HOPES for a grand plan to solve the European debt crisis were fading ahead of last night’s emergency summit in Brussels, with France and Germany still at odds over the rescue package and Italy’s coalition government facing potential collapse over differences on austerity.
Fears of a double-dip global recession rose as a meeting of the European Union’s 27 finance ministers that had been planned for the start of the summit was cancelled.
The leaders of the EU countries were still set to meet overnight to discuss rescue proposals — non-euro countries such as Britain are keen to ensure they are not disadvantaged by any deal — and then the 17 members of the single-currency euro zone were to meet to vote on final measures.
The prolonged political hand-wringing over the 18-month debt crisis produced near despair among some EU diplomats. One official told The Guardian: “Everybody realises that we are on the brink of such a total catastrophe that anything that prevents it and a huge recession must be grasped. The markets will kill us if they haven’t laughed themselves to death.”
The rescue proposals have three pillars: persuading creditors to give up hope of being repaid a large proportion of Greek debt (known as a write-down or a “haircut”); injecting more money into Europe’s banks so they can withstand the shock waves of a Greek default; and boosting the euro zone’s bailout fund, the European Financial Stability Facility, so that it can cope if larger debt-ridden economies such as Spain or Italy need to call upon it.
There seems to be agreement that banks should get €108 billion ($A144 billion) to increase their capital base so they will not have to freeze lending if they lose large amounts of money over Greece.
But the other two strands of the deal are facing hurdles. Private creditors are reportedly resisting pressure by the European Commission and the European Central Bank to accept haircuts of up to 60 per cent, three times the 21 per cent agreed to in July. Banks have offered 40 per cent and warned that anything more would endanger the banking system.
The size of the debt write-down must be decided before the final figure of the boost to the bailout fund, which could go as high as €2 trillion, can be calculated.
Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy are again at loggerheads over whether the European Central Bank should buy up more Spanish and Italian bonds to support those countries. Dr Merkel rejected a draft summit communique that appeared to suggest this measure should continue.
Dr Merkel faces strong domestic opposition to the ECB’s bond-buying. Germans fear it will lead to inflation and compromise the central bank’s independence.
The two leaders are united, however, in their insistence that Italian Prime Minister Silvio Berlusconi arrive at the summit with his divided coalition pulled into line behind a plan to slash Italy’s €1.9 trillion debt.
On Tuesday, negotiations with Mr Berlusconi’s Northern League coalition partner over pension reform and an increase to the retirement age had broken down so badly that it was thought Italy might face an election over the issue.
Northern League leader Umberto Bossi said he was “pessimistic” about the government’s survival.
Tag Archives: Eurozone
Dutch voters back eurozone in election
LONDON
IN A strong show of support for Europe, Dutch voters have rejected Euro-sceptics and backed two pro-Europe centrist parties.An election that was a litmus test for Dutch willingness to back Europe and the euro during its debt crisis has resulted in Liberal Prime Minister Mark Rutte claiming victory for his centre-right VVD Party.
The centre-left Labour Party was a close second, with vote-counting continuing last night and a coalition government of the two still probable.
The anti-immigrant Freedom Party of far-right firebrand Geert Wilders looked to have been devastated, with an exit poll suggesting its 24 seats could be slashed to as few as 13.
Mr Wilders, a harsh critic of the European Union, had triggered the election by refusing to back Mr Rutte’s plans for an austerity package to rein in the budget deficit.
Mr Wilders had also called for the Netherlands to ditch the euro and leave the European Union.
He complained that the government was ”throwing money over the dykes” to help Greece and Spain while cutting social services to its own people.
The VVD was set to take 41 seats in the 150-member Dutch Parliament, two more than the Labour Party.
Voters also rejected the far-left Socialist Party, which had opposed eurozone rescue deals and had led in polls over the past three months.
The result is an embarrassment for pollsters, who had not predicted the abandonment of smaller anti-Europe parties in favour of the two main players, who have both consistently backed eurozone rescue packages.
In essence, Dutch voters seem to have backed further integration with Europe, despite anger that they were being asked to increase contributions to bail-outs of southern nations.
But there might also have been an element of strategic voting, with voters swinging towards the major parties at the last minute in the hope of pushing the one that best represented their views to victory.
Mr Rutte said the result was an endorsement of his austerity platform: ”This is a strong boost for the agenda that we have laid out for the Netherlands, to go on with our policy in this splendid country.”
Mr Rutte had promised to bring down the Dutch deficit and stimulate the economy – which has been flat because of the eurozone crisis – with budget cuts and investment in infrastructure.
Labour leader Diederik Samsom leaned more towards the fiscal stimulus policies of French president Francois Hollande and had campaigned on job-creation programs.
If the two unite in coalition, there is likely to be a moderation of Mr Rutte’s strong support of the austerity policies championed by German chancellor Angela Merkel.
Mr Rutte had earlier warned against a result that might undermine the close ties between the two nations.
”Will we continue our close relationship with Germany and fighting the euro crisis, or will we shift towards a more France-oriented Europe, which I will be against?” he said after casting his vote.
But Mr Samsom said German-led austerity policies had hurt the Dutch economy: ”It is wrong to assume that this crisis will be solved by a choice between Paris and Berlin. Europe is not about axes. Europe is about co-operation. Otherwise you will never get out of this crisis.”
Mr Wilders, best known for his anti-Muslim views, said of the result, ”I would rather have stood here with good news, but the voter has spoken. We have lost badly.”
Swedish Foreign Minister Carl Bildt welcomed exit-poll results, tweeting, ”Looks as if populist anti-Europeans are losing big-time in Dutch election. Distinctly good news.”
A provisional voting result was expected overnight but the official result will not be confirmed until Monday.
First published on theage.com.au
German court opens door to euro rescue
Austerity, bailout fatigue take toll
A CONSTITUTIONAL crisis for Germany and a financial shock to the euro have been averted by a court decision that will allow Germany to contribute to Europe’s permanent euro bailout fund.
The German Supreme Court last night ruled that it was legal under the constitution for Germany to participate in the bailout, but imposed conditions, including a limit of €190 billion ($234 billion).
If the government wants to contribute more than this to the €700 billion European Stability Mechanism, the decision must be referred to the German parliament for a vote.
This means that heavily indebted countries such as Greece and Spain can continue to receive the support they need in order to avoid bankruptcy.
The court case had threatened the government of Chancellor Angela Merkel and risked plunging European sharemarkets into turmoil and the world economy into a downturn.
The case was mounted by 37,000 petitioners, including the group More Democracy, academics, ordinary Germans and members of Dr Merkel’s own party. They were angry that their taxes were being used to support olive-belt countries they regarded as financially reckless and claimed Germany was taking on “unlimited and irreversible liability risks”.
Germany was the only eurozone country not to have ratified the treaty establishing the ESM. As it is also the largest, the fund had been unable to open for business.
In line with its share capital in the European Central Bank, Germany must give €22 billion in cash to the fund and provide guarantees totalling €170 billion. But critics warn that much more will be required to support the unsteady euro.
The fund’s war chest is not considered enough to finance a full bailout of both Spain and Italy.
The court decision was in line with expectations, with many observers having predicted that the court would be reluctant to bring down either the government or the euro and would likely steer a middle path that set limits.
Mattias Kumm, of Berlin’s Humboldt University, said, “It means that Germany will now be able to move forward and ratify the ESM, providing an additional clarifying interpretation of the conditions under which Germany can assume responsibility. So in effect, this means that the ESM can enter into force.”
It also means that regular reports on where Germans’ money is going will be made public in the run-up to the German federal election.
Meanwhile, voters in The Netherlands went to the polls overnight in a general election triggered by the refusal of Geert Wilders the leader of the Freedom Party, to support cuts to reduce the Dutch deficit.
Opinion polls put radical eurosceptic parties in third and fourth place in elections that were expected to rob Dr Merkel of a key ally as the Netherlands swings to the left, away from Berlin’s doctrine of fiscal discipline and towards French President Francois Hollande’s support for reduced austerity.
Many commentators are predicting the biggest swing to the left in Holland’s history.
First published on theage.com.au
GENERATION LOST?
WHEN Eva Valiente finished her university studies in advertising, she fired off written applications to 200 companies in Madrid. She did not get a single reply. So Valiente got part-time work with a chain of fashion shops. They sacked her when she turned 25 — she was too old for their look now, they said.
“It is illegal but the laws are weak for beginning people,” she says, with the hard-earned wisdom of a 26-year-old.
She tells of a friend who was offered a “job” in which she would work from 9am to 9pm five days a week — and get no salary for a year. Talking of the desperation of young Spaniards for work, she says “it’s for crying.”
Spain’s youth unemployment rate is a staggering 53 per cent, the highest in the 17-member eurozone. Among the jobless are Valiente’s boyfriend, a qualified lawyer who has never had work in his field, and two of her sisters: one a graphic designer who has never worked and the other a psychologist who recently lost her job. All of this in a middle-class, educated family — Valiente’s father is a doctor.
The eurozone now has a total of 3.3 million young people who cannot find work. Leading this dismal set of statistics are Spain and its fellow victim of financial crisis, Greece (52.8 per cent). With half the eurozone nations in recession, there are now enough unemployed people of all ages to make up a middling-sized country: 25 million.
There are warnings of a “lost generation” from the Organisation of Economic Co-operation and Development. In a report in July, it demanded urgent action to stop the cyclic jobless problem becoming permanent, particularly for young people. “We need to avoid the risk of a lost generation by all means,” said OECD Secretary-General Angel Gurria.
An alarming report by the World Economic Forum, Global Risks 2012, used even tougher language. It warns that with unemployment and systemic financial crises, the world is sowing “the seeds of dystopia”, defined as “the opposite of utopia, a place where life is full of hardship and devoid of hope”.
The report, based on the views of 469 leaders from industry, government, academia and NGOs, warned that rapid global changes risked producing misery for much of humanity. The risks included “a large youth population [that] contends with chronic, high levels of unemployment, while concurrently the largest population of retirees in history becomes dependent upon already heavily indebted governments.
“Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability.”
Declining economic conditions could jeopardise the social contracts between states and citizens and increase nationalism and populism. The Forum warned of the emergence of “critical fragile states — formerly wealthy countries that descend into lawlessness and unrest as they become unable to meet their social and fiscal obligations”.
The number one risk to global stability, according to the report? Major systemic financial failure — that is, the collapse of finance or banking institutions, or even a whole currency.
All of which leads back to Spain and its potential to wreak economic disaster upon the rest of Europe and, perhaps, the world.
Madrid does not look like the capital of a struggling nation. Its broad, proud boulevards and graceful old buildings speak of majestic confidence. Its pavements are smooth and its many public gardens green and manicured, despite a summer so hot that there have been bushfires in the provinces. Madrid does not seem to have in any numbers beggars such as the Romanies on Parisian streets, or the English homeless holding out plastic cups for coins in London.
But Spain is suffering. While Greece’s public writhing under the agonies of austerity in a recession has been the focus of headlines, this is because if the eurozone falls, Greece is likely to be the first domino. In many ways, however, Spain is the bigger worry.
Greece is a small nation and accounts for only 3 per cent of the eurozone economy. While its exit from the euro might trigger a crisis of confidence in Europe’s financial markets, the euro would have a chance of surviving it. But Spain is Europe’s fourth-largest economy and is widely considered too big to bail.
That did not stop the European Central Bank deciding in June to lend Spain up to €100 billion to help its struggling banks in an attempt to ward off a more serious emergency.
Spain is in financial crisis — and Valiente and her family and friends are out of work — because of what Spaniards call “the brick bubble”. When Spain joined the euro, credit became cheap as the European Central Bank kept interest rates low for the whole zone. Spaniards bought property, leading to a construction boom. In 2007 came the bust.
Credit tightened. People stopped buying. The value of houses plummeted, some by more than 50 per cent, leaving many people owing big mortgages worth more than the property involved. Banks found themselves weighed down with mortgage defaults and toxic assets worth a fraction of their previous value. The countryside is dotted with ghost towns, huge housing developments that remain unfinished and unsold. Federal and regional governments that had spent big as revenues flowed found themselves unable to balance budgets.
The human cost is dire. Spain now has 1.7 million households in which no one is working, and the government says it does not expect joblessness to fall below 22 per cent until at least 2015.
For Valiente and others like her, this means adult life is on hold indefinitely. She and her boyfriend would like to live together but they can’t afford it, she says in frustration: “You can’t leave home. You can’t be in a couple. You can’t be a mother. You feel like you are too old for everything, but at the same time, you have to live like you’re a 15-year-old. You live with your parents; you live like a teenager.”
This pattern of delayed adult milestones is also showing up in statistics, says sociologist Almudena Moreno Minguez of Valladolid University. “If you compare us with other European countries, Spaniards are now marrying three or four years later, on average, and having children six or seven years later.”
This is partly because many of those aged between 25 and 34 who moved out of home a few years ago when they started work are returning because they’re unemployed and broke. Parents call them “boomerangs”, she says.
“The parents aren’t happy. There comes a point when even the family cannot support another three or four members at home.”
She says research shows that young people are feeling angry and alienated from the formal structures of society; they feel they have no voice in the deciding of public affairs. Recent improvements to welfare benefits did not include them, she says, and Spain spends less of its GDP on training and education than the rest of the eurozone.
Many Spaniards talk with disdain of the “botellones” (from the word for big bottles) — young people who gather at night in public places to drink and party because they can’t afford clubs or bars.
Moreno says, “Even worse than not investing in them, people here try to make them feel guilty. ‘You are responsible for this situation.’ It’s like they have spat them out.”
A survey of young people aged 15 to 29 asked them to rank different institutions according to how well they respected them. Moreno says, “They gave justice 3, unions 4.5 — and politicians 2.”
Their disdain for politicians is shared by their elders. Newspaper columnist Luis del Pino, who contributes to El Mundo, says Spaniards have an old saying, “Two things are bad for your health — politicians and smoking, in that order.”
He says “legal” political corruption is to blame for many of the financial problems. Regional politicians manipulated local banks to encourage finance for local projects: “They put boards of directors that oriented these savings banks towards giving credit to big construction companies who were friends of the politicians. All this subsequently collapsed.”
Four Spanish banks that have been part-nationalised because of toxic debts have at least €71 billion ($A87 billion) in bad loans on their books.
Politicians also made many political appointments to get friends and supporters on the public payroll, he says. “Mayors and ministers have a total of 17,000 ‘personal advisers’, according to my colleagues at El Mundo. That’s an €850 million expense each year.”
And some politicians also manipulated the “brick bubble” for personal profit, buying land they knew was to be rezoned and reselling it for many times the original value, he says.
But Spain also has tight labour laws that need reform. Both right-wing and left-wing economists agree regulations, generous but not all unreasonable in boom times, now serve to lock young people out of work.
Sick employees can get most or all of their wages for 18 months. Employees can only be sacked without a payout in the first year, and many long-serving staff would cost €80,000 or more to let go. Businesses stay small because once they reach 50 employees, they must have five workplace reps to bargain on wages and conditions, each of whom receive 15 paid hours a month for these duties. Companies also pay higher rates of tax once they have more than 25 staff.
Inigo del Toro Calonje lost his job as an environmental engineer with a company designing golf courses when the boom bust. Golf courses had sprung up to add value to housing developments in the middle of nowhere but suddenly his company’s clients stopped paying and Calonje, unable to find another job, decided to set up his own consultancy.
It cost him €4000 and took three months to set it up to comply with government regulations. He earns only 60 per cent of what he earned as an employee but must pay company taxes each month and is driven mad by the different environmental regulations in Spain’s 17 regions. “They punish us for trying to be independent,” he says.
He is not the only one feeling punished by “la crisis”. “Social instability is a risk because we will have a large group of young unemployed for a long, long time,” warns Almudena Moreno (pictured). “It will produce social conflict and the social structure will break down because young people don’t see any future; they don’t see any solution. What is going to happen in three or four years if we don’t find a solution?
“Here, democracy is quite young. It’s less than 40 years [since dictator General Franco died], it’s nothing. Our structures are quite weak. It’s hard to predict but if groups such as the long-term unemployed, the young people with no future and the people who have been evicted join together, their social power could be terrible, and dangerous too.”
Luis del Pino is another who can foresee potential trouble. He warns of the “amazing speed” with which the middle class, the backbone of any developed society, is disappearing.
“It would be a disaster if this led to the rise of political extremism. Franco is within living memory here. When you put several million people in a desperate enough situation, then they will hear anyone who promises them some hope, even if that anyone is the most despicable man.”
Right now, those questions are too big for most of the young jobless, for whom the main question is where to go next. Many are considering joining the tens of thousands leaving the country to seek fortune in foreign lands.
Enrique Melendez, 30, who lost his job writing for a public relations firm, is thinking about migrating to South America. It’s far away but they speak Spanish there, he says.
He is grateful to have worked at all: “At least the people around 30 had a job and lost it. At least we have had the experience of work. It’s more dangerous for the next ones coming behind us, who’ve never had a job and have no experience.”
Eva Valiente is wondering about moving too. She has two ideas; to become a cook and move to a rural town — “life is cheaper there” — or to go to England and improve her English and, therefore, her saleability. Maybe both. She cannot see anything changing for her in Madrid any time soon: “They say the crisis will go on for five or 10 years. I don’t know. Young people are very sad.”
HARD FIGURES
■ The number of people helped by Spanish Catholic charity Caritas
2007: 400,000
2011: 1 million, mostly families with children
■ Unemployment
2005: 8.7%
2012: 25%
■ On the edge of poverty
10.5 million people, 22% of the population
■ Court orders for evictions
2007: 25,943
2010: 93,636
■ Homes in which no one works
2005: 2.6%
2012: 9.1%
SOURCE: CARITAS SPAIN
First published in The Age.
The pain in Spain falls on ghost towns
Half-vacant Sesena is symptomatic of the economic blight in Spain. Karen Kissane reports from Madrid.
THE blunt brown apartment blocks of Sesena rise into the sky and spread wide along the dry paddocks. Around them, dirt from bare ground whirls in the summer wind, crane towers lie piled like matchsticks, and cyclone fencing surrounds the dream that turned to dust.
Block after block of apartments stand shuttered and empty, monuments to the folly and greed of Spain’s “brick bubble” — the property boom that went bust in 2007. Five years later, only 5000 of the 13,000 homes planned for Sesena are completed, and 2000 of those have yet to be sold.
This is the Spanish paradox: as huge property developments all over the country fade into ghost towns, an average of 159 people a day are being evicted because they can no longer pay their mortgages.
Foreclosures have quadrupled, with the courts granting 530,000 eviction orders between 2008 and 2011. Homelessness has increased as an estimated one in five houses — up to 5.6 million homes — stand empty.
An action group, Stop Evictions, has profiled the typical evictees: Spanish-born, with children in their care, and unemployed. The Spanish jobless rate is now the highest in Europe, 23 per cent, and its youth unemployment is a staggering 53 per cent, the worst in the industrial world. This means many people cannot afford to buy a home even though some houses and flats are now one-third the price they were five years ago in the heady days of cheap credit.
A young mother pushing a pram in the otherwise empty streets of Sesena, half an hour’s drive south of Madrid, says she and those in her block have been lucky; they paid only €72,000 ($A87,000) for their fire-sale apartments.
She would like the landscaping to be finished — “This should be garden,” she says, gesturing at the dirt — but her neighbours in the block opposite have a more serious problem: “They are worried and angry; they paid €200,000, big money.”
The property crash has been devastating to Spaniards who, unlike most Europeans, are as obsessed with home ownership as Australians. Retirees have lost their savings, young couples are stuck with big mortgages on houses they cannot sell, and Spanish banks are overloaded with toxic debt.
This week the government of Catalonia, with a budget as big as Portugal’s, became the second region to ask the Spanish government for a financial bailout. It wants an emergency credit line of €5 billion to help fund payments on its €42 billion debt.
In another barometer of rising fear, private depositors in Spanish banks withdrew more money in August than at any time since the country joined the euro.
Meanwhile Sesena has no chemist, its only public transport is a bus to Madrid once an hour, and the ground floors of all its blocks stand shuttered and blank — the retail businesses that were meant to fill them have never eventuated.
A young jogger living in blocks of nearby townhouses — who, like the mother, did not wish to give his name — says he regrets having bought a home in Sesena: “It’s too quiet. If we want to go out and do things, we have to go to Madrid.”
Then, realising he has just talked down his own property value, he bids a quick farewell and jogs off down a weed-filled street of withered front gardens.
First published in The Age.
Far right on rise in Europe
POLITICS: ‘As anti-Semitism was a unifying factor for far-right parties in the 1910s, ’20s and ’30s, Islamophobia has become the unifying factor [now]’
BY KAREN KISSANE IN PARIS, ATHENS
WHEN France’s far-right National Front was newly minted in the 1970s, the people who backed it were stereotyped as working-class roughs with shaved heads and ugly tempers, sometimes photographed at street demonstrations with their fists punching the air. That was then. This is now.
Thibault, 22, lives in Paris and has just graduated from university with a commerce degree. He has studied overseas and he and his sister Camille, 18, who is studying art history, speak fluent English. Their mother is a school teacher and their father a retired businessman.
On a mild summer evening, they mill on the pavement with a couple of dozen other young people waiting to join a meeting of the youth wing of the National Front, the nationalist party led by Marine Le Pen, daughter of party founder Jean-Marie Le Pen. Jean-Marie once called the Nazi gas chambers “a detail of history”. Marine Le Pen has been accused of being Islamophobic.
Thibault has followed the party since 2002, when Jean-Marie caused a stunning upset by making it to the second round of the French presidential election.
“I couldn’t comprehend why there was so much hatred towards him and why he was being persecuted,” Thibault says. “I was aware that he had made homophobic and anti-Semitic comments and I’m happy now that such positions are no longer part of the Front National. It must be understood that he is obviously not the same age as Marine Le Pen and that he belongs to another generation . . . The party now truly reflects all of my opinions, whereas 10 years ago it would have troubled me.”
Thibault and Camille are part of the new face of the right in France, which has seen a surge of support among the young and those living in the provinces, many of whom are economic refugees fleeing the struggling banlieues (suburbs) that ring Paris.
The right is on the rise not just in France but across western Europe. There has been a similar spike in support in Greece where, at the June election, hardship and anti-immigrant feeling catapulted Golden Dawn — a more extreme right-wing party often described as neo-Nazi — into an unprecedented 18 seats in the Greek parliament.
Parties pushing anti-immigrant and anti-Muslim ideas now have significant parliamentary blocs in eight countries, including Germany, Hungary and the Netherlands, where politician Geert Wilders has compared the Koran to Mein Kampf.
They feed unapologetically on growing resentment that foreigners are taking local jobs and welfare benefits. France’s anti-Muslim Bloc Identitaire serves a pork-based “identity soup” to homeless people; Greece’s Golden Dawn hands out food parcels only to people carrying Greek identity papers.
“As anti-Semitism was a unifying factor for far-right parties in the 1910s, ’20s and ’30s, Islamophobia has become the unifying factor [now],” says Thomas Klau, of the European Council on Foreign Relations.
British think tank Demos last year used Facebook to recruit more than 10,000 young supporters of 14 parties and organisations in 11 countries to answer questionnaires. The findings revealed a powerful swell in hardline nationalist sentiment in the young across the continent, particularly among men.
Demos used Facebook’s own advertising tool to extract data about 450,000 supporters of the organisations. Almost two-thirds were aged under 30, and three-quarters were male and more likely than average to be unemployed.
The resentment about outsiders is peculiarly spread. At this meeting of the youth wing of the National Front in Paris, several members are the children or grandchildren of migrants. Karime, 20, is a railway worker whose grandparents emigrated from North Africa. He, too, complains about migrants edging the French out of jobs and welfare but, for him, the main attraction to the party is Marine Le Pen; his face lights up as he talks about what a warm leader she is, and how she truly understands the problems facing the nation.
For Thibault, those problems can be summed up thus: “Past governments have failed to assimilate the incoming flux of immigrants and we are now faced with a tremendous challenge with the third generation of people from North Africa and Africa.
“They have no respect for France’s tradition and culture and seek to impose their own customs and values, which is intolerable. France is probably the most welcoming country in the world — free education and social security — but we cannot welcome all of the world’s misery. For that reason, we need to critically reduce the number of migrants.”
He has come to this view partly because of his mother’s experience teaching, he says: “She is also witnessing this change; numerous children with absent, unemployed fathers, violent and troubled. When you have 70 per cent of the class that isn’t French native and who don’t speak French, how are you supposed to pass on French culture and its heritage?”
He is also sceptical about the European Union and favours protectionism for French products. His sister, Camille, likes the Front’s zero tolerance approach to law and order issues. “There is an increasing sense of insecurity in the big cities,” she adds.
While they feel perfectly comfortable with their views, they are aware that not everyone regards the party in the same light. They chose not to use their surnames for this article in case potential employers should find them on the internet.
Le Pen ranked No. 1 of 10 candidates among young voters in the first presidential ballot earlier this year. She has softened the party’s stance in ways that appeal to a younger electorate.
French political analyst Nonna Meyer of Sciences Po says she has shifted the party away from her father’s image and rhetoric. “She’s younger, she’s a woman, she condemns anti-Semitism . . . She says she is tolerant, it is Islam that is intolerant . . . she up-ends the discourse,” Meyer says.
The opposite is the case with Golden Dawn in Greece, where the rhetoric is increasingly savage. Just before the Greek election in June, MP Ilias Panagiotaros promised that if his party were elected, “It will carry out raids on hospitals and kindergartens and it will throw immigrants and children out on the street so that Greeks can take their place.”
Kostis Papaioannou, former chairman of Greece’s National Commission for Human Rights, links Golden Dawn to rising racist violence. “This is not the rise of the extreme right,” he told The Saturday Age. “We have had the extreme right in parliament for a period; they are mainly ultra-conservatives, who pay attention to values like safety and tradition and illegal immigrants. That was as far as they went.
“But Golden Dawn — this is neo-Nazis. They openly use violence and hate speech, deny the Holocaust, and their internal structure is like an army.”
He says the party’s success at a first election in May was followed by a big rise in race attacks, such as one in Piraeus where 25 people entered a house in which Egyptian immigrants were sleeping: three managed to escape but one was badly beaten. “These people were arrested and they were members of this neo-Nazi party,” Papaioannou says.
In the last quarter of 2011, there were 70 such incidents in just two neighbourhoods of Athens. Groups attacked people who were walking or waiting for a bus, or unleashed dogs to terrify them.
“This is organised,” he says. “In many attacks there are juveniles taking part. Golden Dawn is doing very systematic work in recruiting teenagers in high schools in Athens.”
This is not an image of the party that is recognised by many of those who vote for it. Kostas Fasianis, 39, used to own a mini-market in the Athens suburbs before the economy went bad; now he is unemployed. Politically, he describes himself as a nationalist and a Golden Dawn voter. “The core of the party is people like me and you, the common people,” he says. “Its highest value is that we love our country and are patriotic.”
He wants Greece to guard its borders and deport illegal immigrants, who he believes bring diseases into the country and contribute to rising crime: “In Athens it’s become more violent and it’s uncontrollable. People nowadays, they could kill you for five euros.”
Fasianis says it is a lie to say that Golden Dawn activists have ever attacked leftists or immigrants: “There’s no truth at all to that, and it’s proved by the fact that no member of Golden Dawn was ever convicted in court,” he says.
Kostas Papadakis, 35, is the owner of an Athens mini-market and voted for Golden Dawn for the first time in June. He, too, wants a crackdown on illegal immigration, as well as a renegotiation of the sovereign debt repayment deal that is crippling the Greek economy.
“The country has changed dramatically since the first wave of immigrants,” he says. “It started with Albania, and now there are people from Africa and Afghanistan, and large parts of Athens have become ghettoes.”
For Papadakis, Golden Dawn is an alternative to the corruption of the conservatives and socialists whose economic mismanagement has brought the country to its knees. Of its more extreme elements, he says: “Yes, I also believe that there are members in Golden Dawn that act as neo-Nazis. Personally, I have nothing to do with that. I am not a neo-Nazi and not a strong supporter.
“I want Golden Dawn in the parliament to shake up the system. It’s so unjust that 10 million Greeks have to pay and suffer for the money that was embezzled by the 300 members of the Parliament.”
A World Economic Forum report on Global Risks 2012 warned that Europe’s financial crisis, with resulting 50 per cent unemployment in countries such as Spain and Greece, was sowing “the seeds of dystopia”.
Those seeds have begun to sprout.
First published in The Age.
Centre fights to hold Greece
POLITICAL horse-trading over the next few days will decide the shape of Greece’s next government, as the pro-bailout New Democracy party tries to form yet another coalition to lead the troubled country.
Greek voters provided a breather in the euro crisis by favouring parties that supported the bailout, warding off an immediate crisis in the eurozone. But they also rewarded parties of the radical left and extreme right, marking a new polarisation in political views.
New Democracy leader Antonis Samaras hailed his win as a victory for Greece and Europe: “We will not have new adventure, we will not doubt the position of Greece in Europe, we will not be cowed by fear.”
But he also promised that “we cannot continue to injure every family with government”.
Greece has been crippled by five years of recession and high unemployment, intensified by severe austerity measures imposed as part of a European deal to help it cope with its debt.
Greece’s lenders had insisted the two bailouts, totalling €240 billion ($300.7 billion), be honoured or funds would be cut off, bankrupting Greece and forcing it out of the eurozone.
But Greeks had protested fiercely against the harshness of the measures and a previously obscure party, the radical left Syriza, has sprung to prominence following promises to tear up the memorandum over the bailout. New Democracy won 29.5 per cent. Syriza came a close second, increasing its share of the vote to more than 27 per cent.
German Chancellor Angela Merkel congratulated Mr Samaras and told him she was confident Athens would abide by its European pledges.
Germany has been a major contributor to Greece’s two rescue packages and a key advocate of highly unpopular austerity and reform measures in exchange.
Meanwhile in France, weekend elections gave the Socialists an easy absolute parliamentary majority, strengthening President Francois Hollande’s position in questioning austerity measures and putting greater focus on growth.
The Greek electoral system gives the party with the highest vote a bonus of 50 extra seats but Mr Samaras will still need several coalition allies. He is likely to seek a partnership with the other traditional ruling party of Greece, the centre-left socialists of Pasok. Between them they could muster 160 seats in the 300-seat parliament, but given their fierce differences the coalition would be volatile. Syriza has declined to join the coalition.
“We have a very polarised election result and I think it is reflecting the anger as well as the fear of the voters,” said Kostas Papaioannou, a candidate for the Democratic Left.
Mr Papaioannou told The Age the strong result for extreme-right, anti-immigrant party Golden Dawn, which won about 7 per cent of the vote and an estimated 19 seats in parliament, showed the party was here to stay.
He said the vote that first catapulted the party into parliament last month was clearly not an aberration. Voters could not claim they did not know what they were voting for because they had seen the consequences of the party’s success in the past six weeks.
These included party spokesman Ilias Kasidiaris slapping a woman MP on national television, several racist attacks and a threat by party MP Ilias Pangiotaros to raid hospitals and kindergartens and throw immigrants and their children onto the street so Greeks could take their places.
Mr Papaioannou said: “In my view the top priority now is that we have to see what we can do with the fact that there will be strong neo-Nazi representation in the next parliament.”
First published in The Age.
Greek bailout back on track as election victor seeks allies
ATHENS
Political horse-trading over the next few days will decide the shape of Greece’s next government, as the pro-Europe New Democracy Party tries to form yet another coalition to lead the troubled country.
Greek voters provided a breather in the euro crisis by favouring parties that support the bailout deal, warding off an immediate new crisis in the eurozone. But they also rewarded parties of the radical left and extreme right, marking a new polarisation in political views.
Antonis Samaras, leader of the conservative New Democracy, hailed his win as a victory for Greece and for Europe. He said: “We will not have new adventure, we will not doubt the position of Greece in Europe, we will not be cowed by fear.” But he also promised “we cannot continue to injure every family with government”. Greece has been crippled by five years of recession and high unemployment, intensified by severe austerity measures imposed as part of a European deal to help the nation cope with its euro debt.
Greece’s lenders had insisted the two bailouts, totalling €240 billion ($301 billion) , be honoured or funds would be cut off, bankrupting Greece and forcing it out of the eurozone. This could mean the end of the euro and global financial chaos.
But Greeks had protested fiercely against the harshness of the measures and an obscure party, the radical left Syriza, has sprung into prominence on the back of promises to tear up the memorandum over the bailout.
Syriza came a close second, increasing its share of the vote to more than 27 per cent. New Democracy won 29.4 per cent.
The German Chancellor, Angela Merkel, congratulated Greek’s pro-bailout conservative leader on his victory and told him she is confident Athens will abide by its European pledges.
Germany – Europe’s biggest economy – has been a large contributor to Greece’s two multibillion-euro rescue packages and a key advocate of demanding tough, and highly unpopular, austerity and reform measures in exchange.
Meanwhile, weekend elections in France gave the socialists an easy absolute parliamentary majority, strengthening the position of the socialist President, Francois Hollande, in debates about the future of Europe.
European leaders had delayed leaving for a G20 summit in Mexico to see the Greek election result. The Greek electoral system gives the party with the highest vote a bonus of 50 extra seats but Mr Samaras will still need several coalition allies. He is likely to seek a partnership with the other traditional ruling party of Greece, the centre-left socialists of PASOK. Between them they could muster 160 seats in the 300-seat parliament but given their fierce differences the coalition would be volatile. Syriza has declined to join the coalition.
“We have a very polarised election result and I think it is reflecting the anger as well as the fear of the voters,” said Kostas Papaioannou, who stood as a candidate for the Democratic Left.
Mr Papaioannou, former chairman of the National Commission for Human Rights, told the Herald the strong result for the anti-immigrant party Golden Dawn, which won about 7 per cent of the vote and an estimated 19 seats in parliament, showed the party was here to stay. He said the vote that first catapulted the party into parliament in May was clearly not an aberration, and voters could not claim they did not know what they were voting for.
These included an incident in which party a spokesman slapped a woman MP on television, racist attacks, and a threat by party MP Ilias Panagiotaros to raid hospitals and kindergartens and throw immigrants and their children onto the street so that Greeks could take their places.
Mr Papaioannou said: “In my view the top priority now is that we have to see what we can do with the fact that there will be strong neo-Nazi representation in the next parliament.”
First published in the Sydney Morning Herald 19 June 2012.
Greek bailout back on track as election victor seeks allies
ATHENS
Political horse-trading over the next few days will decide the shape of Greece’s next government, as the pro-Europe New Democracy Party tries to form yet another coalition to lead the troubled country.
Greek voters provided a breather in the euro crisis by favouring parties that support the bailout deal, warding off an immediate new crisis in the eurozone. But they also rewarded parties of the radical left and extreme right, marking a new polarisation in political views.
Antonis Samaras, leader of the conservative New Democracy, hailed his win as a victory for Greece and for Europe. He said: “We will not have new adventure, we will not doubt the position of Greece in Europe, we will not be cowed by fear.” But he also promised “we cannot continue to injure every family with government”. Greece has been crippled by five years of recession and high unemployment, intensified by severe austerity measures imposed as part of a European deal to help the nation cope with its euro debt.
Greece’s lenders had insisted the two bailouts, totalling €240 billion ($301 billion) , be honoured or funds would be cut off, bankrupting Greece and forcing it out of the eurozone. This could mean the end of the euro and global financial chaos.
But Greeks had protested fiercely against the harshness of the measures and an obscure party, the radical left Syriza, has sprung into prominence on the back of promises to tear up the memorandum over the bailout.
Syriza came a close second, increasing its share of the vote to more than 27 per cent. New Democracy won 29.4 per cent.
The German Chancellor, Angela Merkel, congratulated Greek’s pro-bailout conservative leader on his victory and told him she is confident Athens will abide by its European pledges.
Germany – Europe’s biggest economy – has been a large contributor to Greece’s two multibillion-euro rescue packages and a key advocate of demanding tough, and highly unpopular, austerity and reform measures in exchange.
Meanwhile, weekend elections in France gave the socialists an easy absolute parliamentary majority, strengthening the position of the socialist President, Francois Hollande, in debates about the future of Europe.
European leaders had delayed leaving for a G20 summit in Mexico to see the Greek election result. The Greek electoral system gives the party with the highest vote a bonus of 50 extra seats but Mr Samaras will still need several coalition allies. He is likely to seek a partnership with the other traditional ruling party of Greece, the centre-left socialists of PASOK. Between them they could muster 160 seats in the 300-seat parliament but given their fierce differences the coalition would be volatile. Syriza has declined to join the coalition.
“We have a very polarised election result and I think it is reflecting the anger as well as the fear of the voters,” said Kostas Papaioannou, who stood as a candidate for the Democratic Left.
Mr Papaioannou, former chairman of the National Commission for Human Rights, told the Herald the strong result for the anti-immigrant party Golden Dawn, which won about 7 per cent of the vote and an estimated 19 seats in parliament, showed the party was here to stay. He said the vote that first catapulted the party into parliament in May was clearly not an aberration, and voters could not claim they did not know what they were voting for.
These included an incident in which party a spokesman slapped a woman MP on television, racist attacks, and a threat by party MP Ilias Panagiotaros to raid hospitals and kindergartens and throw immigrants and their children onto the street so that Greeks could take their places.
Mr Papaioannou said: “In my view the top priority now is that we have to see what we can do with the fact that there will be strong neo-Nazi representation in the next parliament.”First published in The Sydney Morning Herald.
Lone, fragile future beckons the Greeks
The crisis engulfing the country has led to violence, recriminations and widespread hatred of politicians, writes Karen Kissane in Athens.
At the beginning of last year, they were both in work. By the end of it, they were both unemployed. Now, like many young city people, Vasso Simu and Panagiotis Vovos have been forced by what Greeks call “The Crisis” to return to the simpler life on the land that their grandparents had led.
Simu and Vovos are both 31. She had been an adviser in an insurance company, he had been a computer programmer. Unemployed and with no future in the city, three months ago they moved back to his mother’s village on the island of Evia, two hours’ drive from Athens.
“We wanted a new life in the countryside,” Simu says. “We have our own garden: tomatoes, aubergines, peppers, beans, corn. We will make our own olive grove.” She works in a restaurant to earn them cash but they hope eventually to make a real living out of selling what they grow.
Meanwhile, they love the traditional life. “Every day we are swimming in the sea,” she says with satisfaction. “We get up early and collect the eggs. Right now Panagiotis is filling the ground with water and then he will fix the house of the chickens. I make marmalade and all the food for us to eat. We are very happy.”
There are not many Greeks who can say the financial crisis has led to happiness. The economy has been crippled by five years of recession, aggravated by an extreme austerity drive that has driven up taxes while public spending, wages and pensions have been slashed. Unemployment is at 23 per cent and is close to 50 per cent for young people.
The national debt is so mountainous that Greece might default on its repayments and walk away – out of the euro and back into the drachma, out of the European Union and into a lone and fragile future.
All of this is enough to make tomorrow’s Greek election, a rerun of a poll six weeks ago that failed to deliver a government, the most important since the end of World War II. It will effectively be a vote on whether Greece should continue to accept the tough terms of its financial bail-out by the “troika” of the EU, the European Central Bank and the International Monetary Fund.
This means it is also an election that Europe’s leaders are watching with bated breath. If Greece defaults or leaves the euro, there will be a domino effect across the rest of the troubled zone, with Spain, then Italy, and even Belgium and France facing investor flight and unsustainably high interest rates.
Spain and Italy endured a market storm this week as the Greek election drew near, despite the fact that eurozone leaders agreed to a €100 billion ($126.1 billion) rescue package for teetering Spanish banks.
On Thursday, Spain’s Foreign Minister warned of impending doom for the eurozone as his country’s borrowing costs reached an unsustainable 7 per cent. Jose Manuel Garcia Margallo told his wealthier neighbours: “If that Titanic sinks it takes everyone with it, even those travelling in first class.”
The threat of a Greek default is real. The main conservative contender in the Greek election, the New Democracy party, wants to change some terms of the bailout but basically supports the deal. But a left-wing party that also has a good chance of coming first, Syriza, has promised to renegotiate or even tear up the memorandum of understanding. Default even has a nickname now: “Grexit.”
A printing house is rumoured to be on stand-by to produce drachmas should they be needed. European banks and political leaders are drawing up contingency plans for an emergency. Ordinary Greeks have their own contingency plans; they are pulling up to €800 million a day out of banks to try to safeguard their savings by hiding them in their homes or squirreling them away overseas.
Greek domestic politics are always roiling but are particularly fevered now because people of all political stripes are furious with the major parties – conservative New Democracy and socialist PASOK – that have led their country to ruin. If there is one thing that unites this fractious nation, it is a withering contempt for its inept (and often corrupt) leaders.
Leo, who does not want his surname used, is a fine arts graduate, a former chief executive of a private school and most recently an icon painter who supported himself happily by painting for 20 years until the crisis struck. Two years ago, he found himself with no orders for icons and no money to pay rent. He ended up living on the streets of Athens.
He was taken in by a hostel, Klimaka, and is living there until he qualifies for the age pension in a year. He won’t be voting tomorrow.
“I do believe that my vote is valuable and [should] not to be spent on those crooks,” he says. “I am very angry with the politicians, particularly those who ruled for the last 25 years and present themselves for our votes now. They don’t accept that they are failures.”
He refused to elaborate, saying the language he would have to use to describe them would not be fit for a family newspaper.
Voters have physically attacked politicians in the street. Many demonstrations against the bailout terms have ended in violence. Last week, the rage leapt into the political arena itself with an incident that has become known as “the slap”.
Ilias Kasidiaris is a spokesman for Golden Dawn, a party described by some as extreme right and others as neo-Nazi. In a live TV debate he lost his temper after verbal goading from a female communist MP and struck her. He also threw a glass of water at another female politician. He later blamed them for having provoked him but he faces assault charges.
While prosecutors have no doubt he did wrong, comments on social media were more evenly divided. A Facebook page was set up with the title “God bless his hands” (a Greek expression that is the equivalent of “serve her right”). It gained 4000 fans in a day.
The caption below a photograph of Kasidiaris said: “Today Ilias did what all the Greeks wanted to do for a long time – slap the political system and its representatives.”
Michalis Spourdalakis, professor of political science at Athens University, says: “A man beating up a woman is not acceptable in Greece, but beating up a woman who is a politician, that’s OK. This is because [people think that] as a woman she is out of her place to be in politics, and also because politicians are hated.”
Spourdalakis says he did not believe the doomsayers who warned two years ago that the consequences of the austerity measures insisted upon by the bailout would be a disaster. He now thinks they were right.
“There has been loss of income, an undermining of the basic functions of hospitals and schools and universities – everything,” he says. “Seventy thousand small businesses have gone bankrupt. There have been very strong anti-authoritarian measures; police have been beefed up and have been very aggressive against demonstrators.
“And there’s no dialogue any more; collective bargaining has gone in this country, and it has been part of the tradition of Western democracies since the 19th century. All this has happened in just two years.”
Leonidas Vatikiotis, who teaches political economy at the Varna Free University of Cyprus, says it is the most brutal austerity program imposed on a developed nation since World War II. It has shrunk the middle class and triggered “generalised poverty” and “social genocide”.
“People can’t pay the loans for their own homes; they are homeless at 50 or 60, and ashamed of it,” he says.
“In the centre of Athens we have 25,000 homeless, and usually they were in the middle class. They weren’t workers or public servants, they were shop owners or self-employed.
“Athens is a ghost city at night, with people wrapped in blankets waiting in the shadows.”
At the same time as Greeks are earning less, welfare is shrinking, with the closure of 54 hospitals and 1000 schools last year. This is a big problem in the remote mountains where sending children 30 kilometres to school in winter is dangerous. “You can’t compare Greece’s school ratio with, say, Sweden’s, because Greece has different geography,” Spourdalakis says.
The consequent loathing of establishment politics has led to a polarisation in Greek voting patterns. At the last poll on May 6, voters savaged the main parties that had supported the bailout deal, parties that had dominated Greek politics for decades, and turned instead to parties that were further left and further right.
The ultra-nationalist Golden Dawn shot to prominence when it won 7 per cent of the vote and entered parliament for the first time with 21 seats. It was buoyed by a wave of hostility towards illegal immigrants – it wants to send them “home” and lay landmines to protect borders – as well as concerns about street violence and crime. Its new status is being linked to a spate of assaults on immigrants.
But the real arm-wrestling tomorrow will be between New Democracy, which won 18.5 per cent of the vote last time (120 seats) and the new left-wing coalition Syriza, which got a close-run 17 per cent (52 seats). (In Greece, the party that wins the highest percentage of the vote is awarded a bonus 50 seats.)
The Syriza leader, Alexis Tsipras, whose coalition contains 12 parties of greens and socialists, has promised to stand up to Europe over the terms of the bailout.
He says Greeks have been duped into thinking that there is only one way out of their economic mess, “through the cruel austerity [German chancellor] Madame Merkel and the IMF have inflicted upon us”.
Tsipras has also won brownie points by attacking the corrupt political elite and crooked bankers. “Greeks who vote for Syriza are not expecting Syriza to solve all the problems,” Spourdalakis says. “They vote just in hope of a breath of fresh air and as a small step towards self-respect. There’s no way in this country we can have a troika going into every public office and telling us what to do. Greeks are insulted.
“But they also lean towards Syriza because it is not corrupt and because it supports them in the struggle against the memorandum. Syriza were there in the protests, they were tear-gassed too, they were jailed with them. That’s why they trust them.”
Polls show Syriza neck-and-neck with New Democracy, but neither is expected to win outright in the 300-seat parliament. “We are hopeful we will be the first party and confident we can find a framework to come together [to govern] with the Democratic Left and perhaps the Communist Party,” says John Milios, a professor of economics who has helped write Syriza’s economic platform.
He says the party accepts the main goal of the bailout terms: a primary surplus in the budget. “But it’s impossible to achieve the goal of growth, which is required for a primary surplus, while paying €110 billion in interest by 2020. If we follow this austerity program we would have to further reduce wages and pensions and dismantle welfare.”
Milios says the party will prevent further cuts in the income of most people, returning the minimum wage to €751 a month (it had been cut to €560) and reintroducing collective bargaining.
“We need to work out how to make the debt viable and take specific measures for stronger growth rates.” This would involve big infrastructure projects to boost employment, he says.
Big projects such as the Athens Olympics in 2004 were a large part of what got Greece into trouble in the first place. Spending on stadiums and roads gushed on the strength of easy credit, but public revenues, strangled by tax evasion, did not keep up with the outgoing torrent.
Business and citizens did their bit, too. They borrowed lavishly for consumer goods and for property, which ballooned into a bubble that burst, leaving many over-burdened with debt that outstripped their assets.
At least the disaster has not stripped Greeks of their sense of humour. A young man dressed up for a carnival party this year in a black dinner suit and hired himself a fancy car for the evening. He told other guests: “I’m coming as the 1980s!”
Many are now reassessing their values along with their budgets. Fay Vernikou, 29, and Kostas Hatzipanagiotis, 31, are another young couple who fled to the island of Evia when they foresaw hard times.
He used to work for a publishing company and she was a primary school teacher in Athens. They were not unemployed when they chose to move three years ago, “but you could see what was coming”, Hatzipanagiotis says. “It was the time of the first austerity measures.”
He says Greeks had the mistaken idea they could be consumers without first creating anything. He is trying to become more self-sufficient, including by growing his own food, but confesses ruefully that he is struggling to wean himself off TV and the internet.
“The crisis is our fault as much as anyone else’s fault,” he says. “Sometimes Greek society is hoping for a fairy godmother. We always put the blame on politicians but we also played a part.”
He won’t be voting tomorrow because he doesn’t think elections make a difference: “People need to organise into small groups and set up co-operatives to change our lives. We shouldn’t expect politicians to solve anything.”
Milios also thinks the current crisis brings as its flip side an opportunity for change, but while Hatzipanagiotis is thinking small, he is thinking big.
Milios sees the mess as being about the failure of Thatcherism and neo-liberal policies that gave too heavy an emphasis to markets and business, and not enough to the human needs of society.
If Greece can force a renegotiation of its loan terms, it creates space for a discussion “about a different kind of society, one based on social needs and not on the interests of the few or the maximisation of profit as a prerequisite of accomplishment of any goal”.
He also sees his party’s stance as a spur to the saving of the euro. Many economists believe it will survive only if the European Central Bank guarantees the debt of all members and issues European bonds to raise money for them. This option is fiercely resisted by Germany and its Chancellor, Angela Merkel.
But her party is expected to do badly at the next German elections, Milios says. “We expect that the whole European structure will change. I think we are playing a role as the initiator of this process.”
First published in The Age.