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Greece and the European Union: First as Tragedy, Second as Farce, Thirdly as Vassal State

james petras

Another brilliantly insightful article by James Petras available at http://petras.lahaine.org/?p=2044 and reprinted below in full:

james petras

First, the denial came as tragedy: When the Greek majority elected Syriza to government and their debts increased, the economy plunged further into depression and unemployment and poverty soared. The Greek people voted for Syriza believing its promises of ‘a new course’. Immediately following their victory, Syriza reneged on their promise to restore sovereignty – and end the subjugation of the Greek people to the economic dictates of overseas bankers, bureaucrats and political oligarchs. Instead Syriza kept Greece in the oligarchical imperialist bloc, portraying the European Union as an association of independent sovereign countries. What began as a great victory of the Greek people turned into a tragic strategic retreat. >From their first day in office, Syriza led the Greek people down the blind alley of total submission to the German empire.

Then the tragedy turned into farce when the Greek people refused to acknowledge the impending betrayal by their elected leaders. They were stunned, but mute, as Syriza emptied the Greek treasury and offered even greater concessions, including acceptance of the illegal and odious debts incurred by private bankers, speculators and political kleptocrats in previous regimes.

True to their own vocation as imperial overlords, the EU bosses saw the gross servility of Syriza as an invitation to demand more concessions – total surrender to perpetual debt peonage and mass impoverishment. Syriza’s demagogic leaders, Yanis Varoufakis and Alexis Tsipras, shifting from fits of hysteria to infantile egotism, denounced ‘the Germans and their blackmail’ and then performed a coy belly-crawl at the feet of the ‘Troika’, peddling their capitulation to the bankers as ‘negotiations’ and referring to their overlords as . . . ‘partners’.

Syriza, in office for only 5 months brought Greece to the edge of total bankruptcy and surrender, then launched the ‘mother of all deceptions’ on the Greek people: Tsipras convoked a ‘referendum’ on whether Greece should reject or accept further dictates and cuts to bare bones destitution. Over 60% of the Greek people voted a resounding NO to further plunder and poverty.

In Orwellian fashion, the megalomaniac Tsipras immediately re-interpreted the ‘NO’vote as a mandate to capitulation to the imperial powers, accepting the EU bankers’ direct supervision of the regime’s implementation of Troika’s policies – including drastic reductions of Greek pensions, doubling the regressive ‘VAT’ consumption tax on vital necessities and a speed-up of evictions of storeowners and householders behind in their mortgage payments. Thus Greece became a vassal state: Nineteenth century colonialism was re-imposed in the 21st century.

Colonialism by Invitation

Greek politicians, whether Conservative or Socialist, have openly sought to join the German-led imperial bloc known as the European Union, even when it was obvious that the Greek economy and financial system was vulnerable to domination by the powerful German ruling class.

From the beginning, the Greek Panhellenic Socialist Party (PASOK) and their Conservative counterparts refused to recognize the class basis of the European Union. Both political factions and the Greek economic elites, that is, the kleptocrats who governed and the oligarchs who ruled, viewed entry into the EU as an opportunity for taking and faking loans, borrowing, defaulting and passing their enormous debts on to the public treasury!

Widely circulating notions among the Left that ‘Germany is responsible’ for the Greek crisis are only half true, while the accusations among rightwing financial scribes that the ‘Greek people are spendthrifts’ who brought on their own crisis is equally one-sided. The reality is more complex:

The crash and collapse of the Greek economy was a product of an entrenched parasitic rentier ruling class –both Socialist and Conservative – which thrived on borrowing at high interest rates and speculating in non-productive economic activities while imposing an astronomical military budget. They engaged in fraudulent overseas financial transactions while grossly manipulating and fabricating financial data to cover-up Greece’s unsustainable trade and budget deficits.

German and other EU exporters had penetrated and dominated the Greek markets. The bankers charged exorbitant interest rates while investors exploited cheap Greek labor. The creditors ignored the obvious risks because Greek rulers were their willing accomplices in the ongoing pillage.

Clearly entry into and continued membership in the EU has largely benefited two groups of elites: the German rulers and the Greek rentiers: The latter received short-term financial grants and transfers while the former gained powerful levers over the banks, markets and, most important, established cultural-ideological hegemony over the Greek political class. The Greek elite and middle class believed ‘they were Europeans’ – that the EU was a beneficent arrangement and a source of prosperity and upward mobility. In reality, Greek leaders were merely accomplices to the German conquest of Greece. And the major part of the middle class aped the views of the Greek elite.

The financial crash of 2008-2009 ended the illusions for some but not most Greeks. After 6 years of pain and suffering a new version of the old political class came to power: Syriza! Syriza brought in new faces and rhetoric but operated with the same blind commitment to the EU. The Syriza leadership believed they were “partners”.

The road to vassalage is rooted deep in the psyche of the political class. Instead of recognizing their subordinate membership in the EU as the root cause of their crisis, they blamed ‘the Germans, the bankers, Angela Merkel, Wolfgang Schnauble , the IMF, the Troika… The Greek rulers and middle class were in fact both victims and accomplices.

The German imperial regime loaned money from the tax revenues of German workers to enable their complicit Greek vassals to pay back the German bankers… German workers complained. The German media deflected criticism by blaming the ‘lazy Greek cheats’. Meanwhile, the Greek oligarch-controlled media deflected criticism of the role of the parasitical political class back to the ‘Germans’. This all served to obscure the class dynamics of empire building — colonialism by invitation. The ideology of blaming peoples, instead of classes, is pitting German workers against Greek employees and pensioners. The German masses support their bankers, while the Greek masses have elected and followed Syriza – their traitors.

From Andreas Papandreou to Alexis Tsipras: Misconceptions about the European Union

After Syriza was elected a small army of instant experts, mostly leftist academics from Canada, the US and Europe, sprang up to write and speak, usually with more heat than light, on current Greek political and economic developments. Most have little knowledge or experience of Greek politics, particularly its history and relations with the EU over the past thirty five years.

The most important policy decisions shaping the current Syriza government’s betrayal of Greek sovereignty go back to the early 1980’s when I was working as an adviser to PASOK Prime Minister Andreas Papandreou. At that time, I was party to an internal debate of whether to continue within the EU or leave. Papandreou was elected on an anti EU, anti NATO platform, which, like Tsipras, he promptly reneged on– arguing that ‘there were no alternatives’. Even then, there were international and Greek academic sycophants, as there are today, who argued that membership in the EU was the only realistic alternative- it was the ‘only possibility’. The ‘possibilistas” at that time, operating either from ignorance or deceit, were full of bluster and presumption. They denied the underlying power realities in the structure of the EU and dismissed the class capacity of the working and popular masses to forge an alternative. Then, as now, it was possible to develop independent alternative relations with Europe, Russia, China, the Middle East and North Africa. The advantages of maintaining a protected market, a robust tourist sector and an independent monetary system were evident and did not require EU membership (or vassalage).

Above all, what stood out in both leaders, Andreas Papandreou and Alexis Tsipras, was their profound misconception of the class nature of the dominant forces in the EU. In the 1980’s Germany was just beginning to recover its imperial reach. By the time Syriza-Tsipras rose to power (January 2015), Germany’s imperial power was undeniable. Tsipras’ misunderstanding of this reality can be attributed to his and his ‘comrades’ rejection of class and imperial analyses. Even academic Marxists, who spouted Marxist theory, never applied their abstract critiques of capitalism and imperialism to the concrete realities of German empire building and Greece’s quasi-colonial position within the EU. They viewed their role as that of ‘colonial reformers’ –imagining that they were clever enough to ‘negotiate’ better terms in the German-centered EU. They inevitably failed because Berlin had a built-in majority among its fervently neo-liberal ex-communist satellites plus the IMF, French and English imperial partners. Syriza was no match for this power configuration. Then there was the bizarre delusion among the Syriza intellectuals that European capitalism was more benign than the US version.

EU membership has created scaffolding for German empire-building. The take off point was West Germany’s annexation of East Germany. This was soon followed by the incorporation of the rightwing regimes in the Baltic and Balkans as subordinate members of the EU – their public assets were snapped up by Germany corporations at bargain prices. The third step was the systematic break-up of Yugoslavia and the incorporation of Slovenia into the German orbit. The fourth step was the takeover of key sectors of the Polish and Czech economies and the exploitation of cheap skilled labor from Bulgaria, Romania, Hungary and other satellite states.

Without firing a shot, German empire-building has revolved around making loans and financial transfers to the new subordinate member states in the EU. These financial transactions were predicated upon the following conditions: 1) Privatization and sale of the new member states’ prized public assets to mainly German as well as other EU investors and 2) Forcing member states to dismantle their social programs, approve massive lay-offs and meet impossible fiscal targets. In other words, expansion of the contemporary German empire required austerity measures, which transformed the ex-communist countries into satellites, vassals and sources of mercenaries – a pattern which is now playing out in Greece.

The reason these new German ‘colonies’ (especially Poland and the Baltic States) insist on the EU imposing harsh austerity measures on Greece, is that they went through the same brutal process convincing their own beleaguered citizens that there was no alternative – resistance was futile. Any successful demonstration by Greek workers, farmers and employees that resistance to empire was possible would expose the corrupt relationship between these client leaders and the German imperial order. In order to preserve the foundations of the new imperial order, Germany has had to take a hardline on Greece. Otherwise the recently incorporated colonial subjects in the Baltic, Balkan and Central Europe states might “re-think” the brutal terms of their own incorporation to the European Union. This explains the openly punitive approach to Greece – turning it into the ‘Haiti of Europe’ analogous to the US’ long standing brutalization of the rebellious Haitians – as an object lesson to its own Caribbean and Latin American clients.

The root cause of German intransigence has nothing to do with the political personalities or quirks of Angela Merkle and Wolfgang Schnauble: Such imperial leaders do not operate out of neurotic vindictiveness. Their demand for total Greek submission is an imperative of German empire-building, a continuation of the step-by-step conquest of Europe.

German empire-building emphasizes economic conquests, which go hand-in-hand with US empire-building based on military conquests. The same economic satellites of Germany also serve as sites for US military bases and exercises encircling Russia; these vassal states provide mercenary soldiers for US imperial wars in South Asia, Iraq, Syria and elsewhere.

Syriza’s economic surrender is matched by its spineless sell-out to NATO, its support of sanctions against Russia and its embrace of US policies toward Syria, Lebanon and Israel.

Germany and its imperial partners have launched a savage attack on the working people of Greece, usurping Greek sovereignty and planning to seize 50 billion Euros of vital Greek public enterprises, land and resources. This alone should dispels the myth, promoted especially by the French social democratic demagogue Jacques Delores, that European capitalism is a benign form of ‘social welfarism’ and an ‘alternative’ to the savage Anglo-American version capitalism.

What has been crucial to previous and current versions of empire-building is the role of a political collaborator class facilitating the transition to colonialism. Here is where social democrats, like Alexis Tsipras, who excel in the art of talking left while embracing the right, flatter and deceive the masses into deepening austerity and pillage.

Instead of identifying the class enemies within the EU and organizing an alternative working class program, Tsipras and his fellow collaborators pose as EU ‘partners’ , fostering class collaboration – better to serve imperial Europe: When the German capitalists demanded their interest payments, Tsipras bled the Greek economy. When German capitalists sought to dominate Greek markets, Tsipras and Syriza opened the door by keeping Greece in the EU. When German capital wanted to supervise the take-over of Greek properties, Tsipras and Syriza embraced the sell-off.

There is clear class collaboration within the Greek elite in the destruction of nation’s sovereignty: Greek banker oligarchs and sectors of the commercial and tourist elite have acted as intermediaries of the German empire builders and they personally benefit from the German and EU takeover despite the destitution of the Greek public. Such economic intermediaries, representing 25% of the electorate, have become the main political supporters of the Syriza-Tsipras betrayal. They join with the EU elite applauding Tsipras’ purge of left critics and his authoritarian seizure of legislative and executive power! This collaborator class will never suffer from pension cuts, layoffs and unemployment. They will never have to line up at crippled banks for a humiliating dole of 65 Euros of pension money. These collaborators have hundreds of thousands and millions stashed in overseas bank accounts and invested in overseas real estate. Unlike the Greek masses, they are ‘European’ first and foremost – willing accomplices of German empire builders!

Tragic Beginnings: The Greek People Elect a Trojan Horse

Syriza is deeply rooted in Greek political culture .A leadership of educated mascots serving overseas European empire-builders. Syriza is supported by academic leftists who are remote from the struggles, sacrifices and suffering of the Greek masses. Syriza’s leadership emerged on the scene as ideological mentors and saviors with heady ideas and shaky hands. They joined forces with downwardly mobile middle class radicals who aspired to rise again via the traditional method: radical rhetoric, election to office, negotiations and transactions with the local and foreign elite and betrayal of their voters. Theirs is a familiar political road to power, privilege and prestige. In this regard, Tsipras personifies an entire generation of upwardly mobile opportunists, willing and able to sellout Greece and its people. He perpetuates the worst political traditions: In campaigns he promoted consumerism over class consciousness (discarding any mobilization of the masses upon election!). He is a useful fool, embedded in a culture of clientelism, kleptocracy, tax evasion, predatory lenders and spenders – the very reason his German overlords tolerated him and Syriza, although on a short leash!

Tsipras’ Syriza has absolute contempt for democracy. He embraces the ‘Caudillo Principle’: one man, one leader, one policy! Any dissenters invite dismissal!

Syriza has utterly submitted to imperial institutions, the Troika and their dictates, NATO and above all the EU, the Eurozone. Tsipras/ Syriza reject outright independence and freedom from imperial dictates. In his ‘capitulation to the Germans’ Tsipra engaged in histrionic theatrics, but by his own personal dictate, the massive ‘NO to EU’ vote was transformed into a YES.

The cruelest political crime of all has been Tsipras running down the Greek economy, bleeding the banks, emptying the pension funds and freezing everyday salaries while ‘blaming the bankers’, in order to force the mass of Greeks to accept the savage dictates of his imperial overlords or face utter destitution!

The Ultimate Surrender

Tsipras and his sycophants in Syriza, while constantly decrying Greece’s subordination to the EU empire-builders and claiming victimhood, managed to undermine the Greek people’s national consciousness in less than 6 months. What had been a victorious referendum and expression of rejection by three-fifths of the Greek voters turned into a prelude to a farcical surrender by empire collaborators. The people’s victory in the referendum was twisted to represent popular support for a Caudillo. While pretending to consult the Greek electorate, Tsipras manipulated the popular will into a mandate for his regime to push Greece beyond debt peonage and into colonial vassalage.

Tsipras is a supreme representation of Adorno’s authoritarian personality: On his knees to those above him, while at the throat of those below.

Once he has completed his task of dividing, demoralizing and impoverishing the Greek majority, the local and overseas ruling elites will discard him like a used condom, and he will pass into history as a virtuoso in deceiving and betraying the Greek people.


Syriza’s embrace of hard-right foreign policies should not be seen as the ‘result of outside pressure’, as its phony left supporters have argued, but rather a deliberate choice. So far, the best example of the Syriza regime’s reactionary policies is its signing of a military agreement with Israel.

According to the Jerusalem Post (July 19, 2015), the Greek Defense Minister signed a mutual defense and training agreement with Israel, which included joint military exercises. Syriza has even backed Israel’s belligerent position against the Islamic Republic of Iran, endorsing Tel Aviv’s ridiculous claim that Teheran represents a terrorist threat in the Middle East and Mediterranean. Syriza and Israel have inked a mutual military support pact that exceeds any other EU member agreement with Israel and is only matched in belligerence by Washington’s special arrangements with the Zionist regime.

Israel’s ultra-militarist ‘Defense’ Minister Moshe Yaalon, (the Butcher of Gaza), hailed the agreement and thanked the Syriza regime for ‘its support’. It is more than likely that Syriza’s support for the Jewish state explains its popularity with Anglo-American and Canadian ‘left’ Zionists…

Syriza’s strategic ties with Israel are not the result of EU ‘pressure’ or the dictates of the ‘Troika’. The agreement is a radical reversal of over a half-century of Greek support for the legitimate national rights of the Palestinian people against the Israeli terrorist state. This military pact, like the Syriza regime’s economic capitulation to the German ruling class, is deeply rooted in the ‘colonial ideology’, which permeates Tsipras’ policies. He has taken Greece a significant step ‘forward’ from economic vassal to a mercenary client of the most retrograde regime in the Mediterranean.

One law for Germany and another for the rest


The same mantra has dominated German politics and the German media for many years now. It is reflected in many ways but at its core remains the same: any German blame for the social and economic devastation wrought on peripheral countries in the euro zone is denied; all others are at fault, and only one country did everything right. According to the Deutsche Bundesbank (the German central bank), in conjunction with the latest data on the nominal gross domestic product from the Federal Statistical Office, the German current-account surplus reached a new record in 2014: it now stands at 7.4 per cent of GDP. It was already incredibly high in previous years: 5.7 per cent in 2010, 6.1 per cent in 2011, 7.1 per cent in 2012, and 6.7 per cent in 2013.

The current-account surplus has never been so high, not even in the days preceding German reunification. West Germany’s surplus, which exceeded 4 per cent in the second half of the 1980s, was considered to be extremely high. However, the resulting pressure from the foreign exchange markets led to an appreciation of the German mark against the US dollar and to readjustment within the European Monetary System. This in turn devalued West German foreign assets, which had been accumulated through trade surpluses—a mechanism that no longer exists within the monetary union.

The current-account surplus of 7.4 per cent creates a major macro-economic imbalance inside and outside EMU. It is higher than the (arbitrarily set) limit of 6 per cent of the “macro-economic imbalance procedure” (MIP), which is part of the so-called European semester, which is an absurdity in itself.

The limit set by the MIP is asymmetrical: deficit countries within the EMU need to adhere to a rule that limits the deficit to 4 per cent of their GDP. If the deficit becomes bigger than 4 per cent, the EU Commission will push for a reduction of the deficit. The surplus countries, on the other hand—presumably at the behest of Germany—have to face sanctions only at 6 per cent. On top of that, three-year averages of balances are considered, meaning that for single years the result can exceed or fall below the limit (if compensated for in other years) without the Commission intervening. However, given the fact that the German government expects the surplus to increase again in 2015, a violation of the treaties is undeniable.

The logic of the balance of payments necessarily requires that the sum of all current account deficits equals the sum of all current account surpluses. There is no logical reason why a country with a foreign trade surplus should be given preferable treatment. According to this rule, a surplus country can have a surplus of 6 per cent with countries that a have a deficit of, say, 5 per cent. The surplus would not be a problem for the surplus country, but the deficit would be a problem for the deficit countries. The asymmetry is not only unfair, it is an absurdity.

There is no doubt that long-lasting external deficits can be harmful to an economy. But the same is true for surpluses. Without surpluses, deficits would not exist. If deficits create problems, surpluses create exactly the same problems.

Apart from this, the varying size of economies plays an important role. The current -account balance as a percentage of the GDP of a relatively big country, such as Germany, is significantly bigger in absolute terms than the same percentage for a small country. A German surplus of more than 7 per cent does not lead to 7 per cent deficits in other countries but to much bigger ones. If, for example, there were only two countries, say Spain and Germany, a German surplus of more than 7 per cent would cause a Spanish deficit of almost 20 per cent. It is not altogether clear why the asymmetric MIP rule was agreed upon. There is certainly no logical reason for it. Apparently it was clear from the moment of its creation that the German current-account balance would move well above 4 per cent, so that, from the German viewpoint, a higher percentage was required in order to avoid a reckoning by the EU Commission. Most probably, the hope had been that the German balance would fluctuate below 6 per cent; but this has proved wrong. By 2011 the three-year average hit the 6 per cent limit only slightly, but since 2012 the net balance has grown well above it.

So Germany is in blatant violation of EMU regulations. The simple truth is that Germany’s mercantilist economic model is based on undercutting its trading partners, so that it accumulates surpluses while creating deficits and debt everywhere else. Only a deterioration of German competitiveness (through rising wages) and declining surpluses vis-à-vis its trading partners can help to overcome deflation and stimulate economic growth in all countries inside EMU. It does not seem likely that this will happen in the foreseeable future: the collective fear of facing the truth is insurmountable.

Yet politicians like Wolfgang Kauder, leader of the CDU-CSU group in the German Bundestag, can tell Der Spiegel that “if Greece wants more money from its European partners it must pass reforms. Perhaps it helps to realise that it is not the European bail-out policy that has driven Greece into misery but the failure of their own elite.”

If it is the Greek elite that is responsible for the cataclysm in Greece, why is it that the Troika’s infamous memorandums since 2010 (the memorandums of understanding, according to the wording of the IMF) literally spell out the policies that a country has to abide by, including a reduction in wages, pensions, and social welfare.

A great example of German denial was provided by the former chief economist of the EU Central Bank, Jürgen Stark. In the Financial Times of 11 February he wrote: “The truth is that, in contrast to many eurozone countries, Germany has reliably pursued a prudent economic policy. While others were living beyond their means, Germany avoided excess. These are deep cultural differences and the currency union brings them to light once again.”

Along the same lines, the Süddeutsche Zeitung wrote a few days previously: “It is often noted that Greek wages fell sharply because of the crisis. But the truth is that labour costs during the first ten years of the euro rose by nearly 20 per cent in Greece, while they decreased in Germany. Although Tsipras’s populism suggests otherwise, the Greeks brought most of their problems upon themselves.”

A wage increase of 20 per cent in ten years is not a problem in itself. There is nothing excessive or irresponsible about this, given that wages increase in line with productivity plus the inflation target of 2 per cent set by the ECB.

The truth about all this is that the inflationary use of the word “truth” in Germany comes on top of the complete denial of Germany’s devastating role in the European Monetary Union. The newly discovered love for what is euphemistically called “the truth” in the German media only serves to distract attention from the manifest failure of German economic and financial policies and their devastating consequences.

However, the media’s new love affair with “the truth” did not fall out of the sky. The myths about German innocence and Greek irresponsibility need to be intensified as the contradiction at the heart of the euro zone becomes more and more obvious to all.

Taken from http://www.people.ie/news/PN-128.pdf

A new IMF working paper is brutally stark

A new paper published by the International Monetary Fund states that the banking crises in Iceland and Ireland are among the ten costliest in regard to the increase in public debt, increased in both countries by more than 70 per cent of GDP within four years.

With regard to loss of output, the continuing crises in Ireland and Latvia are among the ten costliest banking crises since the 1970s, with losses exceeding 100 per cent in both cases. “Ireland’s crisis, which started in 2008, is still the costliest since the Great Depression in terms of the economic havoc it wreaked on the country.”

This state is now in a double-dip recession, our GDP having collapsed by 10 per cent, with a debt-GDP ratio next year of 121 per cent, with a deficit of nearly 9 per cent, with unemployment at a record 15 per cent, in the middle of an IMF bail-out programme, and whose banking collapse is costing 40 per cent of GDP.      Our GDP in 2011 was €156 billion, our more representative GNP was €124 billion.      The Irish Bank Resolution Corporation—the bank formed after the merger of Seán Fitzpatrick’s Anglo-Irish and Michael Fingleton’s Irish Nationwide Building Society—has received €34 billion of a bail-out, representing more than 20 per cent of our GDP.

But don’t worry, Enda and the boys and girls at the recent summit in Brussels (29 June) agreed to allow bail-out funds to recapitalise banks directly, and to buy bonds for “well-behaving” countries—states that are pursuing reforms but suffering from market pressure—and the Euro Group “will examine the situation of the Irish financial sector with a view to further improving the sustainability of the well-performing adjustment programme.”

The Irish Timesdutifully reported that Kenny has said that “a European Union agreement reached in Brussels in the early hours of this morning to bring down borrowing costs for indebted countries will reduce the debt burden on Ireland’s taxpayers.”

The announcement came too late to stop one particular piece of lunacy. On the Tuesday, Wednesday and Thursday of the very week of the Brussels summit the state paid private banking debts to the tune of approximately €1,141,716,762—debts not covered by the 2008 banking guarantee and not secured on bank assets.

The minister for finance, Michael Noonan, acknowledged last year that these payments are likely to be to “speculative investors.” Confirming some time ago that the payments would be made, the minister expressed helplessness and ignorance. In answer to a question in the Dáil, he gave this weak justification:

“The Government is committed to delivering a return to a successful, vibrant economy. In this context I have indicated that there is no private-sector involvement for senior bank paper or Irish sovereign debt without the agreement of our external partners. This commitment has been agreed with our external partners and is now the basis on which Ireland’s future financing strategy is built. This strategy is working well, as evidenced by the reduction in pricing of Irish sovereign debt in the secondary markets and the recent successful bond exchange offer by the NTMA.”

So this act of criminal folly would be an example of an action by the sort of “well-behaving” country praised by the president of the EU Council, Herman van Rompuy, after the meeting.

And the next steps?

A banking union “should evolve as soon as possible”

It is reported that EU officials have drawn up a far-reaching plan that would eventually turn the euro zone into an outright fiscal union. The document suggests that ultimately the single-currency area will need a treasury office and a central budget.

Among the short-term changes required is the de facto handing over of budget power and economic policies to the EU level. “Upper limits on the annual budget and on government debt levels . . . could be agreed in common,” says the paper. Budgets that breach fiscal rules would have to be altered. The supervision of all banks would be at the European level, and the EU authority would have “pre-emptive intervention powers.”

The paper—drawn up by the presidents of the European Commission, European Council, Euro Group, and European Central Bank—moots giving the European Central Bank the ultimate authority. In the medium term, so long as there is a “robust framework for budgetary discipline and competitiveness,” some form of debt mutualisation “could be explored.”

Meanwhile, labour policies and tax polices—until now a no-go area for the European Commission—will no longer be exempt. An integrated economic euro zone would need “co-ordination and convergence in different domains of policy,” says the paper, explicitly mentioning “labour mobility” and “tax co-ordination.”

“Let me tell you here,” said the president of the EU Commission, José Manuel Barroso, at the European Policy Centre in Brussels on 26 June, “that fiscal union is about much more than just euro bonds. It also means more co-ordination in taxation policy and a much stronger European approach to budgetary matters.”

And Kenny? According to his devoted fans in the Irish Times, his “focus is on the prospect of a banking union being created over the next twelve months rather than a fiscal or political union over the medium to longer term and he is emphatic that another referendum is not going to happen in the near future. From our point of view the banking union is the big one here.”

In effect, an EU banking union would deprive states of the ability to make banking and credit creation serve national developmental goals. It would make it impossible for the state to insist that Irish banks should subscribe to its state debt. Having given up the power to issue money by joining the euro zone, advocates of a banking union would pass control of credit in Ireland to banks outside the country completely.

Kenny insists that there will be no referendum on such a development. He should have a look at article 45.2 of the Constitution of Ireland, which states that “in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole.”


Outsourcing is a further transfer of wealth to big business

Statement by the Communist Party of Ireland 3 September 2012

The Government is to outsource services in health, justice, education and local authorities as part of the EU-IMF cuts programme. Each department has been given until the end of the year to propose areas for outsourcing; but given the history of these major decision being discussed beforehand in foreign parliaments, it is likely that the principal areas have already been picked and that this is merely a rubber-stamping of this major negative development in the provision of services to Irish people.Private companies will carry out these services only if there is profit to be made off citizens. This will drive a reduction in the quality of services, accompanied by extra costs, either direct to the citizen or by way of government contract. These companies will put their own profit agenda ahead of citizens’ needs. It is likely that any outsourcing will also lead to offshoring as jobs are sent to the cheapest country.

We are still suffering the consequences of this private-sector agenda in banking that has bankrupted the country.

What outsourcing really represents is a transfer of money from citizens to big business. It will be the usual global monopolies that will win contracts through their cut-throat cost-cutting, and the state will hand over millions to boost their profits.

Once again Irish taxpayers will be paying for the lavish and outrageous lifestyles of a global elite while our services are cut, jobs outsourced and offshored, and our young people forced to emigrate.

Unions and citizens need to combine to defend jobs and services. The trade union movement, if it is to remain relevant, must no longer allow the tail to wag the dog but must break with Labour Party policy.