Tag: european union

The Tories Brexit debacle

By Daniel Margrain

 

Theresa May’s announcement that the decision to trigger Article 50 of the Lisbon Treaty at the end of March at the latest, by-passing parliamentary debate, is a kick in the teeth for all those campaigners who argued that to do so would undermine due legal process in the wake of the passing of the 2015 Referendum Act. As I stated previously, in legal terms, the referendum decision to leave the EU was advisory not mandatory. What happened following the vote was therefore a matter of politics, not law.

However, the governments formal position was that it had no legal obligation to consult parliament on invoking Article 50 which gives Britain a two year period to negotiate the terms of its departure and insisted that every word of its defense had to be kept secret. But on September 23, crowdfunded group People’s Challenge lodged a court application to allow it to publish the governments argument. Six days later, the court ruled that the government must disclose the legal arguments on the procedure of Article 50.

The governments announcement to definitively invoke Article 50 while ignoring the rest of the process that Parliament set in train when it passed the 2015 Referendum Act, seems to be predicated on its ancient (archaic) use of the Royal Prerogative to trigger the process of the UK leaving the EU in the interest of the Government’s sectional and party political interest.

Indeed,  Teaching Fellow in Public Law and Jurisprudence at University College London, Thomas Fairclough concluded“it will be the Government, using the Royal Prerogative, who will decide if/when to trigger the Article 50 mechanism and take the United Kingdom out of the European Union.” By using the Royal Prerogative to trigger Article 50 of the Treaty of Lisbon this Government will be sweeping away rights at a stroke of a pen without the proper scrutiny of and a final decision being made by our Sovereign Parliament.

In announcing her proposed deadline for the triggering of Article 50 now, PM Theresa May said there will be time for preparatory work from all parties involved, which she hopes would lead to a “smoother process of negotiation”. May said that while she was willing to announce key landmarks in the Brexit timeline, she did not plan to continue sharing details during the negotiation process.“There’s a difference between not giving any commentary and giving a running commentary,” she said.

The lack of government transparency is bound to have implications in terms of whether foreign companies decide to invest in the UK. It’s incumbent on the government to be as open and transparent as possible in order to create the necessary conditions to allow companies to make an informed choice as to whether or not to invest in the UK.

According to the Telegraph, bosses of several of America’s banks and corporations have warned May that they will shift operations into Europe unless she can provide early clarity on the future shape of UK-EU relations. If the banks go, there will be virtually nothing left that the UK specializes in other than selling WMDs to whoever is prepared to meet the governments asking price, or making cars to sell to the Germans, Indians and Japanese.

The bad news was delivered to May in New York in a meeting with US investors, presumably intended to calm their nerves. According to an account by the Telegraph, May declined to provide information about how the UK government would approach the Brexit negotiations never mind when they would start. Neither May nor the government appear to have any idea about where the country is going or how long it will take to get their.

Try putting yourself, dear reader, into the shoes of the investors. If you had the best financial interests of your company and shareholders at heart, would you invest in a country that appeared to have no idea where it is going?

Estimates for job losses resulting from a “hard Brexit” range from 40,000 to 80,000 over the next decade. Furthermore, Chancellor, Philip Hammond has said that the retention of passport rights of bankers is highly unlikely given the constant calls from mainly Tory constituents demanding that immigration be curbed at any cost. As financial services are said to generate more than £66bn in tax in the UK, the consequences for society are potentially serious.

Meanwhile, EU leaders continue to harden their stance against the UK saying they will rule out any cherry-picking in relation to accessing the single-market. The negative consequences resulting from the UKs uncertainty surrounding Brexit is already happening. Job vacancies in the UKs financial sector have suffered a sharp decline since Brexit.

According to the Institute of Public Policy Research, for example, job openings in the financial sector have plunged 10 per cent across England, falling in every region during July and August. They attributed the decline to concerns whether the UK will retain its passport rights. London recorded a 13 per cent drop in job adverts.

Investment in infrastructure has also received a set back according to Standard and Poor, the ratings agency. In a note to clients, the agency said that private investment in infrastructural projects was under threat: “The biggest risks for infrastructural companies could be from an extended period potentially running for many years during which the terms of exit and replacement trade treaties with the UKs partners are renegotiated”, they said.

In other words, nobody wants to spend any money in a country where they don’t know where it’s going or how long it takes to get there. On the other hand, infrastructural assets might become cheaper as the pound sterling devalues. So we ought not be surprised if the Tories sell off what little infrastructure we have remaining to the Chinese and Saudi’s for short-term profitable gain.

The incompetence of people like Boris Johnson who led us into this mess and the mainstream media who failed to challenge him, have instead focused their ire on attacking Jeremy Corbyn, who argued in favour of the Remain position. How much longer Theresa May and her Tory government can insulate themselves from media criticism over the Brexit debacle, remains to be seen.

A second referendum?: The Tories continue to fiddle while Britain stumbles into the abyss

By Daniel Margrain

Last Wednesday afternoon I took the Eurostar from a grey and dismal London to a sunny Paris. I decided that I would try to ignore the news while I was away. However, by Friday, temptation got the better of me. While sitting at a restaurant table in the small picturesque Parisian commuter-belt town town of St Germaine en Laye enjoying my lunch, I asked the waiter if he knew what the result of the EU referendum was. He expressed his shock at the decision of the British public to renounce their membership of the 28 member club. “That’s it”, he said, “the European project is dead”. I asked him whether he thought that this was a good thing or a bad thing? “It’s a bad day for Europe”, he exclaimed. “I’m not sure the project can continue to be run effectively with Britain gone but your heart was never really in it anyway”, he continued.

He claimed that Britain had already negotiated for itself numerous concessions and any more would have effectively made the Federalist vision for Europe he was in favour of, a redundant concept. The British position he said was selfish in as much as the government appeared reluctant to use its economic muscle as leverage in order to help improve the living standards of the working classes within poorer nations of the EU which, according to him, was the ethos at the heart of the project. In other words, for the poorer nations to gain something, and for the European project to work, as he saw it, it was necessary for richer nations like Britain, to concede some financial ground at the expense of the poorer nations.

He blamed David Cameron for triggering “an unnecessary referendum based upon unfair criticism of the EU and many years of misinformation about how it actually works”, which in turn was perpetuated by some of the most right-wing media in the whole of Europe. He also claimed that vast swaths of working class people were further disorientated by some political commentators and politician’s on the left of the spectrum who he said, “ought to have known better” than, for example, to effectively blame immigrant workers for allegedly undercutting British workers. All of this, he claimed, had eventually – from a Brexit perspective – “bore fruit”.

It was difficult for me to disagree with any of this. The news that the British people had decided to leave the EU appeared to have been as much of a shock to him as it was to me. The statistics show that the demographic of those who voted to leave were mainly the elderly age group and those who voted to remain were from the younger age group. However, the elderly will not be around for long compared to the young. It therefore, follows, the former will experience the consequence of a decision that they made to a far lesser degree than the latter who didn’t.

It does seem strange that an ageing population who were allowed to vote but statistically are less able to make an informed decision with regards to issues that have long-term ramifications, are considered to be a better judge for what is best for the country than people who are, say, 16 or 17 years old but are prevented from voting on something that will effect them to a far greater degree and for far longer. For this and other reasons, it makes sense why younger people might be furious with older people. The latter, for example, have overseen the ruination of the environment that includes the spreading of poisons throughout the atmosphere, sea and soil. They have also overseen climate change, the ruination of entire economies and been at the forefront of the shift in wealth from the many to the few, which will mean that the generation to come will not only be poorer than the preceding one, but will die sooner.

In short, the older generation have run the world for their own selfish short-term gain. The younger generation are suffering, and will continue to suffer, the consequences wrought by a post-war generation that were virtually guaranteed socioeconomic protections that will be denied to their young counterparts. This includes the concept of a job for life, free higher education and gold-plated, index-linked pensions that the elderly have taken for granted. Relatively speaking, the post war-generation have never had it so good, although one will be hard pressed to draw such a conclusion from the mainstream media. And to top it all, by disproportionately voting to leave, the older generation have now given a future to the young that they specifically do not want – problems that will be further compounded by the imminent growth in automation and increasing global competition.

What is also bizarre is that countries and regions like London, Scotland and Gibralter wanted to stay in the EU within a context in which some of the most deprived parts of England and Wales were intent on leaving. In Boston, in North East England, for example, 75.6 per cent voted to leave the EU. Paradoxically, given that Brexit means that no more EU funds will be forthcoming to these deprived regions, it’s the poorest who will be most adversely affected as a result of this decision to leave. Consequently, it would appear that the poorest have been persuaded to make the decision to leave for the worse reasons, predicated largely on lies. These lies included the amount of money they were told the government spends on the EU and what amount, by contrast, it spends domestically.

The leave campaign also understated the positives of continued membership in terms of the amount of funds Britain receives from the EU as well as insisting that by leaving the British people would have the prospect of being surrounded by fewer foreigners. On all these points, and more, the public were lied to by the leave campaign. In terms of the second of these issues, for example, UKIPs Nigel Farage has already back-tracked in relation to his assertion that the £350 million a week that he wrongly claimed was spent on the EU would, instead, be spent on the NHS. The more likely scenario is the correct £161 million net figure will be used to pay for more tax cuts for the rich. Apparently leave have deleted their promises from their website. This is a useful aide-memoire.

Almost a week has passed since the referendum result was announced and the Conservative government under PM David Cameron is in disarray. With the PM still not having made any definitive legal commitment to leave, the political consequences for the remaining 27 members is far from certain. With Britain’s new status outside the EU yet to be legally formalized, its legal sequestration remains uncertain. For all those who thought that the Brexit vote would have meant a hasty political decision to leave based on a legal determination, might need to think again. As I said in my previous post, in legal terms, the referendum is advisory not mandatory. What happens next is a matter of politics, not law – a determination that’s dependent upon whether the government decides to invoke Article 50 of the Lisbon Treaty.

Even though I supported the remain camp, I respect the democratic decision the British people made when they voted to leave. Any decision to either seriously delay invoking Article 50, or any attempt at backtracking on the referendum result would, in my view, be totally unacceptable. Nevertheless, delaying the democratic decision of the majority is what the government appears to be intent on doing. Seemingly, this will involve the implementation of a possible second referendum. The government intends to respond to calls for it within the next few days. This will likely take the form of a debate in parliament following the signing of a government petition by four million people to that affect.

In many other democracies throughout the world, four million signatures would guarantee a vote on the issue. But in Britain, a similar amount of signatures only guarantees that the government will consider talking about the possibility of a vote. The governments petition committee is currently considering the protest following a meeting they held yesterday (June 28). The petition entitled EU Referendum Rules Triggering A Second EU Referendum, reads:

“We the undersigned call upon HM government to implement a rule that if the remain or leave vote is less than 60 per cent based on a turnout less than 75 per cent, there should be another referendum.”

Will the government give in to the demands set by the petition and thereby allow a second referendum to take place?

The wider issue seems to be that unless the government can find a way of presenting simple solutions to a complex set of problems, people on the whole will not understand them. However, the problem is there are no simple solutions to such complex problems. Ultimately, David Cameron will go down in history as the man who set in motion the chaos and uncertainty that will almost certainly ensue in the coming days, weeks, months and possibly years.

Because Cameron attempted to assert his authority over the Tory party, he assumed that by offering the people a referendum and winning it, would cement this authority and garner the UKIP vote as a consequence. But by losing, he has bolstered the xenophobic fringe within the UKIP and Tory parties, unleashed the potential for a rise in racist attacks and hastened the rush for Scotland to break from the UK. But perhaps most significantly of all, is that a final decision to leave, will prompt the 60 per cent of companies outside the EU who have their EU HQs in the UK and who trade with the EU, to re-locate elsewhere. If you headed a company that was based outside the EU but was big enough to have a EU HQs and you selected to be in a country that is now potentially going to be outside the EU, what would you do?

It’s a no brainer. You would have to up-sticks and move to the EU. Having an EU HQs in a country that is no longer in the EU, makes about as much sense as having a US HQs in London. So in the event of Britain definitively leaving the EU both politically and legally, tens of thousands of jobs will be lost. This is a bare minimum of the chaos that is likely to occur set against a backdrop of increasing resentment, suspicion, xenophobia and racism. Buckle up, it’s going to be a bumpy ride ahead.

A victory for Brexit is unlikely to change anything in the near future

By Daniel Margrain

 

For all those who thought that a Brexit vote in Thursday’s (June 23) highly anticipated and drawn -out referendum campaign will result in closure, might need to think again. In legal terms, the referendum is advisory rather than mandatory. What happens next is a matter of politics, not law – a determination that’s dependent upon whether the government decides to invoke Article 50 of the Lisbon Treaty.

To put it another way, the government doesn’t necessarily have to pay attention to what the British public says. What will happen on Thursday is that we, the British electorate, will effectively be advising and giving our opinion which doesn’t make the decision to leave, if that is indeed the outcome, necessarily legal. If we vote in a way that Osborne and Cameron disagree with, the government will almost certainly reconsider the result, particularly if the outcome is close.

Say, hypothetically, the turnout is 50 per cent and 51 per cent of that 50 per cent voted to leave, it would mean that 25.5 per cent of the electorate would have made the decision to leave which would adversely impact on the remaining 74.5 per cent. In other words, if something similar to this hypothetical situation did arise it would not, the government could argue, be indicative of a mandate to leave. Given how close the result is predicted to be, the vote tomorrow is unlikely to be the end of the matter, but merely the beginning of a long and drawn out process that will likely continue until the electorate arrives at a decision that Cameron and Osborne regard as acceptable.

As the Financial Times puts it:

What happens next in the event of a vote to leave…. will come down to what is politically expedient and practicable. The UK government could seek to ignore such a vote; to explain it away and characterise it in terms that it has no credibility or binding effect (low turnout may be such an excuse). Or they could say it is now a matter for parliament, and then endeavour to win the parliamentary vote. Or ministers could try to re-negotiate another deal and put that to another referendum. There is, after all, a tradition of EU member states repeating referendums on EU-related matters until voters eventually vote the “right” way.

What matters in law is when and whether the government invokes Article 50 of the Lisbon Treaty. This is the significant “red button”. Once the Article 50 process is commenced then Brexit does become a matter of law, and quite an urgent one. It would appear this process is (and is intended to be) irreversible and irrevocable once it starts. But invoking Article 50 is a legally distinct step from the referendum result — it is not an obligation.

There are three points of interest here in respect of any withdrawal from the EU by the UK.

First, it is a matter for a member state’s “own constitutional requirements” as to how it decides to withdraw. The manner is not prescribed: so it can be a referendum, or a parliamentary vote, or some other means. In the UK, it would seem that some form of parliamentary approval would be required — perhaps a motion or resolution rather than a statute. The position, however, is not clear and the UK government has so far been coy about being specific.

Second, the crucial act is the notification by the member state under Article 50(2). That is the event which commences the formal process, which is then intended to be effected by negotiation and agreement. There is no (express) provision for a member state to withdraw from the process or revoke the notification. Once the notification is given, the member state and the EU are stuck with it.

And third, there is a hard deadline of two years. This is what gives real force to Article 50. The alternative would be the prospect of a never ending story of rounds of discussions and negotiations. Once notification is given, then the member state is out in two years, unless this period is extended by unanimous agreement. It is possible that such unanimity may be forthcoming – but this would be outside of the power of the member state. Once the button is pushed, the countdown cannot just be switched off by a member state saying it has changed its mind, or by claiming that the Article 50 notification was just a negotiation tactic all along. That will not wash.

This said, what is created by international agreement can be undone by international agreement. Practical politicians in Brussels may come up with some muddling fudge which holds off the two year deadline. Or there could be some new treaty amendment. These conveniences cannot, however, be counted on. The assumption must be that once the Article 50 notification is given, the UK will be out of the EU in two years or less.

What happens between a Leave vote and any Article 50 notification will be driven by politics. The conventional wisdom is that, of course, a vote for Brexit would have to be respected. (This is the same conventional wisdom which told us that, of course, Jeremy Corbyn would not be elected Labour leader and that, of course, Donald Trump would not be the Republican nominee.) To not do so would be “unthinkable” and “political suicide” and so on.

And if there is a parliamentary vote before any Article 50 notification then there is the potential irony of those seeking to defend parliamentary sovereignty demanding that an extra-parliamentary referendum be treated as binding. But it must be right that the final decision is made by parliament, regardless of what the supposed defenders of parliamentary sovereignty say.

What is certain is that if there is an Article 50 notification then there will be immense legal work to be done. Over 40 years of law-making — tens of thousands of legal instruments — will have to be unpicked and either placed on some fresh basis or discarded with thought as to the consequences. The UK government has depended since 1972 — indeed it has over-depended — on it being easy to implement law derived from the EU. The task of repeal and replacement will take years to complete, if it is ever completed. Even if the key legislation — especially the European Communities Act 1972 — is repealed there will have to be holding and saving legislation for at least a political generation.

A vote for Brexit will not be determinative of whether the UK will leave the EU. That potential outcome comes down to the political decisions which then follow before the Article 50 notification. The policy of the government (if not of all of its ministers) is to remain in the EU. The UK government may thereby seek to put off the Article 50 notification, regardless of political pressure and conventional wisdom.

There may already be plans in place to slow things down and to put off any substantive decision until after summer. In turn, those supporting Brexit cannot simply celebrate a vote for leave as a job done — for them the real political work begins in getting the government to make the Article 50 notification as soon as possible with no further preconditions.

On the day after a vote for Brexit, the UK will still be a member state of the EU. All the legislation which gives effect to EU law will still be in place. Nothing as a matter of law changes in any way just because of a vote to Leave. What will make all the legal difference is not a decision to leave by UK voters in a non-binding advisory vote, but the decision of the prime minister on making any Article 50 notification.

And what the prime minister will do politically after a referendum vote for Brexit is, at the moment, as unknown as the result of the referendum itself.

UK Government Assurances Increase The Risks To The Public

We can rely on the government to have our best interests at heart, right? Wrong. On July 20, I posted about the fact that the government is suppressing figures that highlight a link between benefit cuts for the most vulnerable and suicides (1). Unfortunately, that’s just the tip of the ice berg. Political scandals and lies are an endemic feature of the UK establishment which stretch back decades (2). Here’s a couple of scandals that have recently come to light.

In his book, The Underground Serial Killer, former UK detective inspector for Scotland Yard, Geoff Platt, claims that the Home Office covered up a killer who pushed twelve people on to the tracks of the London Underground.

Northern Line

Mr Platt says police kept the claims quiet for fear of sparking a panic on the Underground (Getty)

Kiernan Kelly who is serving life in Wakefield prison, admitted to sixteen murders between 1953 and 1983, twelve of them on the underground. Platt said the records were not made public until last September. According to Platt, Kiernan targeted his victims on the Northern Line. In 1983, when in police custody, Kelly murdered his cell mate for snoring loudly. He then confessed to fifteen more killings.

He was charged with five counts, four underground killings and one for the murder in the cell. Platt said his research found an awful coincidence where people who had jumped on the Northern Line tracks had been standing near Kelly. Incredibly, Kelly gave witness statements to the police who failed to put two and two together.

In the early 1950s, Kelly spent time in Wandsworth prison. In the five days he was there, he had three days out. On each day, someone died on the tracks. “As soon as the story became clear, the Home Office made it perfectly clear they did not want the story to go any further”, said Platt. He added, “I can understand that the Home Office didn’t want people scared to travel”….Really?  Wouldn’t you, dear reader, want information that somebody was pushing people onto the tracks on the underground made publicly available, particularly if you were travelling from Clapham on the Northern Line? I know I would.

Platt said, “The government were afraid of mass hysteria, not earning money or going to work.”  So once again, it’s all about the money. Platt continued: “Now the case is in the public domain anybody who wants to can read about it.”  That’s comforting! The Home Office said, “any evidence to suggest that a crime has been committed is a matter for the police.” The implication seems to be of the “so don’t question us, peasants” variety.

The fact that the government hides stuff from us in this way, is of course, in our own best interests. But it doesn’t end there. The European Union is suing the UK government because the air in the country is not fit to breath (3). For many years the government has been pushing the alleged benefits to the public of diesel. But then it was discovered it was diesel fumes that were killing thousands of people prematurely in London alone (4).

Although this has just come to light within the public domain, successive governments’ have known about this for over two decades. Scientists warned British ministers twenty two years ago that their planned ‘dash for diesel’ could cause a public health disaster but were ignored (5).

Concerns about air quality were sidelined by civil servants in favour of climate changeConcerns about air quality were sidelined by civil servants in favour of climate change (Alamy)

Almost 30,000 UK deaths a year from air pollution do not factor in lethal nitrogen dioxide from diesel engines (6) which when taken into account, pushes the figure to 50,000 deaths (7). In Europe, an estimated 500,000 people die prematurely as a result of air pollution every year, a figure that would be significantly higher had NO2 been factored in (8). Globally, a staggering 3.4 million people died from air pollution in 2010 (9).

In the UK, many deaths from diesel could have been prevented had ministers heeded a 1993 report handed to them by the environment secretary, John Gummer (10).The report said the impact of diesel vehicles on urban air quality is a serious one. Any increase in the proportion of diesel vehicles in urban streets is to be viewed with concern – diplomatic language for “you now have a greater chance of dying”. The documents show that concerns about air quality were sidelined by civil servants.

The annual death rate in England and Wales from illegal drugs that the government claims to be at war with, as of 2013, stood at 1,557 (11).  And yet diesel omissions which contribute towards 50,000 deaths a year is somehow regarded as a low level risk.

In twenty years time will we be looking back in shock at the scandal of a government that is currently suppressing the link between benefit cuts for the most vulnerable and suicides in the same way as we are doing in relation to the two incidents described above that have come to light now? The only thing we learn from history, is the fact that we learn nothing from history.

Greece: Exposing The Media Myths

April 21 is a notorious day in Greek history. It was on this day in 1967 that a US-led authoritarian military coup overthrew socialist democracy in the country. It was US support for this authoritarianism, predicated on the illusion that socialism undermined democracy, that was said to be the cause of rising anti-American sentiment in Greece during and following the junta’s rule (http://www.time.com/time/magazine/article/0,9171,903399,00.html).

April 21, 2010 is also a day now embedded in Greek history. It was on this day that a delegation from the IMF, European Union (EU) and the European Central Bank (ECB) arrived in Athens to implement what they term as planned economic ‘stabilization’ measures, characterized by cuts to public services and reductions in living standards.  The Greeks hatred of this modern form of imperialism that stem from the events of April 21 1967, is manifested on the streets of Athens in the form of mass protests against the austerity measures imposed by the bankers. As one Greek activist contrasting the events of 1967 with the present put it: “We suffered from the military then. We suffer from the bankers now” (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

As I illustrated in my last article, the debt crisis presently sweeping Greece and throughout the globe has its roots in the credit boom period in the US a decade ago, the ideological justifications of which have been legitimized as a result of the capitalist logic that underpins it. But one would be hard pressed to arrive at this conclusion by reading the mainstream media, the vast majority of whom have characterized the crisis essentially as a trajedy that is specific to Greece and where the public response to the crisis is unjustifiably deemed to be negative rather than positive. It is hardly surprising then, that Greece is presented not as a beacon for democracy, but as a “junk country” getting its comeuppance for its alleged “bloated public sector” and “culture of cutting corners” (http://www.guardian.co.uk/world/2010/may/09/greece-debt-crisis-euro-imf). 

The reason why the media are attempting to tarnish Greece in this way is because the Greek people have mobilized on mass against the bankers’ attempts to insist the people pay for the so-called “rescue” of their country by way of massive austerity programmes, without a fight. The memories of 1967 allied to the accompanying acts of popular resistance, remain a feature of the collective Greek consciousness in a way that is for example, absent in a country like Britain. Such resistance is anathema to Europe’s central bankers and regarded as an obstruction to German capital’s need to capture markets in the aftermath of Germany’s troubled reunification. In this sense, the Greece of today is a microcosm of a modern class war that is rarely reported as such and is waged with all the urgency of panic among the imperial rich. Ordinary people are not cowed by the corrupt corporatism that dominates the European Union (http://www.johnpilger.com/page.asp?partid=576).

The right-wing government of Kostas Karamanlis, which preceded the present Pasok (Labour) government of George Papandreou, was described by sociologist Jean Ziegler as “a machine for systematic pillaging the country’s resources” (http://socialistworker.org/2010/05/24/the-modern-class-war).

This “machine” whose functionaries included Goldman Sachs and other US hedge fund operators, are currently being investigated by the US Federal reserve Board for their alleged speculating of public asset stripping by the Greek government and the resulting haemorrhaging of capital by way of capital flight which the ECB facilitates. This has prompted some mainstream commentators to question the apparent hitherto God-given logic which insists upon cuts as a means to appease financial markets as an unaviodable feature of system where such markets, instead of being our servants, are our masters (http://www.guardian.co.uk/commentisfree/2010/may/02/greece-default-debt-choice).

The reason why financial markets are perceived as masters in this way is due to the structural weaknesses of monetary union. All countries have the same access to the money markets, but they do not have the same access to credit, which is obtained at a different price by each country (http://researchonmoneyandfinance.org/media/reports/eurocrisis/fullreport.pdf).

The main problem highlighted by the Greek crisis is that the EU is at most a monetary union not a fiscal union. Fiscal policy—dependent on the power to tax and spend—remains, for reasons of self-interest, firmly in the hands of the nation-states. Governments’ only means of saving the capitalist system from itself was to bail out the financial institutions from which they could then borrow as a means to enact the fiscal measures necessary to rescue the market (Callinicos, Alex, 2010, Bonfire of Illusions, Polity).

Governments’ obsession with appeasing the market means that weaker capitalist states like Greece are not given the luxury of being able to choose the timing of their austerity programmes. Greece has been targeted by the financial markets and their facilitators – the unelected and unaccountable ECB – for reasons of speculative profilagcy to the extent that the country has become threatened with bankruptcy. As a response, the financial markets didn’t just force up the interest rates on the bonds of the weaker eurozone economies, they also pushed down the euro. This made the Greek crisis a problem for the entire eurozone (http://www.allbusiness.com/economy-economic-indicators/economic-conditions-deflation/14489907-1.html).

The dominant continental states, France and Germany, were divided over how to respond: France supporting a coordinated loan to keep Greece afloat, Germany resisting. Greece threatened to humiliate the EU by going to the International Monetary Fund for help, a bluff that was called by Germany. A few weeks ago, European leaders signed up to an unprecedented 750 billion euro ($920 billion) joint rescue package for the euro which has been proven to be inadequate to stabilize it. Instead, the European single currency has continued its dramatic fall, recently hitting a four-year low against the dollar (http://www.spiegel.de/international/europe/0,1518,697098,00.html).

The eventual agreement on the joint IMF-eurozone rescue reflected the fact that a Greek default would not be in the interest of the German banks, which have lent heavily to Greece and the other weaker eurozone economies. But the debate within Angela Merkel’s chronically weak conservative-liberal coalition in Berlin (which was accompanied by ferocious nationalist exchanges between the German and Greek media) tilted towards the hard line taken by Wolfgang Schäuble, the finance minister (http://www.msnbc.msn.com/id/36981501/ns/business/).

He proposed setting up a European Monetary Fund that could come to the rescue of eurozone members in Greece’s plight, in exchange for a tightening up of the Growth and Stability Pact, under which EU states are not supposed to run budget deficits greater than 3 percent of national income. Greece’s budget deficit is currently running at 13 per cent which is close to that of the UK and the US. But ministers want to reduce Greece’s deficit to 3 per cent within the next three years. Moreover, penalty clauses are to be inserted allowing states that broke the rules to be deprived of access to EU cohesion funds or even to have their voting rights temporarily suspended (http://www.ft.com/cms/s/0/c36bf126-2d41-11df-9c5b-00144feabdc0.html).

The message is clear. If Greece fails to implement the required austerity programmes, it will be ditched. The so-called rescue of the country is essentially an effort to rescue the French and German banks. If Greece defaults, it would deal a blow to the banks that are already weakened by the broader crisis (http://www.socialistworker.co.uk/art.php?id=21313).

This explains the nature of the anti-Greek propaganda that is pumped out by the media. This is the same media which claims that the Greek people have artificially high standards of living that must be brought down. But research by investigative journalists expose these lies and distortions. For example, figures show that the cost of living in Greece is one of the highest in Europe with the average shopping basket of food costing 66 per cent more than in Germany. Around 1 in 5 Greeks live on or below the poverty line of 6,648 euros per year. Unemployment stands at around 11 per cent. Public expenditure is equal to 40 per cent of gross domestic product. In Britain it accounts for 45 per cent. There is no “bloated public sector” (http://www.socialistworker.co.uk/art.php?id=21241).

Despite what the media portray, the crisis in Greece is connected to the broader crisis which will lead to increasing pressures on the euro. This will worsen the problems in Portugal, Ireland and Spain – the countries that along with Greece make up the so-called PIGS. According to leading Greek activist Panos Garganos, the intervention of the IMF and EU will not calm this crisis – it will make it worse because the example of Greece shows they have failed there, so they will fail to save Ireland, Portugal and Spain. The markets know this and will move quickly (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

What all this indicates is that the Greek people are clear that it is the system which is responsible for the crisis and are standing up to fight back against the bankers and politicians who insist that they, along with other ordinary folks in countries like the US and UK, repay the debts of the rich and powerful who incurred them. Jobs, pensions and public services are to be slashed and burned, with privateers in charge. For the European Union and the IMF, the opportunity presents to “change the culture” and dismantle the social welfare of Greece, just as the IMF and the World Bank have “structurally adjusted” (impoverished and controlled) countries across the developing world (http://www.johnpilger.com/page.asp?partid=576).

As the illusionary Tweedledee and Tweedledum versions of parliamentary democracy throughout much of the world play to the fiscal tune of ruling class interests, the inspiration for the rest of us are the ordinary folk in Greece.

Copyright: Daniel Margrain

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