On 2012-05-08, at 10:00 AM, Robert Naiman wrote: > Rachman assumes as a premise that the fiscal pact can't be > renegotiated. But even US Treasury says the fiscal pact can be > renegotiated; even US Treasury says that it is stupid to have legally > binding arrangements that prevent governments which can borrow at low > interest rates from doing so to spend during a recession. > > Rachman claims it would be unthinkable for Hollande to "isolate" > Merkel, but according to NPR this morning - you know, that radical > left-wing rag - Merkel is already isolated.
In fairness to Rachman, he thinks there will be a "fudge" on the fiscal pact which will be presented as a genuine "renegotiation". His conclusion is based on a realistic assessment of the relationship of forces between the Germans and the other European states, including France. I suspect that's the outcome the US Treasury also has in mind. The fiscal pact is itself a fudge which, despite its "legally-binding" provisions, will likely prove as practicably unenforceable in the courts as the Stability and Growth Pact upon which it is based. Fiscal compact or not, the German bourgeoisie and its European allies have come up against the economic and political limits of austerity, and have recognized they have got to somewhat slow the tempo of their assault against social programs and union rights which the pact promotes. But this tactical retreat won't represent the kind of wholesale policy shift you seem to be suggesting, and I think Rachman's main point - that the French Socialists will ally with Merkel to try to keep the Greeks in line and in the eurozone - is dead on correct. A tactical retreat under mass pressure is always welcome, but it shouldn't obscure the fact that the main divisions within Europe will remain not between states, but between the states and their peoples. > On Tue, May 8, 2012 at 9:41 AM, Marv Gandall <[email protected]> wrote: >> The Greek crisis will fast expose Hollande >> By Gideon Rachman >> Financial Times >> May 7 2012 >> >> In rural France on Sunday night, the newly-elected French president took to >> the stage and announced that he would lead the battle in Europe against >> austerity. On the other side of the continent, Greek voters were calling his >> bluff. By overwhelmingly opting for parties that want to either repudiate or >> renegotiate Greece’s bailout deal, they have handed François Hollande a >> painful dilemma. Will he stand with the Greek people against austerity? Or >> will he stand with the German government and the International Monetary >> Fund, in insisting that the Greek bailout cannot be renegotiated? >> >> The choice Mr Hollande makes will be fateful, for France and Europe. >> Potentially, France’s new president could position himself as the head of >> Europe’s southern rebels. There is no doubt that the Spanish and Italian >> governments – even if nominally from different political families – have >> been cheering on the French socialist. They, like the Greeks, desperately >> want to see a challenge to German austerity orthodoxy. >> >> Yet any French effort to isolate Germany within the EU would be a historic >> shift in postwar French foreign policy – which has been built around the >> idea that the “Franco-German couple” should run the EU together. Allying >> France with the European south would also damage France’s self-image, as one >> of the stronger economies in Europe. The perception of France in financial >> markets could also worsen. Most damaging of all, an open split between >> France and Germany would cause Europe-wide problems, opening up a seismic >> fault in the foundations of the EU and its single currency. >> >> As a result, most analysts assume Mr Hollande will settle for a few >> face-saving gestures from Berlin, allowing him to say that he has changed >> the direction of the EU debate in favour of“growth”. Even before he was >> elected, experts in Berlin and Paris were sketching out the likely contours >> of an agreement. >> >> A putative Hollande-Merkel deal would go something like this. Mr Hollande, >> as he has already hinted, would modify his demand to renegotiate the new EU >> fiscal pact – the deal that makes a move towards balanced budgets legally >> binding. Instead Germany would agree to a vaguely-worded new growth pact, >> which could sit alongside the fiscal pact. In similar vein, it would reject >> Mr Hollande’s demand for Eurobonds – the issuance of common EU debt. But it >> would probably agree to EU-backed “project bonds”, financing infrastructure >> projects. A boost to lending by the European Investment Bank would also be >> agreed. This would be a typical EU, Franco-German fudge that would allow all >> participants to retreat with honour – leaving the outside world largely >> unaffected and slightly baffled. >> >> The new eruption of the Greek political volcano, however, greatly >> complicates this picture. The Greek problem is now so acute that it cannot >> be “fixed” through a few cleverly-drafted clauses, added to an EU treaty. It >> demands real, crunchy and dangerous decisions. Specifically, will Greece >> press ahead and make further billions of euros worth of budget cuts, within >> months, as demanded by its most recent bailout deal? If Greece refuses to do >> this, then the IMF has made clear that it will not authorise the release of >> the next tranche in aid to Greece. That, in turn, would mean that the Greek >> government simply ran out of money. Managed, if painful, cuts to pensions >> and wages would then be replaced by something much more chaotic and >> dangerous. The forced exit of Greece from the euro would also become much >> more likely. >> >> The raw numbers from the Greek elections suggest that this stark choice >> might soon have to be confronted. The two mainstream, pro-bailout parties, >> New Democracy and Pasok, only garnered about one-third of votes. They will >> struggle to form a coalition government – and Greece may soon face more >> elections. >> >> Moreover, even Antonis Samaras, the leader of New Democracy and still the >> likeliest next prime minister, would argue for changes to the Greek deal. Mr >> Samaras knows the fact that both centrist parties are now associated with a >> deeply unpopular austerity package, imposed by foreigners, is dangerous – it >> makes the nationalist and far-left extremists the only political gainers. >> >> Specifically, Mr Samaras thinks that Greek businesses desperately need lower >> taxes. But he has received no encouragement in this argument from Angela >> Merkel – with whom he has a dreadful relationship. If he makes it as prime >> minister, Mr Samaras would position himself as a reasonable rebel, arguing >> against counterproductive German austerity policies. That makes him sound >> like a natural ally of Mr Hollande. >> >> In reality, faced with a choice between supporting Greece and supporting >> Germany, the French are almost certain to go with the Germans. Yet such a >> choice would expose Mr Hollande’s anti-austerity rhetoric as vacuous. A few >> gestures towards “project bonds” will be as nothing, compared with the >> vision of France standing with the IMF and Germany to impose deep cuts on >> Greece, while the country’s economy shrinks and unemployment soars. >> >> The combination of political chaos in Greece and an inflexible IMF suggests >> that Greece will hit a new crisis this summer. At this point, the EU will >> face a momentous choice. Does it step in with yet more aid for Greece, even >> as the IMF backs off? Or does it refuse to help Greece – accepting all the >> political and economic risks that come with such a choice? Faced with such a >> crisis, Mr Hollande’s vague and uplifting rhetoric about saving Europe from >> austerity is irrelevant. >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l > > > > -- > Robert Naiman > Policy Director > Just Foreign Policy > www.justforeignpolicy.org > [email protected] > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
