THE EUROPEAN REVOLT AGAINST REALITY
Josef Joffe
Wall Street Journal, May 9, 2012
Forget for a moment François Hollande, who sent Nicolas Sarkozy packing [earlier this month]. Set aside, too, the triumph of the radical left and the neo-Nazis in Greece who together captured one-third of the vote. Look instead at…the sickly state of the EU-15, the core of the Union, most of which today uses the euro: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Luxembourg, Portugal, Spain, Sweden and the United Kingdom.
In the 1970s, their average growth clocked in at 3.2%, in the 80s at 2.5%, in the ‘90s at 2.2%—and in the ‘00s, 1.2%.… This year, growth is likely to end up at an anemic 1%.
Europe has been falling back for decades, and this is the source of all its trouble. Yesterday’s economic wonderland, with its ever growing list of benefits and privileges, is losing it. While the U.S. share of global GDP has held steady at around 26% for two generations, the EU-15’s share has dropped to 26% from almost 35% in 1970.
Back to Dark Sunday’s elections. You might have thought that the French and Greek parties would have hyped themselves as saviors: Anoint us, and we shall lead ye from debt and decline. Wrong. The winners were those who yelled: “Stop the world, we want to get off!” Cursed be the market, blessed be the all-providing state.
This is the message of those 52% who voted for Mr. Hollande in France. In the campaign, he had targeted “financial markets” as the enemy of the French social model, while offering to tax, protect and provide. No talk of the real reason those evil markets and their ratings agencies downgraded France: The national debt has surged to 90% of GDP, from 35% in 1990.
In Greece, the big winner was the Coalition of the Radical Left, or Syriza, which won nearly 17% of votes—almost four times its take in the 2009 elections. Together, the far left and far right have overwhelmed a government that had pledged to slash spending and cut into the bloated state sector. The pro-reform coalition of the moderate right and left has lost its parliamentary majority and may have to go into new elections in a few weeks. Hence, the “Nightmare of Anarchy,” as Greek daily Ta Nea headlined its post-mortem.
Meanwhile, unemployment now averages close to 11% in the euro zone. The odd-man-out in this drama of decay is Germany. Joblessness, which stood at five million only a few years ago, has dropped to less than three million. The public budget deficit is heading toward zero. Why this Teutonic miracle? Germany had cleaned house before the crash struck.
Go back nine years, when Social Democratic Chancellor Gerhard Schröder launched his “Agenda 2010.” He declared to the Bundestag: “We shall reduce social benefits, promote individual responsibility and demand more from each and all.” True to his word, he loosened up labor markets, cut payroll, personal and corporate taxes, and enacted a “workfare” program that egged the unemployed off the dole. Angela Merkel is now reaping what her predecessor sowed—efforts for which he lost his job.
Today, elsewhere in Europe, leaders’ attempts to change their economies’ bad old ways have not met with political boons. Since 2008, a dozen euro-zone governments have fallen like the House of Lehman. Yet what is the alternative but to pursue the reforms? Where would the cash come from, when Germany is the last man standing among the large countries? Perhaps Europe is still rich enough to keep Greece on the dole indefinitely. But it does not have the resources to put France, Italy or Spain on euro-welfare.
Which brings us back to the new French president, who in 1981 was a young Elysée staffer when François Mitterrand enacted the very program Mr. Hollande has been hawking: buy now, pay later, tax forever. Two years later Mitterrand’s Socialist Party was drubbed in local elections…and Mitterrand started preaching discipline and markets. This time, the Socialist president won’t even get his first 100 days.
For one thing, Mrs. Merkel will not relent. She will not allow Mr. Hollande to loosen the debt brakes enshrined in the EU’s fiscal pact by inserting the kind of “growth” Mr. Hollande wants—a euphemism for spending Europe into insolvency. She knows that the euro, indeed the EU, is at stake.… If core Europe does not regain competitiveness now, it will sink and fall apart.…
THE EUROPEAN FARCE
Niall Ferguson
Newsweek, May 14, 2012
With the sap rising and the governments falling, all the European powers are merrily acting in national character. In the midst of a severe financial crisis, the French have just elected a champagne socialist on promises of a 75 percent top tax rate and a lower retirement age. The Greeks also had an election in which the established parties lost to a ragbag of splinter groups. The outcome of the election was that they need to have another election. (Cue Zorba the Greek theme music.) Meanwhile, the wailing gloom of the flamenco emanates from Spain, where youth unemployment is now around 50 percent.
Within a few hours of arriving in London, I hear the following announcement on the train: “We apologize for the late departure of this service. This was due to the late arrival of essential personnel. [Translation: the driver overslept.] However, we are happy to inform customers that the London Underground is running a nearly normal service.” It’s that “nearly” that is so quintessentially English.
Three days later, in Berlin, I finally reach the Europe that works. Well, sort of. As usual, I find myself marveling at the sheer idleness of the richest and most successful country in the European Union. Lunchtime in the leafy garden of the Café Einstein on the Kurfürstenstrasse shows no sign of ending even at 3 p.m. It’s Thursday. Did you know that the average German now works 1,000 hours a year less than the average South Korean? That’s why when you go on holiday the Germans are already there—and when you go home, they stay on.
Understandably, many American investors have simply given up on Europe. After two years of the world’s most tedious soap opera (“Can Angela get on with François, the new boy in town? Is Mario the real thing after phony old Silvio?”), they have come to the conclusion that it is only a matter of time before the whole euro zone comes crashing down, with Greece in the role of Lehman Brothers.
Meanwhile, in Berlin they still talk of “buying time.” They mean by this that as long as the European Central Bank keeps printing money, lending to weak Mediterranean banks so that they can buy the bonds of weak Mediterranean governments, it will all work out in the end. This is a delusion. The economies of the Southern European countries are in a disastrous state, comparable with the conditions of the Great Depression.… Suddenly it is no longer so hard to imagine a Greek politician deciding to gamble on exiting the euro zone, restoring the drachma, and letting a drastic devaluation do its work. Suddenly it is no longer so hard to imagine the horrendous consequences, with investors asking the obvious question: “If they can leave, who will be next?”
As last year’s Nobel economics laureate Thomas Sargent pointed out in his…acceptance lecture, Europe is now roughly where the United States was between the Articles of Confederation of 1781 and the Constitution we know today, which replaced them in 1789. What is desperately needed is an Alexander Hamilton, prepared to take all or part of the debts of the individual states onto the federal balance sheet. What is desperately needed is a recognition that Europe’s present confederal structure is incompatible with monetary union created in 1999.
The solution is available. Since November of last year the European Commission has been actively considering how to create “Stability Bonds” that would put the full faith and credit of the EU (i.e., Germany) behind at least part of the national debts of the member states. Taken individually, some of these debts are hopelessly high. Added together and compared with total euro-zone GDP, they are manageable.
What stands in the way is not French socialism or Greek populism. It is quite simply German complacency. Life in Berlin is good. In Munich, the capital of the German manufacturing machine, it is even better. You should try explaining to the average Bavarian beer drinker at the Stammtisch why he needs to get ready to finance an annual transfer to the Mediterranean countries of up to 8 percent of German GDP. I never get very far.
Here, then, is the twist in my tale of national character. For two generations, the Germans really did want to take over Europe—by force. But today, when they could do so peacefully, they can’t be bothered.
BOOK REVIEWS: EUROPE’S OTHER CRISIS
Christopher Caldwell
New Republic, May 4, 2012
Europe’s Angry Muslims: The Revolt of the Second Generation
By Robert S. Leiken
(Oxford University Press, 354 pp., $27.95)After the Fall: The End of the European Dream and the Decline of a Continent
By Walter Laqueur
(Thomas Dunne Books, 322 pp., $26.99)In two separate incidents in March, Mohammed Merah, a French-born citizen who thought he was waging jihad, ambushed four soldiers around Toulouse, killing three of them. A week later, he shot dead three children arriving for morning classes at a nearby Jewish school, along with a young rabbi who was father to two of them. The children were aged eight, six, and three.… Shortly before he died by gunfire, Merah told the soldiers who had surrounded his apartment that he regretted not having done more of what he did.…
Something needs to be candidly acknowledged: the killer was not a lone wolf. He had a measure of community support and a great deal of family support. His brother Abdelkader professed himself “proud” of his relation to the murderer. His mother refused to convince her son to surrender to police. His father threatened to file a wrongful-death suit against the French state. The contemporary culture of politicized Islam…is what Merah believed he was fighting for.…
France has been sickened, but not surprised, by the killings. They had an antecedent. In 1995, Khaled Kelkal, an Algerian-born petty criminal in the Lyon suburbs who had discovered radical Islam in jail, murdered a Parisian imam whose positions on the Algerian war were a bit moderate for his taste. Kelkal then set off a bomb in the Saint-Michel RER station, killing eight people. He detonated a car bomb in front of a Jewish school in Villeurbanne…timed for the moment the children were scheduled to emerge. (A bloodbath was averted only because of a delay in the day’s dismissal.) He planted a bomb on a high-speed rail track that would have killed dozens or hundreds had it detonated. But it did not, and the police got Kelkal’s fingerprints. When he was killed by police in a shoot-out that was partly captured on television, there were riots in several immigrant neighborhoods around Lyon.
All western European countries have some version of this problem, which involves immigration, Islam, dissent from established European culture, and organized violence. Although it has been temporarily overshadowed by budgetary and currency woes, it is Europe’s most significant chronic problem. What to do about it depends on where one thinks the problem lies.
Some blame France for having shirked the work of turning foreigners into citizens. If they are right, then all that is now required to put an end to such incidents is that one finally address the problem in good faith. This, broadly speaking, was the reaction of [newly-elected French President] François Hollande.… Hollande sounded an Obama-esque note after the Ozar Hatorah killings, insisting that the French Republic can be made safe “without losing anything of its values against its worst adversaries.” That is true enough, at the simplest level. And given that the continent has spent the last six or seven decades trying to atone for, and prevent a return of, the sort of hatreds that tore Europe apart in World War II, people are rightly warned against tit-for-tat thinking. But there is a thin line between a refusal to escalate violence and a refusal to face reality. It sounded to many French people like Hollande was scolding them preemptively for merely taking such crimes seriously, rather than placing the blame where it belonged, with Merah and his sympathizers.
There is another way of explaining what went wrong. The grim fact is that no Western European country—not one—has managed even a marginally successful integration of its Muslim immigrants, despite half a century of vast treasury outlays, wholesale constitutional re-workings, and indefatigable excuse-making. One is drawn to the conclusion that no successful integration was ever to be expected. Larger historical currents were at play. Islam was on the rise. Europe had lost its élan vital, or its mojo, or whatever you choose to call it. The idea that Europe could handle a mass immigration of Muslims may have been a momentous historical mistake. As Roy Jenkins, the leader of the Liberal Democrats in Britain, remarked in 1989, “We might have been more cautious about allowing the creation in the 1950s of substantial Muslim communities.…”
[For the full article see ‘On Topics’ Below—Ed.]
THE RISE OF EUROPE’S POLITICAL RADICALS
Mona Charen
National Review, May 8, 2012
The theme song of a popular TV show from the last decade featured the lyric “I worry all the time. If you paid attention, you’d be worried too”—a wise posture when analyzing the slow-motion crisis that is Europe.
European governments are toppling like clocktowers in an earthquake.… Turning the rascals out is a normal and healthy thing in a democracy. Who in China or Cuba wouldn’t love the same opportunity? But the European elections are signaling something disquieting—the rise of radicals of both the right and the left.
In the first round of presidential balloting, nearly a third of France’s voters chose either a Trotskyite, Jean-Luc Melenchon (who campaigned to confiscate the incomes of the wealthy) or Marine Le Pen, of the National Front, whose protectionist party fuses anti-immigration fervor with a grab bag of nationalist sentiments.…
Greece [meanwhile] seems to be feverish and unhinged. For decades, Greek governments have promised ever more lavish benefits to voters with the costs put off into the indefinite future. That future is now arriving in the form of bankruptcy, or (because Greece is part of the eurozone), externally imposed austerity. Violence has flared repeatedly over the past several years, as a spoiled population has chafed under the combined effects of recession and government cuts. Now more than 60 percent of Greek voters have chosen small left- and right-wing parties over the ruling Pasok and New Democracy parties.
The Golden Dawn, whose symbol bears a close resemblance to the swastika, won 7 percent of the vote and will send 21 delegates to the 300 member parliament. Golden Dawn opposes not just the austerity plan, but also the “so-called Enlightenment” and the Industrial Revolution. As firecracker-wielding young toughs with shaven heads demonstrated outside, Golden Dawn leader Nikos Michaloliakos announced from an Athens hotel that “the time for fear has come.…” [On Monday, Michaloliakos denied there were gas chambers or ovens at Nazi death camps: “There were no ovens. This is a lie.… There were no gas chambers either,” he said in an interview with Mega TV network. He also derided as an exaggeration that six million Jews were murdered in the Holocaust—Ed.]
On the same end of the spectrum Syriza, or the Coalition of the Radical Left, won 16.4 percent of the vote and 51 seats in parliament.… Like Golden Dawn, Syriza trafficks in implied and sometimes actual violence. Its component parties’ names pretty much tell their own story: Synaspismos (Coalition of the Left of Movements and Ecology); AKOA (Renewing Communist Ecological Left); KOE (Communist Organization of Greece); DEA (Internationalist Workers’ Left)…and so on.
Greece may be the loose thread that unravels the garment. Economist Desmond Lachman, formerly of the International Monetary Fund…is concerned that if Greece does not comply with its obligations, the sovereign-debt crisis in Europe will deepen dramatically, with contagion dragging the continent into another financial crisis from which the U.S. would not be shielded.
Unlike floods and earthquakes, this disaster is entirely manmade and utterly avoidable.… Europeans sabotaged themselves by embracing the foolish idea that they could have an economic union without a political union. They are also paying the price for failing to come to terms with actuarial realities—their populations are graying. Without reforms of pension and other benefits, they cannot sustain their standard of living. Rather than face their own corruption, the Greeks, principally (but also other Europeans), are disintegrating into raging extremists blaming anyone and everyone else.
That’s the object lesson for us. Here, [US President] Barack Obama…[is] promising Americans more of this fool’s gold—limitless government benefits with costs imposed on someone else (“the rich” or future generations). It’s an engraved invitation to Athens.
EXTREMISM IN EUROPE
Editorial
Jerusalem Post, May 8, 2012
A worrying trend is sweeping Europe. Extremist parties on both the far-Left and the far-Right are on the rise, apparently exploiting the economic turmoil that has swept across the debt-ridden continent.…
In France, a number of anti-Zionist parties on the far-Left made a strong showing in the first round of voting in April. And in the wake of socialist François Hollande’s victory over Nicolas Sarkozy…there is a real possibility that these parties will be included in Hollande’s government coalition.… These Trotskyites, anarchists and Greens, who succeeded in garnering 15% of the vote in the first round of voting, have collaborated with Islamists. Shimon Samuels, Director for International Relations of the Simon Wiesenthal Center, has testified to seeing representatives of these parties “marching with Hezbollah banners, incongruously invoking Allahu Aqbar” in demonstrations in France.…
Cause for additional worry in France is the surprising success of Marine Le Pen’s National Front, which received 18% of about 11 million votes in the first round. And more support for the extreme Left and Right is expected in the upcoming legislative elections and in the regional and local ballots.
Meanwhile, in London’s mayoral election, rabidly anti-Zionist Ken Livingstone—who has excused suicide attacks and accused Israel of ethnic cleansing—nearly defeated…incumbent Boris Johnson. Particularly worrying, was the precedent set. Livingstone managed to receive 48% of the vote on a campaign that appeared to be based on catering to one million Muslim votes by alienating some 200,000 Jews.… Promoting an anti-Israel position to garner Muslim support could become a tactic in other cities where there is a high percentage of Muslim residents.
In Greece, the neo-Fascist Golden Dawn party won 7% of parliament seats, easily passing the 3% threshold. In the 2009 elections Golden Dawn received just 0.29% of the vote.… As support for mainstream parties in Greece has waned, the space for the fringe has widened.… Inevitably, the rise of extremism—whether on the Right or on the Left—is bad for the Jews. Benjamin Albalas, head of the Jewish community in Athens has voiced his concern over the rise of parties like Golden Dawn.…
Recent developments in Europe point to a worrying trend of far-Left and far-Right empowerment. As was the case in the wake of World War I, Europeans’ support for extremist parties…is liable to grant these radicals undeserved respectability and legitimacy. Can it be that Europeans have so quickly forgotten the lessons of the recent past?
