Money down the drain

Recent visitors to Spain have noticed the excellent motorway system the country has recently built – indeed, it almost seems a case of overkill, as a lot of them seem to be empty. It’s the same with Spain’s airports. The country has a staggering 47 state-run airports. Does a country with less than 75% of the population of the UK need so many?

The answer according to the Spanish government is no, and two and half years ago, they started to close them down. Indeed, some of them never really opened. Not a single flight has ever landed at the International Airport of the Murcia Region, which cost 266 million euros.

How has Spain, which has been through such a tough time recently, found the money for these grandiose projects? The answer is that it hasn’t. You and I, the European taxpayers, have footed the bill for these white elephants.

The auditors of the European Union have finally woken up to this waste. They recently declared that more than £100 million of European Union funding to build airports has been “wasted” and an additional £165m was “poor value for money”. Nine of the 20 airports across the EU they studied were “not needed at all”.

Unsurprisingly, the European Commission claims that the auditors are not presenting the full picture. “It is a completely unrepresentative sample of Europe’s airports,” said a spokesman.

Perhaps, but the busy airports like London Heathrow or Amsterdam’s Schipol were not built with EU funds.

Furthermore, infrastructure spending in Spain and Portugal has always been viewed as an investment worth making in order to have a “dry run” for the bigger infrastructure improvements needed by the former Soviet bloc countries. These have already started and no surprise, airports in Poland and Estonia were also mentioned by the auditors. In Poland, according to Euractiv, over 100 million euros has been spent on thre “ghost” airports.

Anyone who visited Central and Eastern Europe during or immediately after the Days of the Warsaw Pact would agree that the infrastructure of those countries was inadequate, but are these white elephants really good value for our money? Tony Blair defended his decision to give up Mrs Thatcher’s hard-won rebate in 2005, saying that we must “transfer wealth from rich countries to poor countries”, and that we were, “investing in Eastern Europe.”

The British people are remarkably generous in supporting worthy causes, voluntarily giving millions of pounds in relief aid following last year’s typhoon in the Philippines, for instance, but we have no choice about this international compulsory wealth redistribution. We were never consulted as to whether we wanted to support the worthy cause of improving the infrastructure of Eastern Europe. It was certainly not included in Labour’s 2005 election manifesto. Even if the money had been spent wisely, our own government urgently needs it to reduce our national deficit. Given it has been spent very badly, Blair’s arguments nine years ago look more vacuous than ever.

Europe’s woes

It is now six months since elections to the European Parliament returned the highest percentage ever of EU-critical MEPs of varying hues. Since then, for the UK electorate, the focus has been on UK withdrawal and the torrid time David Cameron has had to endure. He opposed the nomination of Jean-Claude Juncker as president of the European Commission but found no real allies, he lost two MPs to UKIP and then lost the resultant by-elections. A former Cabinet minister has called for him to invoke Article 50 and begin the withdrawal process and his speech on immigration went down like a lead balloon. With so much happening so quickly on the debate about our future relationship with the EU, it has been easy to overlook a number of developments across the Channel.

When we do so, the picture is quite alarming. “Sooner or later, there won’t be a Europe to be part of” wrote Jeremy Warner in a rather apocalyptic piece in the Daily Telegraph last month. “It’s not a question of in or out, but of whether Britain can avoid the flames of destruction”, he continued. “Politically and economically, Europe is sinking fast.”

The economic data make grim reading. Deflation is entrenched in six Eurozone members – Greece, Cyprus, Slovenia, Slovakia, Spain and Portugal. Belgium and Italy are in danger of joining the club, especially given the recent and ongoing fall in commodity prices. Unemployment, particularly youth unemployment, remains stubbornly high. It may have fallen in Spain recently, but this is as much due to emigration of younger workers as to any real improvement in the economy.

The cutbacks imposed by the “troika” – the European Central bank, the European Commission and the International Monetary Fund – have been imposed on countries which are still struggling to pull themselves out of the Great Recession which began six years ago. Incredibly, in spite of the resentment this has generated across “Club Med”, the Eurozone has held together. “Grexit” was averted in 2012 and talk of other countries leaving has faded away. Significantly, during the height of Greece’s problems, it has recently been revealed that the Dutch Government conducted a study into the costs and practicalities of bringing back the Guilder.

Will it ever be dusted off the shelves? Who knows. If elections were held today in either the Netherlands and France, the parties currently registering the largest support in both these countries – Geert Wilders’ PVV and Marine le Pen’s Front National, – have talked of leaving the EU. Spain, which appeared to take the Troika’s medicine without complaint has recently spawned a left-of-centre anti-austerity protest party Podemos, which has seen spectacular growth in the space of less than 12 months it has been in existence. In Greece, another left-of-centre anti-austerity party, Syriza, has topped a number of recent opinion polls. Both these parties loudly assert their pro-EU credentials, but were either of them to be elected to government and to tear up the agreements with the troika, the consequences would be very unpredictable. Meanwhile, Germany’s anti-euro party Alternative für Deutchland, rises higher and higher in the polls. The German mainstream parties, both on the centre left and centre right, look with horror on this party which is challenging EU orthodoxy in its very heartland, but for how much longer will they be able to shun any sort of coalition with AfD and dismiss them as “a people locked into the past?”

Meanwhile, outside the Eurozone, the Swedish government has collapsed after only two months in office when the anti-immigration Sweden Democrats (Sverigedemokraterna) voted with the mainstream opposition to defeat the government’s budget.

All this only six months after the European Parliamentary elections and the record number of MEPs either committed to outright withdrawal or else hostile in varying degrees to the Single Currency or further integration. The response by the mainstream political groups to the rise of such parties was to coalesce around a candidate for President of the European Commission, Jean-Claude Juncker, who epitomises everything the assorted protest parties dislike about the EU. It is as if they were saying “Blow the electorate; let’s carry on with business as usual.”

As the Eurozone limps from crisis to crisis, the reverberations are being felt across the whole EU. Forget the upbeat media reports about the Eurozone’s alleged “recovery”. “Business as usual” may not be an option for much longer.

Dutch farmers welcome EU cash to head off Russian boycott impact

Fruit and vegetable market photoDutch fruit and vegetable growers are set to benefit from a €125m compensation package set up by the EU following the imposition of an import ban by Russia. The money will go to compensate growers for not harvesting or removing produce from sale, farming commissioner Dacian Ciolos announced on Monday.Dutch junior farm minister Sharon Dijksma has welcomed the move. ‘This is the right step and something the Netherlands has been urging for within Europe,’ she said. ‘The situation for vegetable and fruit growers is also particularly acute in our country. It is important to take direct action in the markets for apples, pears, tomatoes and bell peppers, among others.

Financial help

The Dutch cabinet has already agreed that growers affected by the boycott and transport firms can apply for financial help to reduce the impact of shorter working hours on their staff.Dutch farming association LTO Nederland welcomed the European move, saying it is a powerful signal to the market.‘No one wants the market to be flooded with produce,’ said chairman Albert Jan Maat. ‘We are finding suitable solutions by working together with organisation such as the food banks.’ –

(This article courtesy of Dutch News: http://www.dutchnews.nl/news/archives/2014/08/dutch_farmers_welcome_eu_cash.php#sthash.wxk5q6T4.dpuf)

Photo by tornatore

The single market – not as wonderful as we thought

The Bertelsmann Foundation has just published a report to mark twenty years of the single market and interesting reading it makes. It found that, between 1992 and 2012, Germany’s GDP increased by €37.1bn per year as a result of its membership of the EU’s single market – equivalent to €450 per inhabitant. By contrast, UK GDP only benefited by an additional €1bn per year, equivalent to €10 (or just over £8.50) per inhabitant.

Denmark has benefitted even more than Germany. Its GDP increased by €500 per inhabitant per year. However, Southern European nations have not done so well. The per capita figures for Italy, Spain, Greece and Portugal are €80, €70, €70 and €20 respectively. It is unsurprising that these countries have fared badly relative to Germany. Tied to the single currency, their exports to Germany have become progressively more expensive while Germany has been able to grow its exports across the Eurozone after making significant gains in productivity a decade or so ago.

However, even Greece and Portugal, hamstrung by a currency that has not worked in their favour, have gained more from the Single Market than our country. As the debate about EU membership hots up, one of the concerns frequently expressed by figures from the business world is that it would be a calamity to be excluded from the Single Market. It has been taken as read that any trading arrangement with the EU for a newly-independent UK should include access to the Single Market and there is no question that this remains the cases. However, the size of the benefit to the UK economy has not proved nearly as significant as we were led to believe.

The Eurozone crisis is far from over

Three years ago, it looked like Greece would have to leave the Euro. The country was bust and had to be bailed out by the European Central Bank (ECB), the International Monetary Fund and the European Commission (the so-called “Troika”) as no one wanted to loan such a profligate state any more money. Of course, the country should never have been allowed to join the Single Currency in the first place. The books were cooked to hide the huge debt burden the government owed even back in 2000. One of the culprits was Lucas Papademos, the governor of the Central Bank at the time. He was later installed as Greek Prime Minister without any ballot after the incumbent, George Papandreou, incurred the wrath of Brussels by threatening to put the Troika’s tough bailout proposals to a referendum and was forced to resign.

The governments in Spain and Ireland had not been guilty of such profligacy, but the Eurozone interest rates in the years before the Great Recession of 2007 were too low for their housing markets, creating an unsustainable boom that turned into bust. Also vulnerable were Portugal and Italy. Portugal in particular had been struggling because some of its most important exports, such as textiles, were being undercut by cheap goods from Asia. With both countries being tied to the Euro straitjacket, they were unable to respond in their time-honoured manner – devaluing their currencies. (Remember how many lire you used to get to the pound on those Tuscan holidays?)

However, although the Eurozone wobbled for a while and its break-up was prophesied by a number of respectable economists, it became apparent that the various EU institutions were prepared to go to quite extreme lengths to ensure no country withdrew from the Single Currency. One particularly significant moment in the crisis was a speech in London in July 2012 by Mario Draghi, the ECB governor, who promised to do “whatever it takes” to keep the Eurozone together. In the weeks following this speech, Draghi didn’t actually do very much, but his words calmed the markets and borrowing costs for the Spanish and Italian governments started to fall from levels widely regarded as unsustainable. Last year, even the Greek government was able to return to the money markets after recording a “primary surplus” (greater tax revenue than expenditure excluding borrowing costs) for the first time in years.

So it’s all rosy in the Eurozone garden now? Not quite. The price paid by countries who have required a bailout has been very high. In order to balance their books, the governments of Spain, Italy and Greece have been forced to slash their expenditure. While the number of public sector employees in Greece in particular has been too high and their pensions too generous, the scale and the rapidity of the cuts has resulted in a series of strikes and a sharp rise in unemployment. In Greece, over one quarter of the entire workforce has been out of work for almost two years, with youth unemployment remaining stubbornly above 50% in spite of many young people leaving the country to find work elsewhere. Two years ago, one third of business in central Athens had closed because of the downturn. The unemployment figures in Spain are equally dire. Over half the young people are out of work here too and there is very little sign of things improving.

Although no one is talking about bailouts, government finances are facing increasing pressure because of low or, in some cases, negative inflation. While very low inflation is good news for consumers, governments rely on inflation to pay their bills. If you are a government which has borrowed a hundred thousand euros over a 10-year period, it helps if prices and wages go up because, thanks to a bigger tax take, you receive more money to help pay off your debt by the end of the loan period. If prices are actually falling, as they are in Greece, Cyprus and Portugal, people defer buying big-ticket items in the hope that they will become cheaper. Besides this being bad for governments, it does not help manufacturers either, as they suffer a fall in orders.

Then there is the problem with some Eurozone banks – particularly but not exclusively those located in the Mediterranean countries. The precedent set by the bail-out of banks in Cyprus, where savers had to take a hit, means that any hint of insolvency will cause a run on the bank in question. Portugal’s Banco Espirito Santo rattled the markets last week, and this is unlikely to be a one-off incident. In November this year “stress testing” of over 100 Eurozone banking groups by the ECB due to start. In order to ensure that their assets meet the necessary criteria and do not offer the slightest hint of insolvency, banks are tidying up their balance sheets and keeping well clear of any loans with an element of risk. This, of course, is hardly a healthy environment for businesses seeking to borrow money to finance expansion. , and the recent problems with Portugal’s Banco Espirito santo .

Added together, these developments have resulted in a climate of stagnation in much of the Eurozone. The stock of both consumer credit and mortgage loans across the 18-nation single currency area are decreasing and manufacturing in several countries is also in decline. France’s industrial production shrank by 1.7% in May compared to April while Italy’s fell by 1.2%. It is widely believed that the Italian Prime Minister Matteo Renzi dropped his opposition to the nomination of Jean-Claude Juncker as President of the European Commission in exchange for an agreement to relax the austerity policies demanded by Germany as his government struggles to balance its books.

So far, these ongoing troubles in the Eurozone have been kept out of the headlines. However, Anthony Couglan’s recent report on Ireland (See link here ) which captures the sombre mood of a country which has been widely touted as “the poster-child for austerity”, illustrates what is rumbling beneath the surface. The Irish, like the Spanish, Portugese and Greeks, have made heroic sacrifices to keep the Single Currency afloat. But if another spark causes a renewed eruption of this still-ongoing crisis, how much more will they be prepared to take?

CENSORING TRUTH IN THE EU: Rajoy revealed as prime mover for EU Court’s Article 29

This article was written by John Ward, it first appeared on his blog ‘The Slog’

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How Spain is leading the charge towards fascist corporatism

Some weeks ago, the European Court made a quite extraordinary ruling that gives EU governments the ability to sanitise their online history by petitioning Google and other search engines to remove potentially damaging links to newspaper articles and other websites with embarrassing information.

Although a working party is yet to meet and discuss ‘best practice’ (ironique ou quoi?) in enforcing the ruling, as it stands Italy would have the right to ask Google to take down all references to its blatant lies about ‘economic recovery’ in the Spring of 2013.

It will come as no surprise to discover (as I just have) that one of the prime influencers for Article 29 (the basis for this Orwellian policy) was everyone’s favourite control freak Wolfgang Schäuble; but perhaps more interesting (in the light of information coming through from Spain over the last month) is that it was also pushed with some urgency by none other than Mario Rajoy of Spain.

And there’s more on the story of Juan Carlos’s abrupt “abdication”. It seems his major blunder was to proclaim loudly that “a free press is vital to democracy” while giving out gongs at the recent awards ceremony for International Journalism Prizes.

In another startling announcement from Spain, it seems now that Juan Carlos is to be succeeded by some bloke called Phil Bourbon. So with very little chance of a biscuit answering Mario Rajoy back, this should make things easier for the Prime Minister to fulfil his goal of being given a free hand to do WTF he wants as soon as possible.

Rajoy has strong form in the area of censorship. In the Autumn of last year he described those going on protest marches as “abnormal” (he’s right, they’re abnormally poor), and then in December some 300 Spaniards were fined €500 euros each for attending a protest against the budget cuts.

Equally, former Interior Minister (aka spook) and GP politician Mayor Jaime Oreja thinks it is “crazy to let people view all these problems of public order on television, because it only incites people to demonstrate all the more”. Well ping my blog Jaime, you’re right on the ball there and no mistake.

Similar demonstrations have been banned and fines handed out in Greece of late – notably in Athens and, on one occasion when I was present, in Kalamata.

The point here is a very simple one. Any and all examples of bent statistics, government repression and laws forbidden by the Treaty of Rome can be “forgotten” under the EU Court ruling. Working parties on “best practice” in the EU by the EC do not impress me one iota, because it has been blindingly obvious for years that Brussels am Berlin is a fascist grouping prepared to pull any stunt in order to get their Truth to prevail.

What we’re seeing here is Winston Smith’s Ministry of Truth job made flesh. We are seeing the contemporary Mr K being fined for a crime so ill-defined as to be, effectively, a Bourbon lettre de cachet. We are watching the fruition of prophecies made by visionaries from Kafka to Orwell.

To paraphrase the late and much lamented Ed Murrow, “The lights are going out all over Europe”.