The drama continues to unfold, but with some surreal twists, starting with an investigation of one of the lead Troika players, more grim economic numbers, more German court delay, the latest from Spain [including another strike on the way] and Portugal, plus the latest round of austerity measures in Greece, where there are also racist soup kitchens opening up.
Finally, we’ve got another back door attempt to ram through the ACTA agenda.
En garde, Lagarde, the cops are after you!
Our favorite story of the day comes from Paris, where the implacable boss of the International Monetary Fund, Christine Lagarde, is facing a criminal probe herself stemming from her days as money minister for former French President Nicolas Sarkozy.
So what’s the Troika stalwart suspected of doing?
Oh, playing a role in awarding France’s most prestigious honor in return for political favors.
From Peter Allen of the London Telegraph:
Christine Lagarde and Nicolas Sarkozy were embroiled in a new corruption inquiry on Sunday over the awarding of Legion d’Honneur for political favours.
The pair already face allegations that Miss Lagarde, the head of the International Monetary Fund (IMF), authorised a £270 million payout to a prominent supporter of the former French president when she was his finance minister.
Now, they face a separate inquiry in a row over the amount of compensation that Mr Sarkozy’s government should have paid following the collapse of Itea, an insurance company, in 2009.
Xavier Musca, a financial expert, is said to have recommended to Miss Lagarde that Maurice Nussenbaum, another expert, receive the Legion d’Honneur, France’s top civilian award, so he would rule in the government’s favour in the trade dispute.
Anti-corruption police in Paris have launched a preliminary inquiry after Mr Laurent filed a complaint against Mr Musca, who went on to become Mr Sarkozy’s chief of staff. Mr Laurent also indicated that he will take legal action against Miss Lagarde, although the complaint will have to be sanctioned by a dedicated legal body dealing with allegations against former ministers.
Lagarde’s IMF issues another warning
This time it’s a twofer, with both Greece and Spain cited for missing their key austerity numbers.
From Capital.gr:
Spain and Greece, currently the two main epicenters of the euro zone debt crisis, are facing bigger deficits than previously forecast amid feeble European growth and political disorder in Athens, the International Monetary Fund said Monday, Wall Street Journal reported.
Higher government deficits should mobilize policymakers into action, the IMF said in a set of report called the World Economic Outlook and the Fiscal Monitor. Europe needs to move forward promptly to establish a banking union that would allow direct recapitalization of Spanish banks and insulate the region from a potential Greek default. Greek leaders, meanwhile, must scramble to salvage an emergency loan program that has gone badly off track, the IMF said.
>snip<
Uncertainty over the details of the banking union is keeping pressure on Spain?s borrowing prices and market economists say the premium Madrid pays will likely stay near unsustainable levels until the E.U. resolves that issue more definitively. The loan represents almost 10% of Spain?s GDP.
The IMF also warned that Greece?s loan program risked being derailed.
“Recent deterioration in the political and economic climate in Greece serves as a warning about the potential onset of “adjustment fatigue” which remains a threat to continued program implementation,” the IMF said.
And the Spanish and Greek numbers were just part of a larger and equally grim forecast.
IMF downsizes global growth forecast
Yep, it looks like the crisis is growing deeper all over.
From the New York Times’ Annie Lowrey:
In a periodic update of its economic forecast, the Washington-based institution warned that the measures taken in Europe have not done enough to quiet markets and restore growth. The I.M.F. maintained its forecast of 2012 economic growth at 3.5 percent, but it cut its forecast of growth in 2013 to 3.9 percent, down from the estimate of 4.1 percent it made in April. In 2010, the world economy expanded 5.3 percent.
The I.M.F. cautioned that even those tepid forecasts might be too optimistic, if Europe does not do enough to ameliorate its debt crisis and if policies to improve growth in emerging markets fail to gain traction.
“Clearly, downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action,” the fund warned.
Countries experiencing the biggest reductions in expected growth include Brazil and India, whose economies have cooled this year; newly industrialized Asian economies, like Korea and Singapore, hit by a broader global slowdown; and Britain, struck by austerity budgeting.
German court won’t rush that ruling
With the eurozone spiraling deeper into recession, Germany’s highest court isn’t about to rush a ruling on whether or not the president can sign Chancellor Angela Merkel’s treasured legislation allowing German to join the new package of financial oversight mechanisms that will limit eurozone national sovereignty in matters financial.
Oh, and Germany’s participation that bailout fund is also at stake.
From the London Telegraph:
Resisting pressure from politicians and markets for a swift approval of the permanent bailout scheme (European Stability Mechanism) and the fiscal pact for budget discipline, the court said on Monday it would announce its verdict in nearly two months’ time.
There was no immediate reaction from the German government, but Finance Minister Wolfgang Schaeuble said after last week’s public hearing that he hoped for a ruling before the autumn, Reuters reports.
Constitutional Court president Andreas Vosskuhle said during last week’s public hearing into complaints that the eurozone debt crisis tools are unconstitutional that the court might opt for a “very thorough summary review”, which could take up to three months.
>snip<Constitutional experts say they expect the court based in the southwestern city of Karlsruhe to permit ratification of the ESM and fiscal pact, but possibly signal that Germany cannot cede any more sovereignty to Brussels without constitutional changes probably requiring a referendum.
A referendum? That would add some spice to the game, and since it would come months from now, who knows how the citizens of the eurozone’s dominant economy might vote?
But Merkel’s confident of another vote
This one, a Bundestag vote on the latest round of German cash for Spanish banks.
From EurActiv:
Chancellor Angela Merkel said on Sunday she was confident that a majority of German lawmakers would back aid for Spain’s ailing banking sector at a special sitting of the lower house Bundestag set for Thursday (19 July).
Euro zone finance ministers agreed last Monday on a rescue package of up to €100 billion for Spanish banks, which have been crippled by a burst housing bubble.
Merkel’s government needs a green light from the Bundestag before Finance Minister Wolfgang Schaeuble can commit at a meeting of euro zone finance ministers on Friday to pay out Germany’s share of the bailout.
“We always get the majority we need,” Merkel said in a pre-recorded interview for ZDF television channel due to be aired on Sunday evening.
In Spain, talk of a general strike
Faced with a major sales tax increase and the specter of further job and pension losses, the Spanish working class has been growing increasingly worried and angry.
Now comes word that plans are underway for another general strike as the latest round of austerity measures begins to bite.
From German press agency DPA:
A general strike is becoming increasingly likely in Spain, a trade union leader said Monday after police dissolved a protest rally in central Madrid.
Unions were considering another general strike against the government’s austerity policies, to follow an initial one on March 29, said Ignacio Fernandez Toxo from CCOO, one of Spain’s two top trade union confederations.
The strike was “unavoidable” if the government did not backtrack on new spending cuts announced last week, Toxo said. Unions have already called nationwide protests for July 19.
Thousands of people have, since last week, taken to the streets against government spending cuts and tax hikes worth 65 billion euros (80 billion dollars), which are aimed at trimming the budget deficit.
More from Agence France-Presse:
Thousands of people came out into the streets of central Madrid on Sunday, just 48 hours after their last protest, sparked by the approval of Spain’s latest austerity plan on Friday.
Sunday’s late-night protest was spontaneous, sparked by calls on social networking sites, said 21-year-old fireman Miguel Rodriguez. It brought together professionals such as firemen and police along with civil servants who all opposed the government’s plan.
Spaniards say they just despair of what is next.
>snip<
Spain’s two main unions CCOO and UGT have called for another nationwide strike for Thursday over the latest round of trimming, which includes lower jobless benefits and public sector pay cuts.
ANSAmed reports on the latest protest Monday:
One thousand firefighters, police, and public employees dressed in black blocked the capital’s central throughfare and followed an open casket symbolizing the death of the rights of public sector workers today in yet another protest against the government’s 65 billion euro austerity plan, city police union sources said.
This is the fourth public employee demonstration since Friday, when the Cabinet approved Premier Mariano Rajoy’s harsh spending cuts aimed at reducing the public deficit in two years, and which involve reduction of leave and year-end wages and a VAT hike, among other measures. Yesterday thousands of school teachers and university professors, doctors and nurses, firefighters, off-duty police and retirees marched peacefully from the Congress to the Plaza Nettuno. The march ended with one arrest for resistance to a public officer.
Eurocrat praises Portuguese compliance
Austerity’s working in Spain, says a key eurocrat — this despite growing unemployment and misery.
From Europe Online:
The austerity policies that Portugal is implementing in agreement with the European Union and the International Monetary Fund are beginning to yield results, EU Competition Commissioner Joaquin Almunia said Friday.
Portugal was correctly applying the programme agreed to with the two institutions, Almunia said during a visit to Lisbon. The EU and IMF have granted Portugal a bailout of 78 billion euros (95 billion dollars).
The government’s budget cuts have come at the cost of increasing poverty, strikes and protests.
The programme was now beginning to “give very good results,” Almunia said. He mentioned an increasingly favourable relation between exports and imports, which was “the first step towards an (economic) recovery.”
The government has admitted to having difficulties in meeting this year’s budget deficit target of 4.5 per cent of gross domestic product.
And now, on to Greece. . .
Teutonic titans: Make an example of Greece
Yep, the Troika’s gotta whip those Greeks into line in order to make an example of an entire country as a warning to other states to hew the austerian line of crushing organized labor, destroying pensions, and selling off the national treasure.
From Digital Journal:
German Chancellor Angela Merkel has admitted that the austerity programme imposed on Greece was necessary as an example to keep the other eurozone countries in line.
Statements by both Merkel and German Finance Minister Wolfgang Schaeuble have given weight to the notion that Greece has been used as a financial experiment to keep the other Mediterranean economies in line.
Speaking to the German press Merkel said “the austerity imposed on Athens…” is “necessary to set an example to the entire eurozone.” She went on to say “The question of whether Greece carries out its programme is not just a question of whether the programme succeeds or not, but rather of whether obligations will be observed in Europe in future.”
The sentiment was reiterated by Schaeuble. The Telegraph reported he said although he has sympathy for the people of Greece that does not mean they don’t have to put up with austerity. He said “Things are rarely fair in a crisis … the little man suffers and the rich feather their own nests. I have really huge sympathy for the man on the street in Greece. But I cannot spare him. It is not easy to cut the minimum wage in Greece, when you think of the many people who own a yacht. “
Let’s see if we’ve got this right. The country’s that’s benefitted more than any other from costly contracts sold by their own corrupting corporations to bribed public officials is demanding that the citizens stuck with the bills for those contracts secured by German bribes serve as examples to other countries.
Do they actually want people to revolt? Because if they do, they’re going about it just the right way.
Meanwhile, Samaras promises obedience
New Democracy Prime Minister Antonis Samaras says the knives are honed and the slicing’s begun.
From Alkman Granitsas of Dow Jones:
Greece’s prime minister Monday said the government would begin an immediate review of the country’s bloated public sector with the goal of closing and merging state entities as part of its efforts to cut government spending and slash red tape.
In a letter addressed to Greece’s cabinet ministers, as well as alternate and deputy ministers, Antonis Samaras said the review would begin “in the next days’ and would encompass both central goverment entities and other state-linked organizations overseen by the ministries.
“The result of the assessment will be the reorganization of the services through mergers, or the elimination of inactive units and services, with the goal of rationalizing the functions of the ministries and reducing unnecessary spending,” Mr. Samaras said in a letter.
Needless to say, the military’s not included in any pay cuts, though they may have to do with fewer new toys.
A property tax power struggle
When you pay your electric bill in Greece, you’re also paying a special property tax assessment [another austerian gift], which is added to the power bill.
Now the leader of the one moderately left party in the coalition is making a big deal out of insisting that people should never have their power cut if they haven’t paid the tax.
From Ekathemerini:
Democratic Left leader Fotis Kouvelis stressed that power supply should never get cut for people who have not paid their special property tax — included in the electricity bill for this year, too — speaking on state television NET on Saturday morning.
As reports converge to the insistence of Greece’s creditors for the government to maintain the system of property tax payment that last year fetched even more money than anticipated, Public Power Corporation has once again undertaken to collect the levy on all structures with electricity supply, although this year the threat of power supply cut is removed after a recent court decision against it.
Kouvelis, one of the party leaders supporting the coalition government of Prime Minister Antonis Samaras, refrained from confirming PPC’s precise involvement in the tax collection as yet, but underscored that everyone should have their power supply, thereby banishing any thoughts the PPC might find a loophole to enforce the payment through power cut threats.
“What is currently being discussed is whether this tax will be incorporated in the electricity bill or form a separate pay notice to the PPC bill. I am saying this given that it is one thing having your supply cut – and that should not happen and will not happen – and quite another the burden of this tax,” said Kouvelis.
More from Athens News:
The Independent Greeks have accused the coalition government of Antonis Samaras of false promises, in comments made by party spokesman Christos Zois on Sunday.
Zois stated that Antonis Samaras had gone back on a promise to abolish a special property surtax attached to electricity bills, which resulted in several poorer households having their electricity cut because they were unable to pay both the bill and the tax.
“Antonis Samaras’s pre-election pledge to abolish the special surtax on property has been converted into a full implementation of the Venizelos decision,” the Independent Greeks spokesman said.
“The express commitment has been postponed to 2013. The citizens are financially squeezed dry and the public power corporation (DEH) is being devalued before it goes under the ‘hammer’,” Zois added, noting that the coalition government of Pasok, New Democracy and the Democratic Left had promised one thing in June and did another in July.
We find both the posturing odd, given that the a court has already ruled that while the government can use the power bills to collect taxes, it can’t cut off the power.
New to Greece: Racist soup kitchens
Already drawing harsh fire for their racist blood drives, Greece’s neoi-Nazi Golden Dawn is running racist soup kitchens.
From Areti Kotseli of Greek Reporter:
Far-right Parliament party Golden Dawn started kitchen soups providing hundreds of people with food in Ilion, Athens and other areas. The first day the kitchen soups were initiated, masses marched to the area demonstrating their unemployment cards or papers certificating their having large-families.
What sparked controversy among Greek media was the fact that the far-right party demanded that people allowed to take food had to be of exclusive Greek origin. Every immigrant, illegal or not, including Gypsies, is excluded from the kitchen soups; however, we can’t ignore that the 18 elected Golden Dawn MPs and their supporters don’t spend their time and money in cultural events and academic talks, but in actual efforts of social nature.
Each item in the food supply was bought from state money the party received in proportion to the acquired parliamentary seats (according to the legal framework for elected parties). Everything was bought from Greek firms and Greek producers exclusively. In a symbolic show, in this way, Golden Dawn MPs ‘return’ the Greek people the money they gave them with their vote.
A few days ago, the party also organized blood donation events for Greeks only. They put up posters all over Athens calling for volunteers to donate blood “for Greeks who need our help.” Once again they received negative comments from across the media and the medical community.
Austerity forces halt to national fete
The end of the military regime installed by a cabal of colonels in 1967 won’t be marked by the usual public festivities this month.
Instead, the president has called for a national day of reflection. Given that there’s little to celebrate, probably not a bad idea.
From Ekathemerini:
Greek President Karolos Papoulias on Monday said that there will be no celebrations this year to mark the July 23 anniversary of the fall of the 1967-1974 military dictatorship.
“The event for the anniversary of the restoration of democracy will not take place this year,” the president’s office announced on Monday. “This is dictated by the suffering of the Greek people.”
Instead, Papoulias said that the July 23 anniversary should be seen as an opportunity for “contemplation.”
Another austerity gift: Greek bank consolidation
Instead of breaking up banks and returning them to community-serving institutions, one of the results of austerity is a further consolidation of those same beasts that landed us in the soup in the first place.
That latest example is happening in that hardest hit of austerity targets, Greece.
From Stephen Grey and Nikolas Leontopoulos of Reuters:
The chairman of one of Greece’s largest banks and his family took out loans totaling more than 100 million euros to finance an undisclosed stake in the bank, according to audit documents seen by Reuters.
Offshore companies owned by Michael Sallas and his two children paid for shares in the Piraeus Bank, the country’s fourth-biggest, by borrowing money from a rival bank.
Together the shares make the Sallas family the largest shareholder in Piraeus, with a combined stake of over 6 percent. The purchase of these shares has not been declared to the Athens stock exchange by Piraeus.
The loans to Sallas, who was executive chairman of Piraeus Bank until last month and remains its non-executive chairman, raise new questions about the stability and supervision of the Greek financial system at a time when European taxpayers and the International Monetary Fund are bailing out its banks with more than 30 billion euros.
>snip<
The disclosure highlights concerns that Greek banks have been borrowing money from each other and using it to meet recapitalization requirements, but not making that clear.
More from Ekathemerini’s Giorgos Mantelas:
[W]e are now entering the final phase of operations for the second major cycle of concentration of the country’s bank sector, with a delay of a decade.
Then, as now, the unknown factor is the key feature as the situation is prone to change. The difference today, however, is that there are some certainties on the horizon, and these are Emporiki Bank and ATEbank.
According to the latest information, National Bank of Greece (NBG) has been examining the case of Emporiki since the start of the year. Some times with more interest and others with less, Emporiki remains the focus of National as one of its main options. A marriage of National with Emporiki could also see Hellenic Postbank join them for the creation of a strong state bank, with some French assistance.
On the other hand, all signs point to an end of National’s interest in the case of ATEbank. The latter’s arrears are far too big, and even if the state covers them — in the sense of splitting it between a good bank and a bad bank — as official sources have suggested, the amount required for what is known as the Agricultural Bank of Greece to return into orbit is deemed prohibitive, estimated at around 1 billion euros. This possibility therefore appears ever more remote.
The second scenario that has gained popularity over the last few days provides for a new group with a completely different composition, but with National still at its core: This time the country’s biggest lender is to be joined by Piraeus Bank and Geniki Bank. The latter’s parent company, Societe Generale, has cut the lines of credit to its Greek subsidiary, according to a recent statement by one of its officials to Reuters.
Meanwhile, Tsipras keeps up the pressure
Syria’s leader continues to stoke the fires of discontent, declaring that the policies of the New Democracy-led coalition will drive an immiserated Greece out of the eurozone, whether they want it or not.
From Andy Dabilis of Greek Reporter:
Continuing his non-stop onslaught against pro-austerity Prime Minister Antonis Samaras’ coalition, Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras said the new government will – despite its promises – impose more austerity on weary Greeks and that the country will so disintegrate that Samaras will be forced to beg for Greece to leave the Eurozone of the 17 countries using the euro as a currency.
That is what Samaras said would have happened had SYRIZA won the June 17 elections because Tsipras vowed to renegotiate the terms of bailout deals from international lenders who demanded pay cuts, tax hikes and slashed pensions. Greece is surviving on a first series of $152 billion in rescue loans from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which is holding back a second bailout for $173 billion until the new government starts implementing more reforms and makes another $15 billion in cuts as part of a memorandum agreement.
Tspiras derided the coalition of Samaras’ New Democracy Conservatives, the PASOK Socialists of Evangelos Venizelos, a former Finance Minister in a previous shaky hybrid government with Samaras which supported austerity, and the tiny Democratic Left of Fotis Kouvelis, a former Leftist ally whom Tsipras dismissed as an enemy of the people now. Sarcastically poking fun at Kouvelis, Tsipras said he no longer was associated with those he said identify “the memorandum-friendly government program as progressive.”
Meanwhile, ACTA sneaks in the back door
As we noted before, the much-lauded European parliamentary defeat of ACTA, the international intellectual property regime pushed by U.S. State Department, was more a Pyrrhic than a substantive victory, given that its provisions are being ewritten into countless other “free trade” pacts.
Now comes word of yet another treaty that follows the same agenda.
From Benjamin Fox of EUobserver:
The European Commission is set for another intellectual property rights clash with MEPs, after leaked documents revealed that proposals from the rejected counterfeit treaty Acta had been included in a draft trade agreement between the EU and Canada.
EU and Canadian officials started negotiations on a bi-lateral trade agreement (CETA) in November 2009 and are expected to reach a final agreement before the end of the year. Like Acta, the trade deal is being drafted in secret, and would require the approval of the European Parliament to enter into force.
Canada is one of the EU’s biggest trade partners, with €52.5 billion of goods being imported and exported between the two in 2011. It was also among the countries to negotiate and sign Acta.
However, alarm bells sounded when provisions contained in the draft chapter on intellectual property rights, which was published on Tuesday (10 July), included criminal liability for “aiding and abetting” copyright infringement alongside strict criminal enforcement rules.
Jérémie Zimmerman, co-founder of the internet campaign group La Quadrature du Net, issued a statement calling on the trade agreement to be scrapped if it contained provisions from the axed treaty. Describing Trade Commissioner Karel De Gucht as “the copyright lobbies’ lapdog”, Zimmerman added that “CETA literally contains the worst of Acta”.
