmetric way, it endangers human life. Because capitalism can kill.]

Albrecht von Lucke, Der nützliche Herr Gauck Blätter für deutsche und internationale Politik 3/2014

Agnieszka Brugger, a Green Member of the German Bundestag, writes on Facebook on 06/16/2014:

Die Äußerungen von ‪#‎Gauck‬ gehen in die falsche Richtung. Statt Militäreinsätze zum Normalfall in der Außenpolitik zu erklären, sollte der Bundespräsident für zivile Krisenprävention, mehr Entwicklungshilfe und weniger Rüstungsexporte werben.

The article she's linking is Annett Meiritz, Bundespräsident: Scharfe Kritik an Gaucks Ruf nach Militäreinsätzen Spiegel Online 15.06.2014. This is a disturbing trend.

Tags: angela merkel, germany, joachim gauck

Euro crisis in the latest GDP numbers

Stephan Kaufmann in Von Deutschland abgehängt Frankfurter Rundschau 16.05.2014 discusses the latest GDP reports on Europe and the eurozone (here from Eurostat). Kaufman writes:

In der Euro-Zone tut sich ein tiefer Riss auf: Während die deutsche Wirtschaft voranprescht, fallen andere Länder zurück. Zwischen Januar und März stagnierte die Produktion in Frankreich. In Italien, Portugal, Finnland und den Niederlanden ging sie sogar zurück. ...

Obwohl die starke deutsche Konjunktur im ersten Quartal den Euro-Zonen-Durchschnitt in die Höhe trieb, blieb das Wirtschaftswachstum der Währungsunion schwach. Mit einem Plus von nur 0,2 Prozent gegenüber dem Vorquartal blieb es deutlich hinter den Erwartungen der Ökonomen zurück, die im Durchschnitt mit 0,4 Prozent Wachstum gerechnet hatten.

[In the eurozone a deeper divide is opening: While the German economy dashes ahead, other countries are falling behind. Between January and March, production in France stagnation. In Italy, Portugal, Finland and the Netherlands it even shrank.

Even though in the first quarter the German upswing drive up the uerozone average, economic growth remains weak in the currency union. With an increase of only 0.2% compared to the previous quarter, it remains significantly below the expectations of the economists, who on the average had counted on growth of 0.4%.]

But it's not all peaches and cream in Germany, either. Chancellor Angela Merkel hasn't yet inflicted the kind of ruinous austerity on her own countries that she has inflicted on much of the eurozone.

Heinrich Flassbeck notes that unusually mild winter weather in Germany helped boost Germany growth in the first quarter, allowing more building activity for example than one would normally expect this time of year. (Die deutsche und europäische Konjunktur im Frühjahr 2014: Gemischte Zeichen, aber keine Besserung in Euroland flassbeck-economics 16.05.2014) And further:

Und selbst aus der Zahl für Deutschland kann man nicht sicher auf eine durchgreifende Belebung hierzulande schließen. Denn die Einkommensverhältnisse der Mehrheit der Menschen haben sich nicht in einer Weise verbessert bzw. werden das in naher Zukunft angesichts der getroffenen Lohnvereinbarungen auch nicht so tun, dass man blind auf einen anhaltenden Schwung beim privaten Verbrauch zählen könnte (jedenfalls nicht ohne eine Senkung der Sparquote der privaten Haushalte). Darüber hinaus lässt die Schuldenbremse den öffentlichen Konsum wie die öffentlichen Investitionen nicht aus ihrem starren Korsett. Abgesehen von Witterungseffekten mag der Wunsch nach Betongold als Reaktion auf die Eurokrise in Verbindung mit den extrem niedrigen Zinsen den Bauinvestitionen auf die Sprünge geholfen haben und auch noch in naher Zukunft eine gewisse Rolle spielen.

Doch schon im März – das ist der letzte verfügbare Berichtsmonat – ist der von uns am meisten beachtete Indikator für die laufende monatliche Entwicklung in Deutschland, die Auftragseingänge in der Industrie, erheblich zurückgegangen ...

[And even from the number for German, one cannot conclude with certain of a thorough economic reanimation here in our country. Because the income conditions of the majority of people have not improved in any way, that is, in light of the wage agreements that have been struck, that will also not have the effect that one can count on a continuing uptick in private consumption (in any case not without a reduction of the savings rate of private households). And besides that, the debt brakes {Merkel's austerity policies now embedded in the German Consitution that severely limits public borrowing and deficit spending} will not release public consumption like public investments out of their tight corset. Besides the effects of the weather, the desire for safe real estate investments {Betongold} as a reaction to the euro crisis together with the extremely low interest rates helped construction investments to jump up and still even in the future may play a certain role.

But already in March - that is the last available reported month - the most followed indicator for long-term monthly development in Germany, the new contracts for industry, has materially fallen back.]

Flassbeck reads the latest numbers as showing that the eurozone outside Germany is basically at zero growth, meaning the "nicht über die Stagnation hinausgekommen sind" ("have not emerged from stagnation").

In the case of Italy, which has been practicing Merkel's Herbert Hoover/Heinrich Brüning heavily for a while, and of France, which more recently began embracing the dubious blessings of Hoover/Brüning policies, the benefits at the moment are, well, dubious: "Die hartnäckige Stagnation lässt sich insbesondere für Frankreich und Italien konstatieren, wo immer noch keinerlei Aufwärtstendenz zu erkennen ist. Italien liegt jetzt ganz nahe bei seinem absoluten Tiefpunkt aus dem Jahr 2009" ("The stiff-necked stagnation is particularly to be seen in France and Italy while there is still not any kind of upward tendency to be seen. Italy now lies near its abolute low point of the year 2009").

And within Germany, the largest corruption of the neoliberal system has frozen the political system from effectively addressing the real economic problems of the majority even of Germans. Jacob Augstein writes in Die Deutschen lassen sich zu viel gefallen Spiegel Online 15.05.2014:

Die Reichen waren in Deutschland noch nie so reich wie heute. Sie haben sich in den vergangenen zwanzig Jahren schamlos selbst bedient - und man hat sie gewähren lassen. Hat man darauf vertraut, dass die Parteien, die Gewerkschaften, die Medien sich der Sache der Gerechtigkeit annehmen würden? Die Arbeitnehmer wurden im Stich gelassen. Am schlimmsten haben die Gewerkschaften versagt.

"Danke, lieber Herr Sommer, für Ihre Hingabe und Ihre Hartnäckigkeit, für Ihre Weitsicht und auch für Ihre Kompromissbereitschaft, wenn sie nötig wurde." So hat Bundespräsident Gauck gerade den scheidenden DGB-Chef gelobt. Tatsächlich. Unter Sommer waren die Gewerkschaften so "kompromissbereit", dass die Vorstände der DAX-Unternehmen in aller Ruhe ihr Salär von 500.000 DM im Jahr 1989 auf durchschnittlich sechs Millionen Euro im Jahr 2010 wachsen lassen konnten - erst zwanzigmal so viel wie ein durchschnittlicher Arbeitnehmer, dann zweihundertmal. Rechtfertigung? Keine. Eine Frage der Macht, nicht der Moral.

Auch auf die Medien war kein Verlass. Als zum letzten Mal eine große Gewerkschaft die Machtfrage stellte - die IG-Metall im Osten im Jahr 2003 - da nannte der SPIEGEL das "absurd", die "Süddeutsche" sprach von "Irrsinn", das "Handelsblatt" von "Anmaßung" und die "Zeit" von "Machtspielen zum falschen Zeitpunkt". Die Wahrheit ist: Die Medien haben den Weg in die Ungleichheit freundlich begleitet. Der Metallerstreik scheiterte damals jämmerlich. Und seitdem gilt in Anlehnung an ein berühmtes Wort über einen Politiker der britischen Konservativen: Ein Angriff der deutschen Gewerkschaften ist wie der Angriff eines toten Schafes.

The wealthy in Germany were never so rich as today. They have shameless helped themselves in the past 20 year - and they were allowed to do so. Did one trust that the parties, the unions, the media would take on the matter of justice? The worker were left in the lurch. The unions have failed the most seriously.

"Thanks, dear Herr Sommer, for your commitment and your stubbornness, for your broad vision and also for your readiness to compromise when it was necessary." So praised Federal President Gauck the departing DGB chief. {The DGB is the umbrella union alliance in Germany, roughly similar to the AFL-CIO in the US.} Just so. Under Sommer the unions were so "willing to compromise" that the boards of the DAX firms could calmly let their salaries grow from DM 500,000 in the year 1989 to an average of six million euros in the year 2010 - first 20 times a much as the average work, then 200 times. Justification? None. A question of power, not of morality.

There was also no reason to trust the media. The last time a large union made a test of strength - the IG-Metall union in the east in the year 2003 - Der Spiegel called it "absurd,", the Süddeutsche [Zeitung] spoke of "lunacy," the Handelsblatt of "arrogance" and Die Zeit of "power plays at the wrong time." The truth is: the media followed the way into inequality cheefully. The metal workers' strikes failed miserably at the time. And since then, to use a famous saying about a British Conservative politician: An attack by the German unions is like being savaged by a dead sheep. {The saying apparently came from Denis Healey about Sir Geoffrey Howe.}

All I can say in conclusion is:

Heckuva job, Angie, heckuva job!

Tags: angela merkel, austerity economics, eu, euro, european union, france, italy, germany