Archive for March, 2012|Monthly archive page

Of European solidarity and other demons

In News on March 13, 2012 at 6:23 pm

On 13 March 2012, the Council of the EU ministers adopted a decision suspending €495.2 million in scheduled commitments for Hungary under the EU’s cohesion fund, to be implemented from January 2013.

This was the result of the fact that Hungary did not take enough measures to reduce its budget deficit and meet the target of 3% of GDP.

This is the first time that a clause enabling the suspension of commitments has been invoked since the cohesion fund was established in 1994.

It should be reminded that Germany and France were the first ones to break the 3% deficit limit agreed in the Stability the Growth Pact in 2003. Back then, the Commission requested Germany to reduce its structural deficit by 0.8% of the GDP, and France by 0.4%. The recommendation was blocked in the Council. As a result, there was no case for imposing sanctions if these countries would not comply.

Commitments suspended for Hungary amount to 29% of scheduled commitments for 2013. Germany’s GDP per capita in PPP prices is $37,935, France’s is $35,048. Hungary’s is $19,647.

This is not European solidarity. This is not even European cooperation.

This is plain and simple a Europe where the powerful impose their terms on the weak. Good old, traditional rule of power.

Eurospeak – when words are abused and meanings are distorted

In News on March 8, 2012 at 5:52 pm

For the past two years, the overwhelming majority of the Greek politicians have been using a list of expressions to describe the Greek debt crisis and to support their proposed solutions, i.e. austerity measures and neoliberal policies in exchange for European bail-outs. The new language “Eurospeak” has been promoted by the Greek media and enjoys the support of European institutions and politicians.

This is a dictionary to help us understand the new language:


Former meaning: a common currency adopted by European countries first as an accounting currency in 1999, then in physical form in 2002. Its inception can be traced back to other forms of currency cooperation in the 1970s between members of the then European Community. Its rebirth in the beginning of the 1990s was partly triggered by a fear of a strong Germany, which was unified in 1990. The euro was a political project, dressed in economic terms and many economists at the time argued that it may not be a good idea for two reasons: First, because the European economies were too divergent and in different phases in the economic cycle to be synchronized (with the euro, a common monetary policy is to be followed for all countries). Second, because a common European currency cannot be sustained for long if there is not a common fiscal policy to complement the common monetary policy.

New meaning: Financial stability and social justice

(Remaining in the) Eurozone

Old meaning: DATA NOT FOUND

The issue was never examined. When placed on the agenda, it is recommended that a sober discussion take place on the advantages and disadvantages for a country with an unsustainable debt to remain in a currency union. Proposed outline: costs and benefits of devaluation versus remaining in the currency union, including growth path, social and economic benefits, and timeline, terms of bail-out agreements etc.

New meaning: the only option available

Monetary stability

Former meaning: One of the macroeconomic goals for sound economic government in a country/ region. Also known as low inflation, typically between 0-2% and sometimes meaning currency stability as well. Other macroeconomic goals include economic growth (% increase of GDP year after year), employment levels, balance of payments (balancing exports and imports)

New meaning: Full employment

Stability in the banking sector

Former meaning: Banking sector is an industry which among other things mediates for lending and borrowing in the economy, following interest rate setting by a central bank. It is considered to have a pivotal role in an economy as a market for credit, which potentially could drive growth (when economic outlook is positive, banks tend to lend) and as a place for people’s saving. Hence, government provided financial support to banks following the 2008 global financial crisis to have stability in the banking sector. Critics say that the banking sector should be allowed to fail (i.e. go bankrupt) just like companies in other sectors of the economy. More so, since it appears many banks were engaging in “gambling” investments, following a wave of bank deregulation in the early 1990s in the US and Europe.

New meaning: Growth

Austerity measures

Old meaning: Measures usually promoted by the IMF as part of its lending agreement with emphasis on trade liberalization, reducing government budget deficits, reducing wages, keeping inflation low, abolishing minimal wages, privatization, exchange rate fluctuation. Imposed as conditions of the IMF lending agreements to developing countries in the 1970s and 1980s.

New meaning: support and solidarity from European partners to Greece

Economic Crisis

Old meaning: High unemployment, slow economic growth or negative economic growth, lowering standards of living, uncertainty in economic expectations.

New meaning: Opportunity

Decreasing wages

Old meaning: Decreasing wages. At an individual level, it is usually followed with falling disposable income and deterioration in the standard of living. At an aggregate level, it is followed by lower consumer demand in the economy, which leads to lower economic growth or even recession.

New meaning: Flexibility in the labour market

Reducing the national minimum wage

Old meaning: Reducing the national minimum wage which ensures a level of income for the least qualified workers. At an individual level, it is usually followed with falling disposable income and deterioration in the standard of living. As an economic measure, it has the effect of “pulling” wages downwards, thus reducing wages. Then follows lower consumer demand in the economy, which leads to lower economic growth or even recession

New meaning: Flexibility in the labour market

Abolishing collective labour law

Old meaning: Collective labour law – Tripartite relationship between employer, employee and trade union. Among other things, it allowed trade unions to negotiate on behalf of workers for better working conditions, fewer working hours, better wages, increasing their collective bargaining power. It is considered more beneficial to employees as they don’t have to negotiate individual contracts for work. Abolishing collective labour legislation means employers have more bargaining power in imposing their own terms, including unjustified firing.

New meaning: Flexibility in the labour market


“Don’t you see that the whole aim of Newspeak is to narrow the range of thought?… Has it ever occurred to your, Winston, that by the year 2050, at the very latest, not a single human being will be alive who could understand such a conversation as we are having now?…The whole climate of thought will be different. In fact, there will be no thought, as we understand it now.Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness.” – Syme

George Orwell, 1984, chapter 5

Europe’s elites and their democracy

In News on March 1, 2012 at 6:19 pm

The European Union (EU) was never famous for its democratic credentials. Discussion about the EU’s “democratic deficit” began in the 1970s two decades after the European Coal and Steel Community (ECSC) was established in 1951 and later expanded to the European Economic Community (EEC, 1957).

The argument in favour of more democracy at European level was that as (Western – we are still in Cold War, remember?) European elites were engaging in economic cooperation, the executive branch i.e. the governments were gradually being empowered at the expense of the legislative branch i.e. the parliaments. As Ministers and Prime ministers were meeting in Brussels to agree on reducing cross-border barriers, liberalizing trade and setting a common external tariff, parliaments back home were only asked to ratify the international agreement, post-negotiation.

Following calls in favour of more democracy and accountability at European level, it was decided that European Parliament (EP) members would be finally directly elected by European citizens. The first EP elections took place in 1979, almost three decades after European integration (i.e. this process of European economic cooperation) had begun. The small print was that the EP’s role was consultative.

Over the years, the EP’s powers grew, just like the EEC transformed itself to a European Union with increasing powers not just in trade and agriculture, but also in economic and social policies, capital movements, justice affairs and immigration policy, education and consumer rights to mention a few. The gap between Europe’s elites and peoples widened with every treaty.

The Treaty of Maastricht was voted down by the Danish in 1992, the Treaty of Nice was rejected by the Irish in 2001, the European Constitutional Treaty was rejected by the French and the Dutch in 2005 and the Treaty of Lisbon was voted down by the Irish in 2008. Each and every time the reading of the negative results was the same: citizens were poorly informed and the “against the treaty” campaign was better organized. Each and every time the response was the same: conduct the referendum again (so that voters get it right).

In this light, it should come as no surprise that over the past few months a number of European officials and politicians have stated their preferences on the timing of the Greek elections. What shouldn’t they? European elites never thought much of their citizens and Europe has a tradition of placing markets above people.

For more on how democracy is currently re-invented in Greece, click here.