Tag Archives: austerity

United Kingdom

Cameron reshuffle nudges UK government rightward

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UK prime minister David Cameron announced his first major cabinet reshuffle Tuesday since taking office in May 2010.

As predicted, justice minister Kenneth Clarke was demoted to ‘minister without portfolio,’ marking what will likely be the end of front-bench politics for the ‘big beast’ of Tory — and British — politics, and for his thoughtful take on prison reform.  He’ll be replaced by the far more right-wing (and non-lawyer) Chris Grayling, an up and coming figure on the Tory right, who had previously served as employment minister.  From The Guardian:

Grayling’s appointment also signals a determination by Cameron to take a tougher line on sentencing, the Human Rights Act, legal aid and community punishment, a nexus of policy issues that has left Conservative backbenchers frustrated by what they regarded as Clarke’s willingness to pander to Lib Dem opinion.

Lady Sayeeda Warsi, the only Muslim in the cabinet and a one-time rising Tory moderate star, was also demoted, from co-chair of the party to senior minister of state at the Foreign Office.

Cameron’s reshuffle among junior ministerial offices was much more thoroughgoing, and also marks a significant swing to the right — and a swing to a cabinet that is ‘more male, white, southern and Oxbrigdge’.  The net effect will be to isolate further deputy prime minister Nick Clegg, the leader of the Liberal Democrats.  Chancellor George Osborne will keep his job, meaning that there’s no shift from the budget austerity upon which Cameron has staked his government’s legacy.

Galicia, Spain

Galicia regional elections will be the first test of Rajoy’s austerity measures

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Galicia’s premier Alberto Núñez Feijóo on Monday announced that his province, too, would join the Basque Country in holding early regional elections on October 21, rather than waiting for his term to run out in March 2013.

In so doing, Feijóo (pictured above, right) who hails from the center-right Partido Popular de Galicia (PPdeG, the People’s Party of Galicia), the local version of Spanish prime minister Mariano Rajoy’s Partido Popular (PP, People’s Party), has launched the first electoral test for Rajoy’s government, after just eight months in office.

Given Rajoy’s ties to Galicia and its status as a traditional PPdeG stronghold, it’s very much more fraught for Rajoy (pictured above, left) than the simultaneous Basque election, where two nationalist parties lead polls and where unique local and autonomy issues will figure nearly as much as national issues.

Rajoy’s party won the Spanish general election in November 2011, but his government is already facing mounting unpopularity as it’s made increasing cuts to the Spanish budget, notwithstanding an economy that’s back in recession — the economy has contracted by 0.7% so far this year and grew just 0.4% in 2011 — and an unemployment rate of 24.8%, as of June.

So far, Rajoy has pushed through at least four different austerity packages, designed to bring the Spanish deficit to just 6.3% of Spanish GDP, down from an 8.9% deficit in 2011.  Rajoy has raised the Spanish income tax rate, raised the Spanish value-added tax by 3% to 21%, eliminated tax breaks for home owners and reduced spending on education and health care — and that comes after two years of cuts implemented by the government of Rajoy’s predecessor, José Luis Rodríguez Zapatero.

For all its efforts, Spain is still straining under yields on its sovereign debt that rose from 5% (on 10-year bonds) when Rajoy entered office to 6.5% now, down from a crisis-level high of around 7.5% in mid-July.  So notwithstanding the harsh austerity, it seems more likely than not that Spain will seek a bailout from the European Union, possibly later this year — earlier in June, the European Central Bank intervened to provide funds for ailing Spanish banks.  That, too, has caused Rajoy to lose credibility after promising that he would never seek a bailout during his campaign.

The austerity push has affected the regions, which are responsible for cutting their own budgets to a combined 1.5% of GDP, and Galicia has not been unaffected by cuts at the regional level.

Since the end of the Franco era, the PPdeG has been out of power for just four years.  As such, it will be somewhat of an embarrassment if Feijóo and the PPdeG cannot win reelection in a region that’s historically been a bastion of Spanish conservatism — Rajoy himself is from Galicia and who once himself served in the Parlamento de Galicia.  Continue reading Galicia regional elections will be the first test of Rajoy’s austerity measures →

Germany, Greece

Samaras ‘negotiations’ with Berlin not going so swell

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It didn’t go so well for Greek prime minister Antonis Samaras on his visits with European Union leaders in Berlin.  His plea for more time to come up with cuts to the Greek budget is being met with stony nonchalance from both German chancellor Angela Merkel (pictured above right, with Samaras) and French president François Hollande, to say nothing of German civil society.

Samaras has requested an additional two years to come up with an additional €11.5 billion in cuts to the Greek budget.  While Merkel — and especially Hollande — were sympathetic to Samaras’s plea and reiterated their support for Greece to remain in the eurozone, Samaras will return to Athens having won no concessions from Berlin or Paris.

Business daily Handelsblatt writes:

“Greek Prime Minister Antonis Samaras does not tire of making new demands. Now he wants more time, for the health of his economy. Not more money, only more time — at least according to his requests to Berlin and Brussels. And, in Berlin and Brussels, there will be much discussion about whether Greece should be granted more time.”

“Our instinctive reaction regarding Samaras’ request is, well, that could be something. Given the near 40 degree Celsius (104 degrees Fahrenheit) temperatures that Germany experienced last weekend, we can empathize with Greek lethargy.”

“But is the Greek prime minister right? Is time instead of money really better? I say no.”

“We have known for a long time that time is money. Perhaps Angela Merkel will also say that to the Greeks. Despite the hot and sweaty 40-degree temperatures, there will be no more days off.”

Athens News reports that Merkel’s comments at a joint press conference with Samaras Friday were particularly tense:

“We expect Greece to deliver all that has been promised,” Merkel declared. In remarks that were unusually sharp for a joint news conference, she stressed that Berlin has heard words in the past but now expects deeds.

The tough talk contrasted sharply with the head of state honours and diplomatic smiles with which Samaras was received on his first official visit, complete with red carpet and band.

Merkel said that Samaras’ visit is a sign of the “very close ties” between the two countries, only to add later that each side had lost credibility in the eyes of the other and that trust must be regained.

And these are demands from someone who ‘Europe’ was desperate to win June’s Greek parliamentary elections.

Can you imagine how horrific the reaction would have been if the request had come from Alexis Tsipras, the leader of SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς)?

Merkel spent Sunday trying to calm the waters against anti-Greek feeling in Germany, after German Bundesbank president Jens Weidmann attacked the European Central Bank’s buying of state debt, and Alexander Dobrindt, general secretary of the governing Christlich-Soziale Union (Christian Social Union), the Bavarian conservative party and sister party of Merkel’s own Christlich Demokratische Union (Christian Democratic Union), speculated that Greece would leave the single currency by next year.

The Netherlands

Rutte and Roemer hope to consolidate support in Dutch election, as Europe watches nervously

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As Dutch voters and the wider international world begin to pay attention to the Sept. 12 election, it’s becoming clear that ‘anti-austerity’ and ‘pro-austerity’ forces are coalescing behind the party of prime minister Mark Rutte (pictured above, top) and the Socialistische Partij (SP, the Socialist Party) of Emile Roemer (pictured above, below), leaving both newer and traditional parties of the Dutch political landscape floundering. 

The election, which is typically followed by months-long coalitions talks, will have a significant impact on the ongoing political and economic eurozone crisis: a Rutte victory would bolster German chancellor Angela Merkel in her cause for Europe-wide austerity, while a Roemer victory would embolden a growing ‘pro-growth’ cause that includes French president François Hollande and, to some degree, Italian premier Mario Monti.

After a relatively quiet election season, Rutte, leader of the Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy), is back in the spotlight with a promise to increase an existing tax break for workers (arbeidskorting) by €300 in 2013 and by €1,000 in 2014.  The move is designed to sweeten the otherwise harsh effect of budget cuts that would lower the 2013 budget deficit to within 3% of GDP — last year’s budget was 4.7% of Dutch GDP, a shortfall that undermined Dutch credibility on the European stage.  Since Rutte came to power in a minority coalition government in 2010, he has made broad cuts across the entire spectrum of government spending, and the Dutch retirement age is set to rise from 65 to 67.

Rutte’s attempt to pass more budget cuts in the Netherlands in April led to the fall of his government, when Geert Wilders, the leader of the Partij voor de Vrijheid (PVV, the Party for Freedom) refused to support further cuts — although the PVV had not been a formal member of the coalition, it had provided crucial outside support to Rutte’s government.

Wilders, who rose to prominence and much electoral success in 2010 on his anti-Muslim, anti-immigration platform, is campaigning in 2012 on a full withdrawal from the euro and from the European Union altogether (even though the Netherlands was one of the original six members of the European Coal and Steel Community in 1951).  For whatever reason, however, voters are turning away from Wilders — much to Roemer’s benefit.

The subtext to Rutte’s drive to cut the Dutch budget is simple — he wants to retain the country’s pristine ‘AAA’ rating and keep the country out of any sovereign debt crisis and the ballooning yields that follow.  Above all, Rutte is determined to keep the Netherlands within the terms set by the Maastricht Treaty that establishes the 3% target.  The Netherlands is just one of four eurozone countries that has maintained its ‘AAA’ rating from each of the three major credit ratings agencies (joining Germany, Luxembourg and Finland).  Continue reading Rutte and Roemer hope to consolidate support in Dutch election, as Europe watches nervously →

The Netherlands

The incredibly shrinking Geert Wilders

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The past decade in Dutch politics has been fraught with what in the United States would be called “culture war” issues.

It may be surprising when you think of the Netherlands and its liberal attitude towards many of the hot-button issues in the U.S. — marijuana legalization, euthanasia, prostitution, same-sex marriage — but the Netherlands has had more than its share of tensions over Muslim immigration in the past decade.

The current standard-bearer of anti-Islam politics is Geert Wilders, somewhat of a Dutch Cultural Warrior, version 2.0 (following in the tradition of the late Pim Fortuyn, filmmaker Theo van Gogh and, to some degree, former Dutch parliamentarian Ayaan Hirsi Ali).  Wilders, the platinum blonde enfante terrible of Dutch politics, has highlighted the influx of Muslim immigrants to the Netherlands as a threat to the culture and way of life of the Netherlands (and Europe, generally).

His Partij voor de Vrijheid (PVV, Party for Freedom) swept the last general election in 2010, winning nearly one-sixth of the seats in the Tweede Kamer, the third-highest total.

Wilders dominated that election campaign with his views — he would ban all Muslim immigration to the Netherlands, pay current immigrants to leave and ban the Koran. He then dominated the months of coalitions talks that resulted when no party won enough seats to govern.  And then, as an outside supporter of Mark Rutte’s government, he has dominated Dutch governance — right up to April 2012, when he withdrew his support for additional budget cuts, leading to the snap elections on September 12.

So it’s with some surprise to see that the PVV is not dominating this election campaign: polls show that Rutte’s liberal, free-market Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) is tied with Emile Roemer’s Socialistische Partij (SP, the Socialist Party).  Rutte is running a campaign defending his push to bring the Dutch budget within 3% of Dutch annual GDP, while Roemer (and not Wilders) has emerged as the voice of opposition to austerity.

What’s clear is that, for the first time in over a decade, next month’s Dutch election is about spending, growth and the economy and less about Muslim immigration and ‘culture war’ issues — and early polls indicate that Wilders has not been as germane to the 2012 debate as he was in 2010.

Maybe it’s because Wilders has been so thoroughly identified as an anti-Muslim candidate (rather than an anti-Europe or anti-austerity).  Maybe it’s because there’s no mistaking the message of anti-austerity that voting for the Socialists sends.  Maybe it’s because Wilders originally provided support to prop up Rutte’s minority government.

But for whatever reason, Wilders has watched Roemer’s party rush to the front of the pack.  Although Wilders would normally seem mostly likely to benefit from a strong protest vote this year, he’s been relegated to watch as the unlikely Roemer drinks his milkshake — Wilders and the PVV remain trapped in a four-way tie for third place alongside the progressive Democraten 66 (Democrats 66) bloc, and the two struggling parties that dominated postwar Dutch politics until the last decade, the center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal) and the center-left Partij van de Arbeid (PvdA, Labour Party).  It’s a little odd, considering that Wilders has a populist style that dwarfs that of either the technocratic Rutte or the plodding Roemer.

That doesn’t mean Wilders is going down gently, and Dutch voters are just starting to tune into what’s been a subdued campaign that coincides with summer holiday season.

His latest bid has been to expand his brand of populism to Europe — the PVV’s platform for 2012 reads, “Their Brussels, Our Netherlands.”  In typical Wilders fashion, it’s not nuanced — it proclaims, “other parties may choose Islam or EU nationalism, our party is for the Netherlands!”  Continue reading The incredibly shrinking Geert Wilders →

Greece

How many days (weeks) away are we from another Greek solvency crisis?

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When the world last left Greece, it was breathing a sigh of relief upon the news that Antonis Samaras would be able to cobble together a coalition following a narrow win in the June elections — the second such election in as many months.

Samaras (pictured above), now a little over six weeks into his government, is finding it increasingly difficult to get his coalition to agree on €11.5 billion in cuts, required by Greece’s bailout from the European Central Bank, the European Commission and the International Monetary Fund.  Those entities, known as the ‘troika,’ have pushed off a long-delayed review of Greece’s bailout program from September to October, but that means only that Greece’s government will have until mid-September to make the cuts. The ‘troika’ will then make a decision about disbursing the next €31 billion tranche of bailout funds to Greece, and Greece will then try to push for a renegotiation of the bailout terms to lighten the austerity that has added pressure to Greece’s downward economic spiral.

It’s clear that the ‘troika’ is getting impatient: the IMF has started to balk at throwing more money at Greece, has called on the European Union to take the lead on any further bailouts and the ECB in late July stopped accepting Greek bonds as collateral altogether.

But the Greek economy is in shambles, and is expected to contract by a full 7% this year — much more than an original forecast of 4.7%.  Greece’s recession is only getting worse, not better, and that’s after the economy contracted almost 14% in the past four years.  As tax receipts correspondingly shrink, Greece’s debt sinkhole becomes ever larger.  Greater debt requires more austerity, which cripples the economy, which leads to greater debt, and so on.

The only solutions seem to be:

  1. a miraculous economic turnaround. Not likely anytime soon.
  2. a full bailout from the European Union. Whether that means a direct cash bailout or “eurobonds” or a more inflationary ECB monetary policy, it all boils down to a transfer of wealth from Germany to Greece  — it’s an option that German chancellor Angela Merkel has resisted and which has become increasingly unpopular in domestic German politics.
  3. the “Grexit”. Greece leaves the eurozone, adopts a new drachma, and devalues it until its debts are manageable and its exports are cheap.  But that could lead to snowballing worries about Spain, Portugal, Italy and the rest of the eurozone and precipitate Europe’s own “Lehman” moment of financial panic.

The next deadline is August 20, when Greece must pay a €3 billion maturing to the ECB — and the ECB (despite its edict that it will no longer accept Greek bonds as collateral) is weighing the option of lending money directly to the Greek central bank (which can accept Greek bonds as collateral), so that Greece in turn can pay back the debt it owes to the ECB.

It’s a tidy Alice-in-Wonderland arrangement in which only a central banker could delight.

ECB president Mario Draghi deserves credit for getting Greece past yet another hurdle, but it doesn’t inspire any long-term confidence in either Europe or Greece to get the country out of its nosedive.  It takes little imagination to see how Greece could bumble out of the eurozone in short order without further intervention if and when it runs out of cash (which could now still happen in September): Greece would then be forced to pay its employees and pensioners in IOUs (think of the kind of IOUs that California issued — registered warrants — when it fell short of cash reserves in 2009), Greece would take longer and longer to pay back the IOUs, individual Greeks would start trading the IOUs for euros, and a market would develop that sets a price for the IOUs in euros.

In time, the IOUs will have become de-facto drachmas.

Meanwhile, the coalition that everyone thought would easily come to an agreement on those additional budget cuts has stalled. Continue reading How many days (weeks) away are we from another Greek solvency crisis? →

The Netherlands

Who is Emile Roemer?

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Europeans, including the Dutch, may well be unplugged and disengaged this month.

But ready or not, September 12 is nearly a month away, which means yet another European election — this time in the Netherlands, one of the six founding members of the European Economic Community in 1957, that body would develop into today’s European Union.  Dutch voters will elect 150 members to the Tweede Kamer, the lower house of the parliament of the Netherlands.

And today, after years of elections on social issues, the Dutch parliamentary election is poised to be fought, won and lost on one issue: budget austerity and bringing Dutch fiscal policy in line with the European ideal.

Given what we’ve seen this year all across Europe — the success of Alexis Tsipras’s anti-austerity SYRIZA coalition in Greece, the emergence of the anti-austerity Victor Ponta in Romania and the surge of Jean-Luc Mélenchon’s Front de gauche in the first round of the French presidential election — it’s no surprise that the breakaway pace-setter in the Dutch election has been not any anti-Muslim group, but the Dutch Socialistische Partij (SP, the Socialist Party), led by Emile Roemer.

As I noted last week, the prior 2010 election saw unprecedented levels of fragmentation among the Dutch electorate, and it led to six months of talks before a governing coalition emerged — Mark Rutte and his free-market, liberal Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) ultimately formed a weak minority government in coalition with the once-strong, now-withering center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal), with outside support on a vote-by-vote basis from Geert Wilders’s right-wing populist and anti-Muslim Partij voor de Vrijheid (PVV, the Party for Freedom).  Rutte’s government fell in April when Wilders denied his support for a budget that would have reduced the Dutch budget deficit to just 3% of GDP next year.

In the current campaign, Wilders has attempted to deploy anti-Europe sentiment with as much gusto as he previously deployed anti-Muslim sentiment in 2010 (including wild rhetoric that would pull the Netherlands out of the eurozone).  But according to the latest IPSOS poll, both Wilders’s PVV and the CDA are sinking.  Even though Rutte’s VVD is holding steady as the top vote-winner, Roemer’s Socialists have vaunted into second-place — and are gaining.  Currently, the Socialists are projected to take 29 seats to 35 seats for Rutte’s VVD.  Other polls, moreover, give the Socialists a lead or put them in a tie with the VVD.

What does that mean? Even if the Socialists cannot form a coalition with, say, the longtime center-left Partij van de Arbeid (PvdA, Labour Party), which is currently polling in third place (projected to win 23 seats), the Socialists will nonetheless be a force to be reckoned with as never before.

And that means Emile Roemer will become a key power broker in Dutch — and European — politics.

So who is Roemer — and what can we expect from him?

Roemer remains a bit of a blank slate within the international media — for now, at least.

Continue reading Who is Emile Roemer? →

Spain

‘Politically bankrupt’ Rajoy running out of options in Spain

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Speigel International earlier this week described a bit of the hopelessness of prime minister Mariano Rajoy who, only eight months into a government that was supposed to allow Spain to turn the corner, is watching his country sink even further into crisis.

Read it all, but this part, in particular, struck me as particularly insightful:

For too long, the prime minister believed that his mere presence at the head of the government was enough to ensure that Spain would stop “being a problem and become part of the solution.”

Rajoy’s bet was that a win by his center-right Partido Popular (PP, People’s Party) over the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) would be enough to assure investors that Spain could make it through the crisis. Sure enough, Rajoy’s PP won 186 seats to just 110 for the PSOE, even after José Luis Rodríguez Zapatero, prime minister since 2004, made clear he was stepping down as prime minister.

But that hasn’t stopped the crisis — if anything, Spain’s nightmare has accelerated in the past eight months, which makes Spiegel‘s description all the more depressing:

And what has Prime Minister Mariano Rajoy done? He hasn’t given a television address or uttered so much as an explanatory or reassuring word to Europe or his people. Instead Rajoy, 57, has disappeared into his office at the Moncloa Palace on the outskirts of the capital Madrid. Some say that he spends his time there staring helplessly and powerlessly at charts. He meets with business leaders like Siemens CEO Peter Löscher in rooms decorated with modern art, and he has even met with Spanish trade union leaders for the first time, though it was after they had already spoken off the record with German Chancellor Angela Merkel. Others say that Rajoy is irritating his European partners with hectic phone calls.

This behavior doesn’t inspire confidence. It seems more like a declaration of political bankruptcy.

What went so wrong? Continue reading ‘Politically bankrupt’ Rajoy running out of options in Spain →

Italy, Sicily

Il ritorno del Berlusconi — why his re-emergence in Italian politics is completely logical

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There will be plenty of time to think about the next Italian general election if, as is likely, current prime minister Mario Monti is permitted to carry on with his technocratic government until April 2013, the last date upon which the next general election must be held.

It’s worth taking in two important stories from last week:

The Economist points us to reports in the Italian press that Silvio Berlusconi (pictured above, right), the éminence grise (well, surprisingly jet black) of Italian politics since about 1994, is likely to lead the center-right in the upcoming election and is taking an increasingly critical position against Monti’s government.

Italy’s federal government, a technocratic government formed under Monti, an economist and former European Commissioner, with a mandate to reform Italy’s sclerotic economy and shrink its bloated public sector — with the support of Berlusconi’s own center-right Il Popolo della Libertà (PdL, the People of Liberty) and the main opposition center-left Partito Democratico (Democratic Party), has managed to keep a skittish bond market at bay, which has been spared, for now, the same fate as Spain in the bond market last week.

Meanwhile, The New York Times last week showcased the fiscal problems of Sicily, which is tottering further on the edge of a debt crisis than Italy itself.  Monti’s government recently sent €400 million to Sicily to forestall a potential default by a region that has long been plagued by low growth, outsized government patronage and abuse of its considerably autonomous power — to say nothing of the Mafia corruption issue.

Today, in fact, Sicily’s regional president, Rafaelle Lombardo resigned following an indictment for corruption — elections follow for October 28 and 29 of this year.

Since November 2011, when Berlusconi stepped down, more or less in disgrace, he has kept a fairly low profile.

But everyone knows as long as he’s around, he would have been the chief behind-the-scenes power of Italy’s center-right.  So when he seemed to designate a successor in November in former justice minister, Angelico Alfano (pictured above, left), now the secretary of Berlusconi’s PdL, it seemed difficult to believe that Il Cavaliere, as Berlusconi is known in the Italian press, was really stepping aside.

Alfano, who is Sicilian, has not managed to recover any ground for the PdL (formerly — and potentially again in the future — known as Forza Italia) — one poll from SpinCon released on July 19 shows the PdL winning just 18% of the vote to 27% for the Democratic Party and 14% for the newly formed Euroskeptic and populist party of comic and blogger Beppe Grillo, the Movimento 5 Stelle (Five Star Movement).**

Italian politics have long been fragmented, but like Greece earlier this year, Italian voters seem to be fragmenting even further under the weight of austerity measures introduced by Monti’s government. Monti himself has said he will not run for election in his own right under any banner.

But above all, Berlusconi’s ace is that he still has more media power than anyone else in Italy.  He also remains the most charismatic leader among a political class of bores — for instance, has anyone outside of Italy even heard of Pier Luigi Bersani, the main center-left opposition leader?

Berlusconi practically invented Italian television in the 1980s by buying TV stations across Italy and harmonizing their content at a time when RAI (Italy’s public television network) was supposed to hold a monopoly on national stations.  He still holds an incalculable political advantage because of that power — it’s what helped him burst onto the political scene in 1994 and what helped him keep power in much of the 2000s, even through the last days of sordid accusations of his cavorting with underage girls and prostitutes at ‘bunga, bunga’ parties.

It’s not clear that Italian voters are willing to turn back to those days (a strong majority of voters say they refuse to back Berlusconi ever again), but if anyone can pull it off, it’s Berlusconi.

Also, for a premier who spent a significant amount of legislative time in the 2000s crafting immunity bills to protect himself from prosecution relating to all sorts of seamy dealings, Berlusconi is likely tempted by the shield from prosecution that yet another stint in office would bring — or at least tempted by the opportunity to parlay a political comeback into a term as Italy’s president in the future.

And at age 75, Berlusconi is a fairly young man by the standards of Italian institutions; Alfano was born in 1970. Italy is a country of old men — to have a forty-something prime minister is unheard of. (Recall that the 93-year-old Giulio Andreotti, a former prime minister in the 1970s and 1980s, now an Italian ‘senator for life’, was instrumental in bringing down the short-lived leftist government of Romano Prodi just six years ago.)

But Alfano’s Sicilian heritage raised an eyebrow in November and it does so especially now, with Sicily’s finances in the headlines and yet another Sicilian president resigned under ties to the omni-present curse of Mafia infiltration.

It’s worth remembering that “Italy” as a national concept really only emerged in the 1860s — and even today, just over 150 years after “unification,” it’s hard to think of Italy as a true country, even if you don’t believe that nationhood in Italy is really a myth-laden fluke.  You have to go back to the mid-1950s to find a Sicilian who has served as Italy’s prime minister — Mario Scelba.  No Sicilians have served as president of Italy in the current republic.  No Sicilians have served as president of Italy in the current republic.  That may not be so surprising, given that Sicily is so far away, not just geographically, but culturally from Rome, to say nothing of Milan or Florence or Turin.  Although Sicilian votes essentially enshrined Italy’s old Christian Democrats in power until the 1992 Tangentopoli (‘Bribesville’) scandal that, in effect, wiped clean Italy’s political slate, Sicilians have rarely held the highest office in Italian politics.

So with Sicily’s finances and its corruption in global headlines, the “Sicily question” is yet another for Berlusconi to sideline Alfano as the 2013 elections approach — for the time being, at least.

Romania

Ponta takes Romania to ‘cusp of dictatorship’ as Sunday’s presidential referendum approaches

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Hungary’s Viktor Orbán seems to be in good company these days.

As it turns out, he’s no longer the only Eastern European leader who gives pause to European Union leaders worried about a backslide to democracy.

Since becoming prime minister of Romania in May of this year, Victor Ponta (pictured above) has taken an unorthodox approach to respecting Romania’s constitutional framework.  Ponta’s biggest gamble so far comes to a climax this weekend — on Sunday, Romania will hold a referendum on whether to remove Romania’s president, Traian Băsescu.  Ponta and his political allies argue that Băsescu overstepped his authority, and have moved to have him suspended from office pending the referendum.  Romania’s Constitutional Court has ruled otherwise, but the referendum is still going forward.

Accordingly, if over 50% of eligible voters turn out, and a majority vote to remove Băsescu, it could trigger even more worries about a quasi-constitutional coup d’état.  The European Union earlier this month issued a stinging report about Romania’s new government since Ponta’s ascension as prime minister, and European Commission president José Manuel Barroso minced no words about his concern:

“Challenging judicial decisions, undermining the Constitutional Court, overturning established procedures and removing key checks and balances have called into question the government’s commitment to respect the rule of law,” Barroso said. “Party political strife cannot justify overriding core democratic principles. Politicians must not try to intimidate judges ahead of decisions or attack judges when they take decisions they do not like.”

Romania, a country of 19 million people centered on the eastern edge of the EU, joined the EU only in 2007 after emerging in 1989 from a Communist dictatorship under longtime strongman Nicolae Ceauşescu — EU leaders are currently assessing whether to permit Romania to join the Schengen Area — Europe’s free-travel zone which has no internal border controls.

Like most countries in Europe, Romania’s political climate has been altered by difficult budget choices in light of the sovereign debt crisis across the EU.  The country is dependent upon loans granted initially in 2009 from the International Monetary Fund in exchange for commitments to bring down Romania’s annual budget deficit from a high of nearly 7% in 2009.  Despite rapid growth throughout the 2000s, Romania’s economy contracted by almost 10% in 2009 and 2010, and grew at only an anemic 1.5% in 2011.

Emil Boc, whose Christian democratic/conservative Partidul Democrat-Liberal (PD-L, the Democratic Liberal Party, and which is also Băsescu’s party) won the greatest number of seats in the 2008 Romanian legislative election, governed until February 2012 and attempted to enact austerity measures in order to bring Romania’s budget under firmer control.

When Boc’s government fell, Mihai Răzvan Ungureanu of the free-market liberal Partidul Naţional Liberal (PNL, the National Liberal Party), attempted to build a new government, with the support of the social democratic Partidul Social Democrat (PSD, the Social Democratic Party), the third of Romania’s three major parties.*  Although Ungureanu attempted to continue economic reforms, his government fell on a no-confidence vote on May 7, when the PSD’s Ponta replaced him.

Since then, it’s been an incredible two months for Ponta, whose government has attracted concern with staggering speed. Continue reading Ponta takes Romania to ‘cusp of dictatorship’ as Sunday’s presidential referendum approaches →

The Netherlands

Up next in the spotlight during the EU’s summer of discontent: the Netherlands

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It may seem hard to believe, especially as yet another bond crisis envelops Europe, but the Netherlands has less than two months to go before a new general election on September 12.

As with so many elections in Europe lately, this one will be fought and won primarily on the issue of austerity.

The early election was called at the end of April following the resignation of Mark Rutte (pictured above, right) over disagreements on the Dutch budget.  Rutte, whose fragile minority government was being supported by Geert Wilders’s Partij voor de Vrijheid (PVV, the Party for Freedom), had been in talks with Wilder and other government partners for weeks in an attempt to cut €16 billion from the Dutch budget, lowering the 2013 budget deficit from 4.7% of GDP to just 3% of GDP.

Wilders (pictured above, left), whose PVV vaunted to the heart of Dutch politics following the particularly fractured 2010 general election, refused to accept the cuts.

In no small part due to the populist, anti-Muslim Wilders, previous Dutch elections have focused on identity politics: protecting the particularly liberal social rights in the Netherlands (as to same-sex marriage, drug legalization and euthanasia, among others), immigration and the role of Muslims in Dutch society.

This campaign, however, is focused squarely on austerity, and while polls today show that voters are inclined to reward Rutte and his free-market, liberal Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy), voters are also inclined to give Emile Roemer’s Socialistische Partij (SP, the Socialist Party) its best showing in Dutch political history — with projections of 30 to 32 seats.  This would only further fragment the Dutch Tweede Kamer, the 150-seat lower house parliament of the Netherlands.

After the 2010 elections, it took Rutte six months of long discussions to put together a minority government.  As it turned out, Rutte entered into a formal coalition with the center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal), with outside support coming from Wilders’s populist, right-wing and anti-immigrant PVV.  The latest Ipsos Netherlands poll shows that both the CDA and the PVV will lose seats in September, which could complicate Rutte’s ability to form any government and which could also prevent the adoption of the 2013 budget.

Here’s the latest composition of the lower house of the Dutch parliament:

Continue reading Up next in the spotlight during the EU’s summer of discontent: the Netherlands →

Greece

Samaras pieces together coalition after ND places first in Greek election

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The rest of the eurozone — indeed, the rest of the world — may have breathed a sigh of relief Sunday when it turned out that the pro-bailout parties appeared likely to secure a majority of the seats in the second of two highly divisive parliamentary elections in Greece.

As shown above, New Democracy (Νέα Δημοκρατία) has won the largest share of votes, taking with it the 50-seat “bonus” in the Hellenic parliament.  It is now very likely to form a coalition with the pro-bailout PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα), and possibly even with the Democratic Left (Δημοκρατική Αριστερά), according to reports of the latest coalition talks.  New Democracy’s leader Antonis will likely be Greece’s new prime minister, with the only question being whether PASOK and Democratic Left figures will take positions in the government or merely provide support to the coalition.

Samaras is allegedly favoring the appointment of Vassilis Rapanos, the president of National Bank, as finance minister.

Athens News has a full blog of Tuesday’s coalition talk developments.

In the meanwhile, here’s a look at where each of the main political actors stand in the fallout of Sunday’s vote, looking onward to what should still be a hot, wearisome summer for Greece and its position in the eurozone: Continue reading Samaras pieces together coalition after ND places first in Greek election →

Greece

Post-‘Spailout’ climate pulls Samaras even closer to SYRIZA’s position

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As the second Greek legislative campaign in as many months winds down for Sunday’s vote, it is becoming difficult to spot the difference between the leaders of the two parties most likely to win.

Oh what a difference a month can make.

Antonis Samaras, leader of the center-right New Democracy (Νέα Δημοκρατία), has been moving toward a “renegotiation” position for some time, but his latest comments about a potential renegotiation of Greece’s bailout terms today vary astonishingly little from what Alexis Tsipras, leader of the leftist SYRIZA, the Coalition of the Radical Left (Συνασπισμός Ριζοσπαστικής Αριστεράς), has been arguing all along:

Overhauling Greece’s debt deal, known as the memorandum, was also at the top of his party’s agenda, he said. “We will change the memorandum, the relentless recession cannot go on.”

He indicated that European leaders were open to renegotiating Greece’s debt deal. “Europe is changing, Greece has a chance for a fair negotiation within this climate of change,” he said.

Samaras said ND had set two conditions for joining other parties in a coalition government: securing Greece’s position in the eurozone and modifying the memorandum.

It’s a staggering evolution by Samaras, even since May.  Regardless of whether SYRIZA wins on June 17, it has cleared moved the terms of Greece’s national debate.

Meanwhile, read Tsipras’s op-ed in The Financial Times from yesterday — he sounds much more like Samaras than the marching-in-the-streets radical of the first election campaign (indeed, the idea of Tsipras writing an op-ed in The Financial Times back in April would itself have been risible).  It’s clear that, with even-or-so odds of becoming Greece’s next prime minister, Tsipras is looking to project an image of sober competence:

The systemic fiscal problems of Greece are, in large part, a problem of low public revenues.  Myriad tax concessions and exemptions granted to special interests by previous administrations, along with a low effective tax rate on personal income as well as capital, explain much of the problem. So too does the highly ineffective method of tax collection. Continue reading Post-‘Spailout’ climate pulls Samaras even closer to SYRIZA’s position →

Greece

Golden Dawn incident highlights possibility of neo-fascist decline in Greek election re-run

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There aren’t many silver linings in being forced to hold two legislative elections in as many months, while your country is running out of money, mired in near-depression economic conditions and suffering from budget cuts that have torn apart the country’s social contract.

But perhaps one of the best things that can come of the June 17 elections — regardless of whether the pro-bailout center-right New Democracy or the anti-bailout radical left SYRIZA wins — is the chance that the neo-fascist Golden Dawn party will fare significantly poorer this time around.

Among other things, reduced support for Golden Dawn would significantly facilitate the arithmetic of forming a government.

The high-profile implosion of the party’s spokesperson Ilias Kasidiaris — an arrest warrant was issued for Kasidiaris after he threw water at one female parliamentary candidate yesterday and repeated slapped another on a live television talk show — does not bode well for the party’s chances:

The exchanges came when the discussion turned to the sensitive topic of the Greek Civil War (1946-1949).
When Kasidiaris called [Communist MP Liana] Kanelli an “old Commie”, she retorted that he was a “fascist”.  Kasidiaris also was incensed that SYRIZA’s Rena Dourou mentioned a pending court case against him.
When Dourou said that there was a “crisis of democracy when people who will take the country back 500 years have got into the parliament”, Kasidiaris, who has served in the army’s special forces, picked up a glass of water and hurled its contents at her.
“You joke,” he shouted.
He then turned on Kanelli, who had got up out of her chair and appeared to throw a newspaper at him.
He slapped Kanelli three times on the side of the face.

The Kasidiaris distraction follows a ridiculous post-election press conference in May when Nikolaos Mihaloliakos, the party’s leader, launched into a neo-nazi screed after the party’s thugs tried to force journalists to stand at attention.

Golden Dawn thrives on these confrontational moments to attract attention.  But even if you think that these kinds of outbursts are deliberate, it’s a sign of Golden Dawn’s weakness that it is staging these moments to suck away media attention from the main parties just 10 days before the election.

In the May elections, Golden Dawn won 6.97% of the vote and 21 seats.  Parties will win seats in the parliament, on the basis of proportional representation, if they can draw more than 3% of the vote. Continue reading Golden Dawn incident highlights possibility of neo-fascist decline in Greek election re-run →

Greece

Tsipras outlines SYRIZA program, as Samaras shifts tone toward bailout renegotiation

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Alexis Tsipras laid out his party’s program for the upcoming June 17 Greek election on Friday.

Tsipras said a SYRIZA government would immediately reject the memorandum on coming to power and ask for Greece’s debt to be restructured or for a moratorium on repayments. It would then repeal a reduction to the minimum wage and extend unemployment benefit to two years. It would also repeal recent labor market reforms limiting collective contracts.

Tsipras set out how his government would stabilize the economy. He said public spending would be set at between 43 and 46 percent of GDP, rather than under 36 percent as agreed in the memorandum. The SYRIZA leader said he would raise revenues by cutting down on tax evasion, waste and corruption and forming an assets register for all Greeks at home and abroad. The wealthy would pay more under a new tax system, he said.

The key takeaway point is that it is not substantively different from the program under which he led SYRIZA, the Coalition of the Radical Left (Συνασπισμός Ριζοσπαστικής Αριστεράς) in the previous May elections.

It does, however, highlight a subtle but unmistakable shift in the tone of Tsipras’s main rival, Antonis Samaras, the leader of New Democracy (Νέα Δημοκρατία), the center-right pro-bailout party that finished first in the May election.  Samaras in recent days has increasingly been taking a softer line on renegotiating Greece’s austerity program with the European Commission, the European Central Bank and the International Monetary Fund, all of which granted two bailouts to Greece in exchange for its adoption of austerity measures and labor market reforms.

Although Samaras has raged throughout both campaigns that a SYRIZA win would be catastrophic and lead to Greece’s exit from the eurozone, it’s clear that in the second campaign, ND and the pro-bailout PASOK (Panhellenic Socialist Movement — Πανελλήνιο Σοσιαλιστικό Κίνημα) are moving toward SYRIZA’s position.   Continue reading Tsipras outlines SYRIZA program, as Samaras shifts tone toward bailout renegotiation →