Global News Journal
Beyond the World news headlines
The Greek debt crisis appears to be entering a new phase, in which the country is no longer just waiting to get needed help but getting concerned that others -- including euro zone powerhouse Germany -- may actually be making it hard for them to recover.
First, there is Prime Minister George Papandreou (right in photo). His concern is that speculators are pushing the cost of borrowing so high that it is undermining the plans he has put in place for deficit reduction. Papandreou is known for being a mild-mannered sort, so any kind of irritability is worth noting.
But Theodoros Pangalos (left), the deputy prime minister and once foreign minister, has no such reputation to hold him back. He has launched an attack on Germany, saying that a) it is allowing its banks to mess around with Greek bonds and b) that it suits Berlin in any case to let the euro fall.
Pangalos is famous for his undiplomatic outbursts. He once referred to Germany as a giant with a child's brain. Another time he suggested that the then -French president was essentially belly-dancing in front of the Turks to get their business.
It was no great surprise that the managing director of the International Monetary Fund looked perplexed when asked during a visit to Brussels to comment on proposals to create a European monetary fund.
”I would be very happy to comment if I knew what it was,” Dominique Strauss-Kahn told a committee in the European Parliament.
In the space of a few weeks, the idea of creating a European Monetary Fund to rescue financially troubled EU member states has gone from being a high-level brainwave from a pair of economists to a major policy initiative backed by powerbroker Germany. In EU terms, that’s Formula One fast.
Yet while German Chancellor Angela Merkel appears to be behind the concept, even if she has concerns about a possible need to change the EU’s treaty, no one has put much flesh on the bones of the idea apart from the original proponents — Daniel Gros of the Centre for European Policy Studies and Thomas Mayer, the chief economist of Deutsche Bank.
In 2000, the European Union set its sights on becoming the world’s most dynamic, knowledge-based economy by 2010. It failed. Economic recession hardly helped, but EU officials acknowledge its goals may have been a little too ambitious.
On Wednesday the European Commission, the EU executive, unveiled a new 10-year plan to boost economic growth and create jobs. The Europe 2020 strategy is intended to create a greener and more prosperous economy and will be the centrepiece of the EU’s efforts to emerge from financial crisis.
While not exactly pocket change, Iceland’s $5.5 billion Icesave debt to Britain and the Netherlands amounts to just 1.2 percent of the value of Norway’s offshore wealth fund. For Iceland, it’s more than $15,000 per citizen.
Given the two countries’ close historic links — Norwegian Vikings discovered the Atlantic island where people still speak a version of “old Norwegian” — speculation about Oslo coming to the rescue has Reykjavik licking its lips.
The European Union seems to have developed a habit of shooting itself in the foot.
The latest self-inflicted wound was an attack on Wednesday by a euro-sceptic British member of the European Parliament who dismissed Herman Van Rompuy, the new EU president, as a “damp rag” who had no legitimacy and threatened democracy.
Three months ago, Herman van Rompuy might have struggled to be recognised on the streets of his native Belgium, let alone Paris or London. The bookish former prime minister, a fan of camping holidays and Haiku poetry, was nothing if not low-key; a studious consensus builder in the world of Belgian politics.
Three months on and Van Rompuy, 62, may not outwardly have changed much, but his title and the expectations surrounding him certainly have. In November he was chosen to be the first permanent president of the European Council, the body that represents the EU’s 27 leaders, and on Thursday he will host those heads of state and government at an economic summit in Brussels — the first such gathering he has chaired.
So there’s no question Greece has work to do to improve its bookkeeping.
Not only must it get spending in check, but it needs to be a bit more honest about where its finances stand in the first place. After all, it’s not often an EU country says one month that its budget deficit is a little over three percent of GDP and admits a few weeks later that, oh dear, it’s actually nearer 13 percent.
Yet it’s hard not to have a little sympathy for Greece at the same time.
Its government bonds have been hammered and the price it has to pay to finance its debt has soared as financial markets have relentlessly taken it to task over the past six weeks for its profligacy.
Much criticism has been heaped on the European Union — the vast majority of it by its own member states — for not being seen to do enough to help Haiti after the Caribbean state’s earthquake.
Never mind the fact EU states and the European Commission have promised a combined 400 million euros ($575 million) in aid and long-term reconstruction. In public relations terms, the sums have all but been eclipsed by images, beamed around the world, of volunteer U.S. firemen pulling victims from the rubble, and emergency aid workers from the likes of Israel and Brazil running much-needed field hospitals.
Greek elections have traditionally been raucous, ebullient affairs, a true celebration of democracy in the country that gave birth to the concept. This year, the mood is noticeably more sombre ahead of Sunday’s vote. Colourful elections kiosks at main squares stand nearly empty, attracting few voters. The chat at cafes and on the Internet usually centres on voters’ disappointment with politics as a whole for failing to fight corruption and put the economy on a steady growth path.
“Our expectations were dashed,” said financial analyst George Kaisarios on the NewsTime blog. “The three pylons of our development strategy in the last decade, euro zone entry, Olympic Games and credit expansion, have been wasted. And unfortunately for all of us, there is nothing on the horizon to replace them.”