Jean-Claude Junker (pictured left) is the Prime-Minister of Luxembourg and an ardent Europhile. He has, for the past seventeen years, aligned his tiny nation with the political movement seeking to build a European federal government. His pro-Europe stance earned him the “Vision for Europe” award, an annual recognition bestowed upon political leaders who do the most to further European integration. It is often assumed that because of his pro-EU credentials, Mr. Juncker will one day be tapped for a high-level European Union job, such as President of its administrative arm, the European Commission.
Thus if you want to understand the direction in which those who favor a pan-European government wish to go, there is no better person to observe than the energetic Prime-Minister of Luxembourg. He is a forward thinker in this respect and certainly one who spends an above-average amount of time working to bring about a United States of Europe – as some are prone to call a future, super-European government. That is why his recent comments to the German magazine Der Spiegel are of particular interest. When pressed about the future of the EU, Mr. Juncker outlined a plan for the emergence of a democratically elected, “President of Europe”, empowered with actual authority to lead the EU:
SPIEGEL: What can be done to make Europe more appealing to people once again?
Juncker: I would favor creating the office of European president at the end of the process, a president who is directly elected by EU citizens. As a preliminary step, the offices of the European Council president and the European Commission president could be combined. The Lisbon Treaty doesn’t rule this out; it would be the precursor to a European president.
SPIEGEL: Wouldn’t there have to be a European finance minister, as well?
Juncker: That would make sense. [end quote].
The office of President of Europe, such as Mr. Juncker describes, was rejected by voters in referendums held in France and Holland, when the draft Constitution of Europe was defeated in 2005. But that has not prevented Mr. Juncker or other politicans like him from pushing forward with calls for a unified European federal government, including a strong executive head. In the present crisis, it may be that the circumstances allowing for such a person to enter the scene are aligning, as European nations struggle to unify around responses to the financial crisis. A desire for strong leadership in these times might be exactly the opening which Mr. Juncker and other European federalists need, to push forward with their plans to create a European head of state that has strong executive powers.
Eye on Europe
The economic turmoil in Europe shows no sign of abating. Over the course of this week there has been a seeming avalanche of bad economic news for the Eurozone countries and the EU in general. Below is a brief review of the week’s top economic stories covered in the European press.
French government faces more unemployment while raising taxes
On July 2nd Francois Holland received a report from the Cour des Comptes, the national auditor, predicting that the French government needed to raise another 10 billion euros in extra revenues this year to close a gap in its finances, and, more ominously, that in 2013, a further 33 billion euros would be needed. His response was to announce a new raft of tax increases and cuts across the board, including the implementation of his promised plan to increase the tax rate on those making a combined income of over 1 million euros to 75%. But it is difficult to raise revenues if the number of tax payers is decreasing. At the end of the week Mr. Hollande received further bad news when French carmaker Peugeot announced, in a surprise move, a plan to close one of its largest plants, effectively laying off 6,500 workers. The Financial Times, in its 13 July print edition, reported the following:
“Jean-Marc Ayrault, the prime minister, leading a chorus of concern from ministers, trade unions and the main UMP centre-right opposition, said yesterday’s decision was a ‘real shock’.…Peugeot’s proposed cuts are the biggest in a wave of redundancies as the eurozone debt crisis exposes the country’s declining competiveness.”
Spain rocked by protests as conservative government announces more austerity
Imagine an unemployment rate of 24%. You don’t have to if you live in Spain, because it is a reality there. In response to sky-rocketing unemployment and rapidly expanding public debt, which is causing international lenders to charge high rates to loan money to Spain, the government of Mariano Rajoy has announced a program of austerity designed to cut public subsidies and spending by 65 billion euros. Included in the program are tax increases, such as an increase in the country’s value added tax – a tax roughly equivalent to sales tax in the United States. The Spanish population has reacted angrily to the announced cuts, however, the government in Madrid sees no other choice. The Independent reported the following comments of Mr. Rajoy made during his speech to Parliament:
“I know that the measures I’ve announced aren’t agreeable,” Mr Rajoy said in his 70-minute speech to lawmakers. “They aren’t agreeable but they are essential. We are in an extraordinarily serious situation.”
This has led to a wave of protest across the country, in particular violent demonstrations this week in Madrid by the country’s miner’s union. Further cuts are expected, however, and there does not seem to be any easing in sight to the country’s phenomenal unemployment rate. Below is raw footage video from the UK’s Guardian newspaper showing the protests across Madrid this week:
The International Labor Organization releases report stating that Eurozone unemployment is expected to rise
This week the Geneva based International Labor Organization released a report stating that the Eurozone risks losing 4.5 million additional jobs unless governments are able to stimulate growth in the near term. Noting that unemployment in the Eurozone has hit 11 % overall, the report states that this rate appears set to increase significantly – possibly as high as 17% for the entire region. The organization called on governments to abandon austerity measures and move to subsidize job creation in order to correct current trends, and further notes that European youth are at the greatest risk of suffering in this economic climate.
Banks could be hit by up to 22 billion US dollars worth of fines over LIBOR scandal
The LIBOR scandal, involving the fraudulent manipulation of international interest rates by mainly British banks, may lead to extraordinary fines being levied on a number of financial institutions. The Financial Times reports that Morgan Stanley released a report today predicting that the fines and penalties that will be assessed against the banks could reach the level of 22 billion USD. This comes at a time when London’s financial services sector is battling a double dip economic recession, and struggling to deal with a growing loss of confidence due to the LIBOR scandal.
This scandal could also lead to further tension between London and Brussels, as European regulators are in reaction considering introducing new, Europe-wide regulation, aimed at monitoring banking activities for corruption and conflicts-of-interest. The British government of David Cameron (pictured left) has fiercly resisted any attempt to impose further regulation on London’s financial institutions in the past, out of a fear that it would reduce this important sector’s competitiveness.
For those in Europe, these months are rapidly turning into the summer of discontent. What is truly concerning is that no one appears to really know where the boundaries of the economic crisis in Europe are. In February of this year, it was announced that measures taken by the European Central Bank had effectively stemmed the crisis, only for the political situation in Greece to then deteriorate and for the horrible economic conditions in Spain to become the next focal point of concern. Europeans are experiencing fatigue as they watch their leaders continually flying into Brussels for one summit after another, only for their attempts to arrest the economic deterioration to be stymied by infighting and disagreement. If unemployment, scandal and debt continues to drag down the EU economy, desperation may lead national leaders to focus on more radical measures to reverse this crisis.
Eye on Europe
Recent moves by Moscow to re-establish its former sphere of influence throughout Central Asia and Eastern Europe have begun to cause alarm in Europe. In February of this year, Russia, together with Kazakhstan and Belarus, established the Eurasian Economic Commission (EEC), an entity intended to be the first step towards integrating the three nations into a close economic and political alliance – a Eurasian union similar to the European Union. Last week, news site Euractiv reported on a presentation by the Russian Permanent Representative to the EU in Brussels, where representatives of the new EEC attempted to dispel concerns amongst EU leaders by claiming that this development will be good for business.
Despite representations from Moscow that a Eurasian union will be a positive step for establishing better economic relations, foreign policy experts tend to see the move as part of Russian President Putin’s overall plan to recapture a portion of the old Soviet Union’s sphere of influence. Part of that plan has also focused on the Ukraine. In a recent presentation to reporters, representatives of the Lithuanian government warned that Ukraine was in danger of falling under Russian control because of growing isolation between it and the European Union.
Concerns in Europe over the pro-Russian Ukrainian government’s treatment of the political opposition have led to a break down in diplomatic relations between Brussels and Kiev. Lithuania and other Eastern European members of the EU see this as a repeat of the situation that led to neighboring Belarus’ decision to break off relations with the West and embrace Russia. Commenting specifically on the failure of the West to cultivate relations with Belarussian President Alexander Lukashenko, a Lithuanian government advisor provided the following comparison, as reported by Euractiv:
“Lukashenko got frightened, he started behaving irrationally and we then completely shut the door. And what happened: he went to Russia. He sold some of his assets, but he became more and more dependent on Russia. We are moving toward the same scenario with Ukraine.”
If Ukraine were to cut loose ties to the EU, it could well mean that it would seek to join the new Eurasian union when it is created, and thus bolster the Russian dominated bloc’s political power.
What these recent developments seem to suggest is that a growing tug-of-war over countries that lie on the fringes of the EU is developing between Moscow and Brussels. What will be interesting is whether the European Union will be able to solidify a common response to Russia’s growing boldness towards extending its political hegemony over its neighbors.
WWT Radio: Europe’s unification and end-time prophecy.
In the near term, Russia appears set to push its plans for establishing the new Eurasian union by 2015, complete with a common currency and parliament. Below is a news clip from Al Jazeera English covering this development.
Eye on Europe
Cyprus takes over the Presidency of the European Union this month, and thus the President of Cyprus, Dimitris Christofias (pictured left), will now serve as the ‘head of state of the EU’. Mr. Christofias is a communist, which means that over twenty years after the fall of the Iron Curtain, Europe will now be led by a Russian educated communist politician. Be that as it may, the position of “President of the EU” is largely ceremonial and administrative, and comes with little real, political power. What is more interesting, in terms of the long term ability of the EU to function, is that Cyprus has recently applied for a financial bailout, as the fifth EU member state to succumb to the European debt crisis. However, what makes Cyprus a bit different than its European counterparts is that it is also seeking a bail-out from Russia – in addition to the EU.
Why does that matter? In terms of economics, Cyprus is a relatively small economy, thus it does not have a great impact on the rest of Europe in the economic sense. But from a political standpoint, what this indicates is that Russia (and possibly China) may be seeking a role in helping certain European countries – those which are its “ friends” – in these difficult times. Those who accept Chinese or Russian money would certainly be expected to reciprocate with a pliant foreign policy.
Not since the fall of the Iron Curtain has Russia had client states within the boundaries of the current EU, but could that change if individual EU members start to look to China and Russia to help them? If so, how would Germany react to having its efforts to lead the EU undermined by Russian financial assistance to those member states who resent Berlin’s austerity measures? An interesting development – we’ve posted a short news summary covering the assumption of the EU Presidency by Cyprus.
Eye on Europe
Interesting excerpt below. European Commission President Barroso delivered a fiery speech to the EU Parliament on the issue of unity earlier this week. A couple of takeaways from this five minute segment: First, President Barroso singles out British Conservative members of the European Parliament for expressing satisfaction and even glee over the troubles in the eurozone. Noting that their party leader, British Prime-Minister David Cameron, maintains a pro-eurozone line, President Barroso blasts the Conservative members of the European Parliament for undermining European unity at this time of crisis. This highlights the growing problem faced by Mr. Cameron, where members of his own party are becoming increasingly vocal in their anti-EU statements, while he attempts to maintain a diplomatic posture in favor of the euro currency. Second, at the end of the five minute excerpt, Barroso chides leaders of the member states for squabbling during the crisis. Interestingly, Mr. Barroso recalls Europe’s violent, war-torn history in admonishing leaders to show unity, and not give in to historical prejudices and divides. He makes the point that the “European project”, a reference to the EU, came about as a means of ensuring peace on the continent. It is worth remembering that many European leaders see the EU as a guardian of intra-European peace. This partly explains why there is such reluctance to see Greece exit the eurozone, despite its economic mismanagement. There is a lot more than just economic cooperation vested in the success of the European Union. The question then becomes, to what lengths are political leaders willing to go to ensure that the EU or some form thereof, succeeds?
WWT Radio: Europe’s role in end-time prophecy.
Eye on Europe