European Foundation Intelligence Digest

Issue No. 117 / 6th  April – 19th Aril 2001

 

 

I.  The euro, today and tomorrow

 


Rumours of a single world currency

The anti-euro newsletter, Deutschlandbrief, reports – strictly as an unconfirmed rumour – that plans are afoot to create a mega-single currency by blending the euro and the dollar.  The central bank for this super-currency would be the Bank for International Settlements in Basel, to whose board the United States has recently appointed members after many decades of neglect.  Alan Greenspan, the Fed chairman, said as far back as 1994 that the BIS was likely to assume greater importance in the future.  In 1995, following the Maastricht treaty, the Americans took up their seats, together with the Canadians and the Japanese, thus starkly changing the composition of the bank.  This move was not least because the Maastricht treaty removed most of the BIS’s raison d’être:  it had previously been used for intra-bank settlements in Europe.  It was also the clearing-centre for the ECU, the forerunner of the euro.  With the introduction of the single currency, this function ceased to have any significance.  On 11th September 2000, moreover, the BIS rid itself of its private shareholders by compulsorily buying them out.  This has the effect of closing the bank’s books to public scrutiny.  It is also relevant that Robert Mundell, the Nobel prize winning economist who was awarded his prize for being the “intellectual godfather of the euro” (even though many economists argue that his theory of optimal currency zones precisely proves why the euro is a bad idea) called for a link between the dollar and the euro at a conference in Paris in November 1999.  [Deutschlandbrief, April 2001; for information and analysis of the institutional changes at the BIS, see www.sandersresearch.com]

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OECD revises euro-zone growth downwards

As the euro continues to fall on foreign exchange markets – it has been trading at 88 cents this week, despite the continuing bad economic news coming out of the United States – the Organisation for Economic Co-operation and Development has revised downwards its prediction for growth in the euro zone to 2.7% for the current year, 2001.  Although the OECD finds that job creation has been faster in the euro zone than in either the United States or the United Kingdom (where rates of unemployment are a fraction of what they are on the European continent) and although it expects euro-unemployment to come down top 8.4% in 2001 and 7.9% in 2002, the single overall economic growth continues to be weak.  The OECD blames differences in growth rates between euro countries and “dissonances” in official pronouncements for the continuing fall in the value of the European single currency, which has lost even more value than it did in 2000.  The rising oil price is also blamed for the euro’s weakness. The new predicted growth rate of 2.7% for 2001 contrasts unfavourably with the rate of 3.4% achieved in 2000.  Inflation is expected to reach 2.2%.  Despite this, the OECD economists insist that the euro zone is now more able to resist external shocks than it was before monetary union.  The OECD continues to call for “structural reforms” in the euro-zone states, especially in the labour markets.  “A revision in the legislation protecting workers” is required, says the report, to encourage growth and employment.  The OECD also says that preparation for the change-over to the euro is lagging behind and that small businesses, especially, should advertise their prices in both currencies.  [Babette Stern, Le Monde, 10th April 2001]

 

Germany revises growth forecast downwards

The German finance minister, Hans Eichel, has confirmed that his government will revise downwards its growth predictions for 2001 and its tax and spending plans accordingly.  The government had initially based its calculations of a growth rate of  2.6%  to 2.9% but Germany’s six leading economics institutes have now revised their forecasts down from 2.7% to 2.1%.  Eichel claimed, however, that tax revenues would not be substantially affected by this lower growth and that there was therefore no reason to bring forward stage two of his tax reform.  A government spokesman also insisted that Germany was on track to reduce unemployment below 3.5 million during the course of 2002.  [Handelsblatt, 12th April 2001]

 

Montenegro to switch to euro in December

It is often forgotten that it will not just be European Union member states who will physically adopt the euro at the end of this year.  Two Balkan provinces will also belong to the euro zone, Montenegro and Kosovo, when the single currency is physically introduced at the end of this year.  The Montenegrin prime minister, Filip Vujanović, confirmed on 11th April that the euro will become the official currency of Montenegro in December 2001.  Mr. Vujanović is, however, not entirely on message, for he added that “economic sovereignty” – by which he means independence from Belgrade but not Brussels – were prerequisites for a better life.  He added that Montenegro would not allow anyone else to control its economy any more. [Tanjug, 11th April 2001]  This, to say the least, is a strange position for someone who wants to adopt the euro as his country’s national currency.  But Mr. Vujanović’s paradoxical position confirms that, in today’s Europe, “sovereignty” is all right if it means you come under the control of Brussels.  Otherwise, it is an antiquated concept with no place in the modern world.

 

Pasqua and Villiers both against the euro

Charles Pasqua and Philippe de Villiers, the two anti-euro politicians who ran together in the European Parliament elections in 1999 but whose alliance has since collapsed, have both independently reaffirmed their opposition to the European single currency.  Charles Pasqua, moreover, has announced that he will run for the presidency in 2002.  Philippe de Villiers, meanwhile, says that he will decide whether to run for president in the autumn or by the end of the year.  Pasqua insisted that he would run for the Elysée on a sovereignty ticket and that he would “defend the values of liberty and authority which the Right no longer dares to defend”.  Mr. Pasqua also attacked the euro as “the symbolic murder of Marianne (the symbol of the French republic).”  Both men also campaigned on issues of public security, saying that they support policies of zero tolerance for street crime.  [Le Figaro, 7th April 2001]


 

 

II.  Other EU news

 


EU plans no sanctions against Italy

Faced with the prospect that the Italians might elect a right-wing government with the Alleanza Nazionale and the Northern League as coalition partners on 13th May, most European chancelleries are playing down completely any repetition of the disastrous sanctions which were inflicted on Austria when the Freedom Party entered the government there in February 2000.  By common consent, the boycott of Austria was a failure:  it has certainly failed to dislodge the Black-Blue coalition from power in Vienna and it is likely that the boycott caused the Danes to vote against adopting the euro and the Swiss to vote against joining the EU.  But one German Social Democrat MEP  has inadvertently admitted the real reason why Italy will be spared the treatment meted out to Austria:  “Unlike Austria, Italy is a large country and a founder member of the European Union,” said Martin Schulz. [Andreas Middel, Die Welt, 12th April 2001] In other words, the European Union’s high moral stance applies only to small countries which the EU feels it is safe to bully. 

 

Berlusconi confident of  victory

With 30 days to go before the general elections in Italy, the leader of the Italian right, Silvio Berlusconi, has reaffirmed that he expects to win and that the coalition he will lead will prove stable.  He has also categorically alleged that he lost in 1996 only because of electoral fraud.   “In 1996, 1,170,000 ballots were destroyed.  In Italy, the left has a long tradition of electoral fraud.  Today, all demoscopic institutes agree that in reality we won, with a lead of between 10% - 15%.”  He also said that a political campaign had been waged against him by a politically motivated judiciary while he was prime minister and concludes that Italy is “not a democratic country”.  “None of the governments which have succeeded that of Romano Prodi have been legitimised by the people,” he said.  Mr. Berlusconi also repeated an attack he made on the American adviser of his chief opponent, Francesco Rutelli.  Rutelli’s campaign is being managed by Stan Greenberg, whom Berlusconi has accused of spreading false information, such as by claiming that there is an increase in support for the left and by demonising Berlusconi.  Berlusconi illustrated Greenberg’s accusatory tactics by telling a story about Lyndon Johnson.  “President Johnson once caused a rumour to be spread, by means of his press spokesman, that his opponent had sex with chickens.  The spokesman retorted that this was simply not credible.  President Johnson replied, ‘That does not matter.  What matters is that he will have to defend himself against these accusations on television.’  This is the way that the left operates here.  Thank God, the Italians have seen through this game.  That is why we are 10% - 15% ahead of our opponents.”  [Interview in Die Welt, 16th April 2001]

 

Seven lean years for new EU members

Having waited over a decade before being welcomed into the “European family”, citizens of the states of Central and Eastern Europe who expect to become members of the EU will have to wait seven years before being allowed to work in another EU state.  The Commission has suggested a seven-year transitional period as a way of defusing fears in the richer Western states, especially Germany and Austria, that cheap labour from the East might undercut wages in the West.  The Commission has therefore proposed a maximum of seven years with provisions for making the transition shorter if the other states so decide.  The EU is currently negotiating with ten states on membership:  these transitional arrangements on employment will not apply to Cyrpus and Malta but to the other eight Eastern European candidate countries.  It is expected that the new admissions will occur around 2004 – 14 years after the fall of the Berlin Wall.  The plans to impose this transitional period are very unpopular, by all accounts, in Poland and the Czech republic, where the governments want immediate access to EU labour markets for their citizens.  [Handelsblatt, 11th April 2001]  The Czechs have said they flatly refuse any transitional period and so a campaign has been launched to discredit that country’s foreign minister:  watch this space for further developments. The Polish position is weakened, meanwhile, by Warsaw’s demand for a 15 year transition period before which Germans will be able to buy land in their country.

 
Suicide pill authorised in the Netherlands

The Dutch Health Ministry has announced that it will not oppose the prescription of a “suicide pill” provided that its use is limited to “very old people who are tired of life.”  The decision marks a dramatic new advance in the rules governing euthanasia and comes within days of the formal legalisation of euthanasia in the Netherlands:  the new law, it was claimed, would regulate euthanasia and restrict it to people who were suffering from terminal illness.  The Health Ministry’s decision overturns the legal position because it has said that it will not oppose the use of the suicide pill for old people even if they are not ill.  The Health Minister who thus re-wrote the law, so painstakingly developed over the last couple of years, has now sidestepped the issue of his legal powers by saying that “being tired of life has nothing to do with euthanasia” because “it is a matter of liberating people from suffering but not from a suffering connected with an illness or a handicap.” [Corriere della sera ,17th April 2001]


 

III.            Eastern Europe and the former Soviet Union

 


Dayton unravels

Feelings are running high in the Croatian parts of Bosnia following the raid on 6th April by Sfor troops on a private bank used by – among others – the Croatian Democratic Union.  The raid followed the declaration by the said party that it would no longer be co-operating with the political institutions set up at Dayton after the UN High Representative closed down one of the chambers of parliament because “nationalists” kept getting elected to it.  The Croats are now regularly dubbed as “extremists” – like the Albanians in Macedonia and Kosovo – and this language is being used to justify the bank raid during which five truckloads of cash and other bank property was violently removed.  [Foreign Press Bureau, Zagreb, 18th April 2001]  Now there are rumours that the leader of the Bosnian Croats, Ante Jelavić, is to be arrested on charges of “murder”.  If he is so arrested, there is likely to be a huge public outcry:  Croat opinion has been highly mobilised by the arrest warrants issued for Croatian generals by The Hague and any new arrest by Sfor would be seen as more colonial meddling by the West.  It is quite possible that these developments represent the end of any pretence that the Dayton settlement is anything other than a sham.  It would be an irony if Jelavić’s arrest coincided with another imminent arrest, this time in Serbia.  The parliamentary leader of the Socialist opposition, Branislav Ivković, has emerged as one of Slobodan Milošević’s staunchest defenders. He too is likely to be arrested soon, for “corruption”. 

 

Lukashenko vows to fight attempts to unseat him

The president of Belarus, Alexander Lukashenko, has told his country’s parliament that he will do everything to thwart attempts by the West to unseat him this autumn, at the presidential elections, using a “Yugoslav scenario”.  He accused the opposition of planning to overthrow him in a manner similar to that used in Belgrade last October against Slobodan Milošević.  Lukashenko even told his country’s lawmakers how he expected the scenario to take place:  “It will develop as follows: 14,000 alleged [election] monitors create their computerized monitoring system in order to announce, as in Yugoslavia, their results. And the West recognizes those results. Then those 14,000 will be transported to the residence, to the parliament; they will break a window and hang out a white-red-white flag – or maybe our flag, a state one, in order not to scare away the population. And they will announce their election [results].”  He pledged to foil the opposition’s attempt to take over power this way: “We are not going to catch them while they are in the windows, we will meet them inside the building.”  [Radio Free Europe Newsline, 11th April 2001]  Western powers have expressed relentless hostility against Lukashenko since he was elected in 1994.  The latest salvo came last October, when the Organisation for Security and Co-operation in Europe refused to observe the country’s parliamentary elections.  It then attacked as stooges those 150 observers who did observe the poll.  Western human rights organisations continue to peddle the lie that those elections went unrecognised or unapproved by anyone.  [See the report on Belarus 2000 by the British Helsinki Human Rights Group,  , www.bhhrg.org]

 

Belarus introduces law on foreign aid to elections

Human rights groups are up in arms at the decision by the government of Belarus to forbid foreign financing of election monitors at the forthcoming presidential elections.  The new law was brought into effect by presidential decree.  It bans foreign funds for “changing the constitutional system; seizing power or overthrowing the government; stirring up social, ethnic, or racial enmity; preparing and holding elections; recalling members of parliament; and organizing strikes, street demonstrations, seminars, and other forms of mass propaganda work among the population.”  [Radio Free Europe Newsline, 16th April 2001]  The measure is specifically directed against the Organisation for Security and Co-operation in Europe which overtly supported the opposition in its statement about the parliamentary elections last October:  in its report on the elections, it even went so far as to exhort the opposition to put forward a single candidate for president in 2001.  Human rights groups, who see their plans for overthrowing Lukashenko thwarted, are protesting against this law.  Strangely, they have not made the same protests about the new law which governs elections in the United Kingdom.  The Political Parties, Elections and Referendums Act 2000, like President Lukashenko’s decree, makes it illegal for foreigners to finance political activity. [The Act can be consulted at www.legislation.hmso.gov.uk/acts/acts2000]

 

Nato exercises in the Caucasus

The supreme commander of Nato, General Joseph Ralston, paid a one-day visit to the former Soviet republic of Georgia on 4th April in preparation for a major Nato training exercise there.  Georgia has aspirations to join the alliance.  Ralston, who is also the commander of all U.S. forces in Europe, held meetings with President Eduard Shevardnadze and with the Georgian Defence Minister.  He told Georgian state television the United States would continue its military cooperation with Georgia and would provide aid to reform the army. Ralston’s visit comes two weeks after U.S. Secretary of State Colin Powell offered a message of support to Georgia which has complained of pressure from Russia.  The rapprochement between this Caucasian state and Nato is, needless to say, vehemently opposed by Russia, which has accused Georgia of harbouring rebel insurgents in its mountainous northeast who cross the border into Chechnya.  NATO is planning a large-scale training exercise in Georgia in June.  [Reuters, 5th April 2001]

 

US pressures Poland to buy US fighters

On a recent visit to Poland, the American Secretary of State, General Colin Powell, has brought pressure to bear on Poland to encourage it to buy US-made fighters instead of British or French ones.  Powell also announced a visit to Poland by President Bush this summer.  The spokesman of the State Department, Richard Boucher, confirmed that Powell made his case that Poland should buy American to the foreign minister, Wladyslaw Bartoszewski:  Boucher said Powell had told the minister that the best plane was American.  According to reports, Powell’s efforts are part of a larger lobbying campaign to convince the Poles to buy Lockeed-Martin F-16 jets instead of Dassault Mirages or BAE’s Gripens.  Poland is expected to make a decision on leasing 18 aircraft by the middle of the year and to acquire 60 aircraft by 2006 – although it is not clear quite what military threat these new planes are supposed to counter.  The State Department spokesman did not say whether the foreign minister had also raised with Powell a law suit being brought in the US by Holocaust survivors who want to force the Polish government to compensate them for property seized by the Nazis, although the Polish foreign ministry has sought to obtain from Washington a promise that the case will be dismissed.  Poland maintains that US courts have no jurisdiction in the matter.  The US government has taken an active role in similar cases brought against Germany and Austria.  [Agence France Presse, 6th April 2001]


Balkan integration proceeds apace

Plans to integrate the Balkans along the same lines as the European Union are proceeding well.  The Macedonian foreign minister, Srdjan Kerim, has said that the initiative to create a Balkan committee for security and co-operation, like the OSCE, launched by his Yugoslav counterpart, Goran Svilanović, was on the agenda when foreign ministers from the Balkans met Colin Powell, the US Secretary of State.  Kerim said it was vital to improve regional cooperation before joining NATO or the European Union, or other, wider integrations. [Interview in Vecernje novosti, Belgrade, 12th April 2001]

 

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