This article was originally published on The liberty Beacon. You can read the original article HERE
The EU Retreats Further Into A World Of Self-Delusion
By Conor Gallagher via NakedCapitalism.com
The situation in Europe is getting so bad on so many different levels, the Brussels crowd had to bring in “Super” Mario Draghi to save the day — or at least write a report telling them what to do…
Draghi has spent time at Goldman Sachs, the European Central Bank (ECB) during the sovereign debt crisis, and as unelected prime minister of Italy during the early days of the Covid pandemic and runup to Project Ukraine. Depending on where you sit, he could be an odd choice to chart a path forward; while Draghi knows his way around a crisis control center, he’s also plenty experienced at creating them.
He was one of the chief architects of the EU’s disastrous economic war against Russia and he’s always been a grim reaper for working class citizens of his native country of Italy. No wonder that for months the neoliberal, war-loving spreadsheet crowd in Brussels has eagerly awaited the report as if it is manna from heaven that will help deliver them from the corner they have backed themselves into.
Curiously, his report was delayed by months, which only increased the anticipation, and it finally dropped last week, conveniently timed at another crisis point. Project Ukraine is quickly unraveling and pressure is coming from all directions for Berlin to give the go ahead for joint EU debt in order to make the EU “competitive” again and buy a bunch of weapons to do something (nobody is too sure of what exactly) about Russia. Indeed, Draghi’s report doesn’t say, nor does it ever consider making nice with Moscow.
That’s because the report, “EU Competitiveness: Looking Ahead” is a political document more than economic one intended to not only give cover to the bloc’s disastrous Russia policies, but continue to double down. And it is already being used as more ammunition for those in the Baltics, Poland, the media, US-funded think tanks in Europe, and more who are calling on Germany to support debt for an extended Cold War. Specifically, they wanted Super Mario to tell them how to get out of the predicament of their own making without changing course on Russia and a host of other issues, and Draghi delivered — as long as you don’t let reality get in the way. His answer? More money. Lots of it.
He calls for massive infusions of cash into multiple sectors: green, tech, energy, and of course defense. According to Draghi, the price tag is a minimum of 800 billion euros annually until 2030.
Asked if his message was “implement your report, or die?” he replied that “It’s ‘Do this, or it’s a slow agony.’”
The EU certainly needs an economic plan, but Draghi’s report never questions whether ongoing belligerence toward Moscow (and loss of pipeline Russian gas) is in the bloc’s best interest and it never mentions Brussels’ obsession with austerity, which is once again being forced on member countries. From a purely economic standpoint, the report is trash economics that reads like something out of the late-stage USSR, according to economist Philip Pilkington.
But it does plug nicely into the political economy of today’s EU, which is being subsumed under Washington and NATO. It is engaged in open economic war and an proxy war in Ukraine against Russia, both of which have hurt working class citizens across the bloc. The austerity-obsessed EU is once again forcing its member states to enact austerity budgets. Draghi’s report was requested by European Commission President Ursula von der Leyen, who is working to amass more power to her mostly unaccountable throne, and is one of many voices calling for a defense union and militarization and the ability to borrow and potentially levy taxes to pay for those debts.
So while Draghi’s report is ostensibly about across-the-board bloc “competitiveness” (there’s plenty on weakening antitrust, for example), Russia still dominates the conversation in the halls of power. Von der Leyen wants to create an “air shield” against Russia. The EU’s new High Representative for Foreign Affairs and Security Policy is proposing a €100 billion (to start) eurobond issue to pay for more weapons to be used against Russia.
And Poland, one of the biggest backers of the war against Russia, might also be getting additional input over a whole lot of EU money. Piotr Serafin, a Tusk confidant and Poland’s European commissioner in Brussels, looks likely to be in charge of the EU Commission budget portfolio, one of the most powerful positions as the bloc is set to sort out its seven-year spending plans.
What these people do with a blank check in the name of competitiveness?
The very same week Draghi’s report came down, so did another from Nicole Koenig, head of policy for the Munich Security Conference, commonly referred to as “Davos with guns.” It is set to welcome in current NATO figurehead Jens Stoltenberg as its new chairman next year, and Koenig endorses the idea of a debt-based fund to fuel weapons purchases as part of a European defense union.
Despite all the buildup to Draghi’s report and it being accompanied by similar calls from the Munich Security Conference and every American plutocrat-funded think tank, the immediate response out of Germany was mostly nein.
Germany’s Finance Minister Christian Lindner said plainly that “Germany will not agree to this.”
Lindner is part of the three party ruling coalition that would be unable to garner 33 percent of the vote if elections were held tomorrow. His fiscally conservative Free Democratic Party currently polls around 3-4 percent — not even enough to get them seats in the next Bundestag.
Friedrich Merz, the leader of the Christian Democratic Union (CDU) and current odd-on favorite to be the next chancellor of Germany, said the following: “I want to say this very clearly, now and in the future, I will do everything I can to prevent this European Union from spiraling into debt.”
The CDU currently polls around 31-33 percent nationally. The insurgent party on the left and right, the Alternative for Germany (17-19 percent) is anti-EU and would never support joint borrowing. I haven’t seen a position from the Sahra Wagenknecht Alliance (7-10 percent), but would imagine its hyperfocus on German working class issues means it is also not in favor.
Robert Habeck, leader of the war mongering Greens (10-12 percent), is in support.
Chancellor Olaf Scholz is remaining silent on the issue, omitting any mention of it from his Wednesday speech to the Bundestag. While he has in the past made his opposition known, it’s worth knowing if his thinking has changed as it did repeatedly for nearly every step of escalation in Ukraine. Scholz’s government enjoys record unpopularity, and his Social Democratic Party is being decimated — in the European elections they were embarrassed, in recent state elections they were thrashed, and in national polling they have fallen from 26 percent of the vote in the 2021 election to 14 percent currently.
So yeah, the timing for Berlin to deal with such major European funding requests is not ideal. From another point of view, though, maybe there’s no better time to take advantage of the chaos and get the green light from the lame duck government in Berlin. There are once again rumblings that Scholz should step aside and clear the way for his pugnacious defense minister Boris Pistorius who has been pounding the table for endless military spending ever since he was plucked from the obscure position as the Saxony State Minister of the Interior and Sports.
Any attempt to enact a joint borrowing scheme would require unanimity from the European Council, which is composed of all the bloc’s heads of state, but there is a belief that if Germany goes along others like the Netherlands can be persuaded.
Germany is dealing with its biggest political upheaval since World War II, it’s deindustrializing, and it’s in a recession largely caused by structural problems and its own missteps. Standards of living are declining following years of record immigration, and it’s all combining to produce the most unpopular government in modern German history.
Despite all Germany’s problems, it is still the most powerful economy in Europe that drives the bloc, and any major EU changes must run through Berlin.
And everyone is pressing now.
Poland and the Baltics are haranguing for more. Southern Europe is on board. Countries like Italy and France have supported joint borrowing for years.
US-funded think tanks stateside and in Europe, which really act as plutocrat-funded shadow governments, are pumping out piece after piece about how Europe (Germany) must use joint debt to fund defense.
Here’s yet another recently-released report from the Council on Foreign Relations, “From the Ukraine Conflict to a Secure Europe.” It argues like so many others that the EU, as an auxiliary to NATO, must take the lead role in ensuring that Russia is bordered by unfriendly states:
A European pillar based on the EU would go a long way toward easing if not eliminating the continuing tension between NATO and the EU in the field of security. For all practical purposes, the EU would become a member of the alliance, and cooperation between the two entities should be seamless. Non-NATO EU members would thus enjoy an implicit Article 5 security guarantee, which would be extended to new members as the EU expanded to include non-NATO allies in the Balkans and the former Soviet space.
Unfortunately for Germany and the EU, that will also include propping up whatever is left of Ukraine and probably making sure its bondholders are made whole while still finding spare change to bring Armenia, Moldova, Georgia, and who knows, Kazakhstan(?) on board as well. How to pay for all the color revolution efforts, bribes, military hardware, state aid, and everything else required by the EU’s now-openly subservient role to US imperial ambitions? The CFR piece cites Macron’s big April speech at the Sorbonne as a blueprint, which of course requires common EU debt.
Yet Germany remains opposed.
The country is dealing with its own budget woes and is cutting almost everywhere except on the military. It has a constitutionally-enshrined cap on spending, known as the debt brake, which it tried to sneak around last year, but a court struck it down. And Berlin is even cutting contributions to the EU rather than looking to back bloc-wide debt.
At issue is how EU debt would be repaid. It would either be done through the creation of new EU budget resources, such as taxes levied by the bloc, or through an increase in member states’ contributions to the budget.
Following the release of Draghi’s report, German bond yields rose as investors placed bets on more spending and, therefore, more rate hikes. As I understand it, it would also make the currency stronger since the debt would be safer, and that would be about the final nail in the coffin of the German model as a stronger euro would be another strike against Germany’s export-oriented industry — or whatever is left of it.
At the same time that German yields rose, however, Italy’s borrowing costs fell. That’s because if the EU and its AAA rating covered the debt of poorer member states or borrowed directly to cover member states’ energy crisis needs and more military spending, countries like Italy would have an easier go of it.
Italy currently pays a little under five percent on its 10-year debt, while the EU pays just over three percent. That’s why countries across the EU south, which face higher borrowing costs, are in favor of EU-wide bonds. Countries like Italy in southern Europe have faced decades of privatizations, budget cuts, and wage suppression in efforts to appease the market gods all to no avail.
How fitting that it would be that joint debt might finally get the go-ahead, not to improve the lives of citizens, but to spend hundreds of billions on a bunch of weapons that will leave them bankrupt and still outclassed by Russian firepower and manpower. Maybe there’s some hope for some military Keynesianism militarism effect, but at least to start with, it will likely be funding overpriced and ineffective American weapons.
One can read in Draghi’s plan or Macron’s Sorbonne speech about their concerns for the working man, European families, as well as the climate, and should a plan for joint debt go through there will no doubt be efforts to spin it that way (there already are) but it’s not hard to see where the priorities lie.
The release of his report comes at the same time that the EU is pushing more austerity on its members states. Brussels is then turning around and using those artificial budget shortages as a reason to borrow at the EU level to cover military expenses.
Bloomberg reported back in March that EU officials and investors are using the fiscal rules to push for an EU-wide bond program that would bring investors bigtime profits while allowing the bloc to ramp up military spending without individual nations incurring more debt. See? Win-win, except for the vast majority of Europeans who work for a living and will continue to see social services crumble while life gets more expensive.
This is not a plan to “save” Europe. It is part of the ongoing effort to recreate Europe as a neoliberal paradise for the financial sector and an anti-Russian servant to Washington.
No hundreds of billions in weapons purchases and streamlining will make a difference in Ukraine or in some hypothetical war agaisnt Russia, but it does take advantage of the self-inflicted crisis to shift more power to Brussels, reward investors, and punish workers holding back productivity. The report laments how the US is so much more “successful” in the realms of private equity and venture capital, and has such higher productivity in sectors like healthcare. Yes, who wouldn’t want to emulate the US healthcare system? Maybe all the military hardware will be useful in disciplining the local population in the name of competetiveness, however…
CONTINUE READING ORGINAL ARTICLE
Header featured image (edited) credit: org. article content
Emphasis added by (TLB)
••••
••••
Stay tuned tuned…
••••
The Liberty Beacon Project is now expanding at a near exponential rate, and for this we are grateful and excited! But we must also be practical. For 7 years we have not asked for any donations, and have built this project with our own funds as we grew. We are now experiencing ever increasing growing pains due to the large number of websites and projects we represent. So we have just installed donation buttons on our websites and ask that you consider this when you visit them. Nothing is too small. We thank you for all your support and your considerations … (TLB)
••••
Comment Policy: As a privately owned web site, we reserve the right to remove comments that contain spam, advertising, vulgarity, threats of violence, racism, or personal/abusive attacks on other users. This also applies to trolling, the use of more than one alias, or just intentional mischief. Enforcement of this policy is at the discretion of this websites administrators. Repeat offenders may be blocked or permanently banned without prior warning.
••••
Disclaimer: TLB websites contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, health, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.
••••
Disclaimer: The information and opinions shared are for informational purposes only including, but not limited to, text, graphics, images and other material are not intended as medical advice or instruction. Nothing mentioned is intended to be a substitute for professional medical advice, diagnosis or treatment.
This article was originally published by The liberty Beacon. We only curate news from sources that align with the core values of our intended conservative audience. If you like the news you read here we encourage you to utilize the original sources for even more great news and opinions you can trust!
Comments