Europe’s seven deadly sins (1/2)
14 December 2011HAMBURG
Hieronymus Bosch: "Greed." From "The Seven Deadly Sins" (1475-80). Madrid, Prado Museum.
The politicians of Europe love to flourish the flag of Community togetherness. But in their day-to-day politicking they give the lie to their supposed virtues. Die Zeit has compiled a cheat-sheet of national egotisms that are harming the Community.
Sloth – Greece
Angela Merkel is to blame, they say. German hard-heartedness is wrecking Europe, they say. That’s how the Greek tabloids are explaining the crisis, and that’s what populist politicians and demonstrators are shouting too. It’s not their debts that the Greeks are bothered by, but the dunning and crowding and lecturing from the rest of Europe. In blaming others, they’re lying to themselves and to Europe.
In Athens, what astonishes one is the incredible self-indulgence. Who is actually grappling with the cause of the misery that is the debt-ridden society of Greece itself? Those who always thought there would be money enough in Europe for them. Guilds that cling on to their privileges. State railway workers who pocketed exorbitant salaries during chaotic wage hikes. Families that continued to rake in pensions for their dead relatives. Politicians who hired their voters’ nephews and nieces, and nephews and nieces who let themselves be hired. The Athens media are reporting on this, for sure. But what’s missing is any cathartic Greek anger at their fellow-citizens.
The Athens populists talk tough about Merkel, but go easy on the guilty in their own country. They prefer raging at a distant bugbear, it turns out, to looking themselves in the eye. This weakness, this lack of talent for self-criticism, is the real Greek crisis.
Michael Thumann
Dealing in stolen goods – Switzerland
The sums are huge. It’s enough to make the eyes of Europe’s politicians gape wide with cupidity. In Switzerland alone, foreigners, most of them EU citizens, have 1,560 billion euros tucked away. In Britain, and mainly in the Channel Islands, about 1,400 billion; in Luxembourg, 440 billion, and in Liechtenstein, 78 billion. All these states hold out a helping hand to tax evasion. They sponge up the national wealth of other countries and live off the interest.
And what does Europe do? Instead of joining together in outrage, the capital cities treat the scandal as a venerable tradition, as an affaire diplomatique. Some individual countries, Germany among them, are pursuing a double-taxation agreement with Switzerland and Liechtenstein that would see some part of the tax debt paid back to the depositors’ countries through a “withholding tax”. This pursuit, though, undermines the request of the EU Commission for an automatic exchange of information to get a lead on tax evaders – a request that Luxembourg has also turned down. This same Luxembourg that otherwise so eagerly preaches European solidarity.
Peer Teuwsen
Bigotry – Germany
Can there be a Europe in which one country exports and turns a profit, while others import and rack up debts?
The Germans are proud of their exporting prowess, as it’s a testament to the efficiency of their domestic economy. But when a country permanently sells more goods to foreign countries than it imports from them, things get rather unpleasant for all involved.
This year Germany’s export surplus with the other EU countries came to €62 billion. That means nothing less than that Germany goods are traded not for foreign goods, but are practically handed over on credit. To buy German goods, the southern Europeans go into debt to the Germans. In other words, the wealth of the Germans is based on the debts of others. But just who is complaining the loudest about this debt? Exactly. Germany.
At some point the debtors will be threatened with bankruptcy and the creditors with claims that have lost value. In recent years, the Germans have built up foreign assets of almost € 1trillion. If the South can no longer pay, however, a large part of that money will vanish.
That is why the Chancellor is saying now that everyone should be like the Germans: export more than they import, lower wages and cut back on consumption. Easier said than done. If everyone just wants to sell goods, after all, there will no longer be anyone to buy them, and the economy will grind to a standstill.
If the Europeans do not want to flood the rest of the world with European goods, which this world will not permit, the balance must be restored within the monetary union. The Italians will have to economise – and the Germans will have to spend more.
Mark Schiertz
Gluttony – Spain
“Thou shalt not empty the seas of thy neighbours’ fish” – Europe could do with that as one its Ten Commandments. Followed by: “Thou shalt not hang your farmers up to a subsidy drip.”
More than one billion euros have been allocated by Brussels to the Spanish fishing industry for the period between 2007 and 2013 – far more than for any other EU country. Since European waters are largely overfished, Spain sends its highly modern fleets to lower their nets off the coasts of Senegal and Mauritania. The trawlers leave little behind for the local fishermen, and they exceed the agreed fishing quotas to boot.
Legal action against the companies concerned would be required, as well as new fisheries agreements between the EU and African countries. So far, Spain’s government has resisted both, as they have also resisted further reform of EU agricultural subsidies.
Around 50 billion euros flow from the Brussels cash box into European agriculture every year – most directly to farmers in various EU countries, who thus stay competitive in a field dominated by price-dumping. A significant part of the cheap meat, dairy and vegetable products from Spain, Italy, France and Germany now lands in African markets.
Good for the poor, say the exporters. Local food production in countries such as Ghana, Cameroon and the Ivory Coast, however, is being driven to collapse. And if agricultural commodity prices go up, the poor will no longer be able to afford these imports of milk powder, poultry leftovers and grain from the EU.
If it comes to a food or hunger crisis, the Europeans will be in a tight spot again. The world’s largest donor of emergency relief, after all, is the EU.
Andrea Böhm
Europe’s seven deadly sins (2/2)
15 December 2011HAMBURG
Hieronymus Bosch: "Wrath". From "The Seven Deadly Sins" (1475-80). Madrid, Prado Museum.
The politicians of Europe love to flourish the flag of Community togetherness. But in their day-to-day politicking they give the lie to their supposed virtues. The second part of Die Zeit's list of national egotisms that are harming the Community.
Self-interest – Ireland
One can of course explain it as the Irish Minister of Culture did. “We are a happy people,” he said recently, “and basically an honest people. For foreign investors, those are the key points.” Definitely. The tax rates Ireland offers, viewed candidly, may however also go some way in explaining why this island in the Atlantic pulls in international companies like a magnet.
At only 12.5 percent, Ireland’s corporate tax is far and away the European flyweight in the field. The majority of EU countries, such as Germany and France, levy a corporate tax of 30 percent. In an internal market in which everyone should have the same competitive opportunities, how, pray, can there be such a gap?
Even before the debt crisis Ireland was attracting powerful multinationals by the dozen: Facebook, Intel, Pfizer, Merck, SAP, IBM – all came thronging to the island of Céad Mile Fáilte, the hundred thousand welcomes. The logic was beautiful, though highly insular: the more firms that cluster there, the more gentle is the hand of the state. The Irish government does now want to raise some taxes, but not the corporate tax.
In Dublin’s view, Ireland has to compensate for some natural competitive disadvantages – for example, that one cannot travel by train to the rest of the Union. Well, since when has that mattered to IT and insurance businesses? What’s more, being the only English-language bridgehead in the eurozone is no small matter. So then, Ireland: stay honest, uphold European solidarity, stay happy! J.B.
Arrogance – France
When the French nuclear group Areva made public in mid-December its plans to lay off several thousand employees, it was really no cause for concern for its employees.
“There will be no impact: that is the line the government has laid down,” Finance Minister François Baroin announced after the initial news of the proposed cuts had been leaked. Baroin then summoned Areva boss Luc Oursel. “There will be no decision that treats jobs as bargaining chips, regardless of what consequences a slowdown in global economic growth may have,” he insisted. Emphasis on French jobs taken note of.
In France, no one is surprised by such statements, which have been part of the raison d’état (the national interest) ever since Jean-Baptiste Colbert, finance minister to Louis XIV, the Sun King, began to run the economy with an iron hand. That the state owns an 87 percent stake in Areva is neither here nor there.
When the cash-strapped private carmaker PSA Peugeot Citroën recently announced job losses, industry minister Éric Besson also immediately promised that all jobs in France would be spared. The head of Renault, Carlos Ghosn, who wanted to outsource a small part of production to Turkey, was called in for a little chat as well.
The brakes that the state puts on developing production facilities in emerging countries is, by the way, an important source of the difficulties the French carmaker finds itself in today. It’s what happens when a state appoints itself the would-be protector of the economy.
Production costs rise, and the manufactured goods become too expensive. To counteract falling exports, the government raises protectionist barriers. A vicious circle. At best, by doing this the French government rewards unprofitable production. At worst, the Elysée abuses its power over companies as a political weapon.
French politicians become convinced Europeans if they can’t go any further on their own. This is what led to the creation of EADS, Europe’s largest aerospace and defence group, and has also prompted political interest in a shipbuilding alliance modeled after the aircraft manufacturer. Yet when the Germany company Siemens showed an interest in “rescuing” its troubled French rival Alstom, then Minister of Finance and current President, Nicolas Sarkozy, blocked its designs.
The same Sarkozy also brokered the 2004 merger of the Franco-German pharmaceutical group Aventis with the French company Sanofi, so smoothing the way for the third largest pharmaceutical company in the world. And at Sarkozy’s request, the formulation of a single market with “free and undistorted competition” was struck off the EU Reform Treaty.
How long will the European Union still be able to afford such hauteur? K.F.
Avarice – Britain
Did the British not hear the shot that went round the world? As if the financial world hasn’t been in meltdown these past three years, they go on believing that they can make up for the loss of their national industries by speculating on other people’s money – whose losses are their profits. Pigheaded and incorrigible, they cling to this so-called logic according to which the markets are invulnerable and to which politics and society will ultimately have to submit.
In this topsy-turvy world driven by an over-heated concept of ‘freedom’ handed down by John Stuart Mill and Adam Smith, a financial system in the City of London with no meaningful regulation was possible. All highly complex derivatives and asset-backed securities were traded there, which contributed decisively to the great crash of 2008. Billions of euros in savings and pension funds of ordinary bank customers were gambled away, but the London bankers themselves lost nothing.
The state debt crisis began when governments had to step in and absorb the banks’ losses. Despite that, proposals to involve investors in the risks brings only a loud hue-and-cry from London. And the transaction tax proposed by the German government, which demonstrably could put a stop to short-term speculation in the foreign exchange market, was described theatrically by Chancellor George Osborne as “a bullet aimed at the heart of London.” Anyone who can swim so inveterately against the stream should perhaps best go swim somewhere else. J.F.J.
Translated from German by Anton Baer
Translated from German by Anton Baer
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