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Eurozone Debt Crisis, Balkanization and the Growth of Greater Germany


COMMENT: The invalu­able german-foreign-policy.com newslet­ter (which feeds along the bot­tom of the front page of this web­site) sheds inter­est­ing light on how the indebt­ed­ness of fail­ing Euro­pean economies plays into the hands of those who aspire to the geo­graph­i­cal expan­sion of Ger­many.

Wealth­i­er areas of strug­gling nations are mov­ing toward seces­sion, in some cas­es look­ing to realign with Ger­many or Aus­tria or, in the case of oil-enriched Scot­land, weak­en­ing the Unit­ed King­dom, Berlin’s main rival.

Note that both Ger­many and Hun­gary (part of the Axis in WWII) have grant­ed cit­i­zen­ship to cit­i­zens of oth­er coun­tries who are of Ger­man and Hun­gar­i­an ances­try.

This has been tak­ing place as Hun­gary man­i­fests polit­i­cal reac­tion sim­i­lar to that of the fas­cist Arrow Cross orga­ni­za­tion that allied with Hitler in World War II and the Repub­li­can Par­ty’s eth­nic out­reach branch in the post­war peri­od.

“Europe Adrift (II)”; german-foreign-policy.com; 12/22/2011.

EXCERPT: Under the pres­sure of the Euro cri­sis, seces­sion­ist con­flicts — some direct­ly sup­port­ed by Berlin — are esca­lat­ing in var­i­ous Euro­pean coun­tries. Italy is most affect­ed, where the coun­try’s more pros­per­ous regions seek to secede from the nation, to escape Berlin’s aus­ter­i­ty dic­tate. Accord­ing to the rea­son­ing, Italy’s more impov­er­ished south­ern regions are respon­si­ble for the coun­try’s enor­mous nation­al debt and should there­fore be the main ones to pay the price. Seces­sion­ist demands are raised par­tic­u­lar­ly in the Ger­man-speak­ing region of South Tyrol and in the Po Val­ley region “Pada­nia”. Where­as in “Pada­nia,” pres­ti­gious ele­ments, par­tic­u­lar­ly those affil­i­at­ed with the “Lega Nord” (North League), are seek­ing to form an inde­pen­dent nation, eth­nic chau­vin­ist cir­cles in “South Tyrol” are seek­ing annex­a­tion by Aus­tria. Fol­low­ing the pat­tern of both Hun­gary and Ger­many, Vien­na is cur­rent­ly con­sid­er­ing grant­i­ng cit­i­zen­ship to “Aus­tri­ans abroad.” Seces­sion­ist forces are also gain­ing ground in Great Britain. In Scot­land, a ref­er­en­dum on the ques­tion of form­ing an inde­pen­dent coun­try is sched­uled for 2014 or 2015. Ger­many would be the pri­ma­ry ben­e­fi­cia­ry of a weak­en­ing of its British rival. . . .



11 comments for “Eurozone Debt Crisis, Balkanization and the Growth of Greater Germany”

  1. deeply inter­est­ed WW11 vet­er­an

    Posted by Harry Beckhough | January 13, 2012, 3:13 am
  2. engage3d in research on Ger­many growth

    Posted by Harry Beckhough | January 13, 2012, 3:15 am
  3. You have to won­der how long it’s going to be before the Szek­ler auton­o­my move­ment is back in the news:

    Sfan­tu Ghe­o­rghe Jour­nal
    Kosovo’s Actions Heart­en a Hun­gar­i­an Enclave

    Pub­lished: April 7, 2008

    SFANTU GHEORGHE, Roma­nia — Dozens of wreaths trail­ing rib­bons in red, white and green, the col­ors of the Hun­gar­i­an flag, cov­ered the base of a memo­r­i­al to the 1848 rev­o­lu­tion in the town park here on a recent day. Deep in the heart of Roma­nia, just one lone­ly gar­land bears the country’s own blue, yel­low and red ban­ner.

    New Year’s is cel­e­brat­ed twice here, first at the stroke of mid­night and then an hour lat­er, when it is mid­night in Budapest. When Koso­vo declared its inde­pen­dence from Ser­bia in Feb­ru­ary, hun­dreds of the town’s Hun­gar­i­ans took to the main square to demon­strate in favor of Koso­vo, and by exten­sion their own aspi­ra­tions for auton­o­my.

    A Hun­gar­i­an minor­i­ty group is press­ing for greater auton­o­my in a region where its mem­bers out­num­ber Roma­ni­ans. A new and more rad­i­cal orga­ni­za­tion, the Hun­gar­i­an Civic Par­ty, has risen to chal­lenge the estab­lish­ment Hun­gar­i­an par­ty, which has been a mem­ber of each coali­tion gov­ern­ment since 1996.

    Those who argue that inde­pen­dence for Koso­vo has set a bad prece­dent tend to talk about frozen con­flicts out­side the Euro­pean Union — Abk­hazia and South Osse­tia, in Geor­gia, and Transnis­tria in Moldo­va. But even in the Euro­pean Union, bor­ders are often arbi­trary. Many eth­nic minori­ties, like the Basques and the Roma, remain state­less while oth­ers, like the Hun­gar­i­ans in Roma­nia, as well as in Slo­va­kia and Ser­bia, are still sep­a­rat­ed from their brethren.

    The Hun­gar­i­an minor­i­ty here, known as Szek­lers, cer­tain­ly believe their time for inde­pen­dence has arrived and that their pro­posed semi-autonomous state, Szek­ler­land, is an impend­ing real­i­ty.

    “Koso­vo is an exam­ple, and a very clear one, that if the com­mu­ni­ty wants to live under self-gov­ern­ment, we have to declare very loud­ly our will,” said Csa­ba Fer­encz, vice pres­i­dent of the Szek­ler Nation­al Coun­cil, a local Hun­gar­i­an group found­ed in 2003 with auton­o­my as its stat­ed goal. Szek­lers are a dis­tinct eth­nic group from the Mag­yars, Hungary’s dom­i­nant pop­u­la­tion.

    Their chances of suc­cess appear slim, but they are press­ing ahead to the cha­grin of Roma­ni­ans here, who say that as a local minor­i­ty they have few­er rights than Hun­gar­i­ans do as a nation­wide minor­i­ty.

    The Hun­gar­i­an region, com­pris­ing part of Mures Coun­ty and all of Harghi­ta and Cov­as­na, where Sfan­tu Ghe­o­rghe is the cap­i­tal, was once a bor­der area of the Hun­gar­i­an king­dom defend­ed by the Szek­lers. After World War I, the Szek­lers found them­selves smack in the mid­dle of Roma­nia, a few hours dri­ve north through the Carpathi­an Moun­tains from Bucharest.

    The con­clu­sion of the war is best remem­bered for the harsh terms imposed on Ger­many. But the peace agree­ment signed by Hun­gary in 1920, the Treaty of Tri­anon, was arguably even tougher. Hun­gary lost rough­ly two-thirds of its ter­ri­to­ry and pop­u­la­tion, includ­ing one-third of its Hun­gar­i­an speak­ers, in the dis­so­lu­tion of the Aus­tro-Hun­gar­i­an Empire, a loss that to this day is known as the Tri­anon trau­ma. (Hun­gary regained most of its lost ter­ri­to­ries tem­porar­i­ly dur­ing World War II.)

    Nowhere is the Hun­gar­i­an minor­i­ty larg­er or more vocal in its demands for greater inde­pen­dence than in Roma­nia. Hun­gar­i­ans make up 1.5 mil­lion of Romania’s 22 mil­lion peo­ple, about half of them Szek­lers. Lit­tle won­der that Roma­nia, a mem­ber of the Euro­pean Union and the host of the just-com­plet­ed NATO sum­mit meet­ing, joined Slo­va­kia, Ser­bia and Rus­sia in refus­ing to rec­og­nize Koso­vo.

    Unlike the Koso­vars, the Szek­lers are ask­ing for auton­o­my with­in Roma­nia rather than com­plete inde­pen­dence, leav­ing for­eign pol­i­cy and nation­al defense in the hands of the gov­ern­ment in Bucharest. Szek­ler­land would be near­ly 4,000 square miles, with just over 800,000 peo­ple, three-quar­ters of them Hun­gar­i­an.


    The coun­cil shares its head­quar­ters with the new­ly mint­ed Hun­gar­i­an Civic Par­ty, which was approved in March to take part in elec­tions, as an alter­na­tive to the main­stream Demo­c­ra­t­ic Union of Hun­gar­i­ans in Roma­nia. The Demo­c­ra­t­ic Union stands accused, by Roma­ni­ans in par­tic­u­lar, of old-fash­ioned eth­nic machine pol­i­tics. But their Civic Par­ty oppo­nents accuse them of sell­ing out.

    “Since 1996 they are in the gov­ern­ment and we think once they were, they rep­re­sent­ed the inter­ests of the Roman­ian major­i­ty and not the Hun­gar­i­an minor­i­ty,” said Zoltan Gaz­da, pres­i­dent of the Sfan­tu Ghe­o­rghe branch of the new par­ty.

    “We have always respect­ed the Roman­ian laws in our fight for auton­o­my, but if this does not have a good end­ing it may raise up oth­er kinds of ten­sions,” Mr. Gaz­da said. “We have sig­nals that the dis­con­tent can increase with con­flicts.”


    Under Com­mu­nism, the dic­ta­tor Nico­lae Ceaus­es­cu tried to dilute the Hun­gar­i­an pop­u­la­tions by mov­ing Roma­ni­ans into areas where they were con­cen­trat­ed, par­tic­u­lar­ly along the bor­der with Hun­gary.


    And then there’s the “Szek­ler Legion”:

    Cor­rib link to Irish man’s death
    Apr 26th, 2009
    by John Dono­van.
    The Sun­day Times
    April 26, 2009
    Michael Dwyer worked on Shell project before his death in Bolivia
    Mark Tighe and Eduar­do Gar­cia

    MICHAEL DWYER, the Tip­per­ary man shot dead in Bolivia, worked in secu­ri­ty on the Shell Cor­rib project with a Hun­gar­i­an asso­ciate of the main tar­get of the Boli­vian police attack.

    It now seems like­ly that Tibor Revesz, 32, who worked with Dwyer for Inte­grat­ed Risk Man­age­ment Ser­vices (IRMS), a secu­ri­ty com­pa­ny that pro­tects Shell’s gas project in Mayo, is the link between the Tip­per­ary man and Eduar­do Rozsa Flo­res.

    I‑RMS refused to answer queries but issued a state­ment con­firm­ing that Dwyer worked for them up to Octo­ber 20 last year.

    Before he trav­elled to Bolivia, Flo­res said he was going to the San­ta Cruz region to form a mili­tia to pro­tect the region against the cen­tral gov­ern­ment.

    Both Flo­res and Revesz were mem­bers of the Szek­ler Legion, a Hun­gar­i­an group that wants to fight for the inde­pen­dence of Szek­ler­land, home to eth­nic Hun­gar­i­ans in the heart of Roma­nia.

    One of the group’s web­sites con­tains a post, dat­ed Octo­ber 30 2008, call­ing for vol­un­teers to send in their CVs if they could work for an unnamed man to help in the defence of San­ta Cruz in Bolivia. This man may have been Flo­res.

    Dwyer trav­elled out to Bolivia in Novem­ber with a Hun­gar­i­an, believed to be Revesz, and two oth­er men to do a secu­ri­ty course. When this course fell through, Dwyer is said to have stayed on to work for a “wealthy guy” accord­ing to his father. The oth­er men who trav­elled out with Dwyer did not stay in Bolivia.


    Posted by Pterrafractyl | January 13, 2012, 12:59 pm
  4. Good to see you back on this web­site, Mr. Beck­hough.

    It is deeply mov­ing to me to see one of the Heroes of Bletch­ley Park check­ing in here.

    Thanks and know that oth­ers are car­ry­ing on the good fight.

    Posted by Dave Emory | January 13, 2012, 9:07 pm
  5. Yes, Dave and Mr Beck­hough,

    Oth­ers are car­ry­ing the good fight, reg­u­lar users of this web­site for exam­ple, such as myself, Pter­rafractyl, Steven, Rob Coogan, Dwight, R. Wil­son, to name a few. And I have good news for you: the days of the Euro­pean Union are num­bered. Stan­dard and Poor’s have just degrad­ed France’s cred­it rat­ing from AAA to AA+. In a mat­ter of a few months, the whole EU will blow out and the Euro will be aban­doned. This night­mare will be over. Of course, you saw it for what it was years ago, but now we are mil­lions that can see the same thing.

    Thank you for your great work, Mr Beck­hough!

    Posted by Claude | January 13, 2012, 11:16 pm
  6. @Mr. Beck­hough: Why, hel­lo, and good tid­ings! Glad to see you back, good sir. :)

    Posted by Steven l. | January 14, 2012, 3:12 pm
  7. In light of the eth­nic-Hun­gar­i­an Szek­ler move­ment in Roma­nia, here’s a 2010 arti­cle about Vik­tor Orban’s Fidesz par­ty in Hun­gary seek­ing duel Hun­gar­i­an cit­i­zen­ship for eth­nic Hun­gar­i­ans in neigh­bor­ing coun­tries. With Orban’s par­ty hav­ing achieved near com­plete con­trol of Hun­gary’s levers of pow­er, and ten­sions with Slo­va­kia already erupt­ing over the cit­i­zen­ship fast-track law, this will be a leg­isla­tive agen­da to watch going for­ward:

    Fidesz plans new IMF deal, eyes dual cit­i­zen­ship

    By San­dor Peto and Mar­ton Dunai

    BUDAPEST | Thu Apr 15, 2010 5:57am EDT

    (Reuters) — Hun­gary’s new cen­ter-right gov­ern­ment will seek a new deal with inter­na­tion­al lenders and plans to make it eas­i­er for eth­nic Hun­gar­i­ans in neigh­bor­ing coun­tries to obtain dual cit­i­zen­ship, for­eign min­is­ter-des­ig­nate Janos Martonyi told Reuters.

    The Fidesz par­ty, which named Martonyi as its can­di­date for the top job in Hun­gar­i­an diplo­ma­cy, won elec­tions by a land­slide on Sun­day and could end up with a two-thirds major­i­ty in the next par­lia­ment after a run-off vote on April 25.

    “Well, I think we have to sit down as soon as pos­si­ble (with the IMF and EU),” Martonyi said in an inter­view late on Wednes­day.

    “We have to talk about the present agree­ment and the exact sit­u­a­tion about that agree­ment, and giv­en the fact that the present agree­ment will expire in Octo­ber this year, we also have to dis­cuss a pos­si­ble exten­sion under amend­ed terms, per­haps, or about mak­ing a new agree­ment. We are com­plete­ly open.”


    He also said the issue of grant­i­ng eas­i­er access to cit­i­zen­ship to eth­nic Hun­gar­i­ans beyond the bor­ders would be on the next gov­ern­men­t’s agen­da.

    Dual cit­i­zen­ship for some 1.5 mil­lion eth­nic Hun­gar­i­ans in Roma­nia, half a mil­lion in Slo­va­kia and more in Ser­bia and Ukraine, was derailed by a failed 2004 ref­er­en­dum.

    Fidesz has a good chance to get a two-thirds major­i­ty in par­lia­ment, nec­es­sary to mod­i­fy the exist­ing cit­i­zen­ship laws.

    “Hun­gar­i­ans liv­ing in the neigh­bor­ing coun­tries... can (now) only obtain cit­i­zen­ship if they set­tle down in this coun­try... for a giv­en peri­od of time,” Martonyi said. “This will be sim­pli­fied by amend­ing the exist­ing leg­is­la­tion.”

    For now, eth­nic Hun­gar­i­ans can only obtain cit­i­zen­ship if they ful­fill a set of legal cri­te­ria and pass cer­tain tests.

    Martonyi said he believed grant­i­ng them eas­i­er access should not lead to ten­sions with Hun­gary’s neigh­bors.

    Slo­vak Prime Min­is­ter Robert Fico said the cit­i­zen­ship issue had the poten­tial to sour rela­tions between Hun­gary and Slo­va­kia.

    “There is some mis­un­der­stand­ing that this could be a kind of ‘en masse’ auto­mat­ic grant­i­ng of cit­i­zen­ship. This is not the case,” Martonyi said. “Obtain­ing the cit­i­zen­ship (would be) always done on an indi­vid­ual basis.”

    Martonyi said grant­i­ng these new cit­i­zens the right to vote was also a pos­si­bil­i­ty, but stressed the vot­ing right was a sep­a­rate issue and was not part of the planned leg­is­la­tion.


    Yep, this could get ugly:

    Decem­ber 19th, 2011
    Fidesz youth group launch­es protest cam­paign against Slo­vak cit­i­zen­ship law
    By MTI

    Fideli­tas, the youth wing of rul­ing par­ty Fidesz, has launched a series of actions in protest against moves by the Slo­vak author­i­ties to deprive Slo­vaks of Hun­gar­i­an ori­gin of their cit­i­zen­ship when they take up Hun­gar­i­an cit­i­zen­ship, Peter Agh, Fidelitas’s chair­man told a news con­fer­ence in front of the Slo­vak embassy in Budapest on Sun­day.

    Agh said what had tak­en place in Slo­va­kia in the recent past was unprece­dent­ed in a mod­ern Euro­pean democ­ra­cy. He not­ed that peo­ple had been stripped of their cit­i­zen­ship “whose only crime was to estab­lish a legal bond with anoth­er EU mem­ber state, name­ly Hun­gary.”


    Boldoghy of the city of Komarno said all Slo­vaks should have the right to dual cit­i­zen­ship.

    “The aim of my ini­tia­tive is that the Slo­vak gov­ern­ment — pre­cise­ly which one and its com­po­si­tion are irrel­e­vant — should abol­ish this point­less and essen­tial­ly imprac­ti­ca­ble law. At the same time I should like to suc­ceed in ensur­ing that every Slo­vak cit­i­zen feels free to take up the cit­i­zen­ship of anoth­er coun­try,” Boldoghy said.

    Slo­va­kia enact­ed the law after Hun­gary intro­duced a fast-track cit­i­zen­ship pro­ce­dure for Hun­gar­i­ans liv­ing beyond the bor­der.


    Posted by Pterrafractyl | January 19, 2012, 11:30 pm
  8. We are proud to announce the iron­ic term of the week: “Judi­cial Czar”.

    Posted by Pterrafractyl | March 11, 2012, 5:15 pm
  9. There’s an impor­tant human cap­i­tal dynam­ic that’s emerg­ing in the euro­zone: labor migra­tion from the PIIGS to the wealth­i­er mem­bers (it sounds like most­ly Ger­many) and the asso­ci­at­ed “brain drain” of high­ly skilled work­ers. It part of a the nEU Nor­mal:

    Ger­many to open doors for skilled work­ers from non-EU coun­tries
    PTI Jun 23, 2011, 10.06pm IST

    BERLIN: Faced with a short­age of high­ly qual­i­fied spe­cial­ists and skilled work­ers in many hi-tech fields, Ger­many has eased the restric­tions on migra­tion of some pro­fes­sion­al groups from non-EU coun­tries that had made it more dif­fi­cult for them to find work in the coun­try.

    It is for the first time, since the reg­u­la­tions on the recruit­ment of these pro­fes­sion­als were tight­ened in the ear­ly 1970s, that the Ger­man gov­ern­ment has agreed with indus­try and union lead­ers to go for a long-term con­cept that includes chang­ing immi­gra­tion laws.

    The new con­cept endorsed by the cab­i­net yes­ter­day, exempt­ed mechan­i­cal and elec­tri­cal engi­neers, auto­mo­bile con­struc­tors and med­ical pro­fes­sion­als from a require­ment that Ger­man com­pa­nies can appoint them only when suit­able can­di­dates are not avail­able with­in the coun­try or in the EU.

    Ger­man com­pa­nies intend­ing to recruit those spe­cial­ists from non-EU coun­tries no longer require to pro­duce such a cer­ti­fi­ca­tion from the Fed­er­al Labour Office, Chan­cel­lor Angela Merkel said.

    Merkel said her gov­ern­men­t’s con­cept is a two-pronged strat­e­gy to tack­le the short­age of spe­cial­ists by exploit­ing the poten­tial avail­able with­in the coun­try and by mak­ing the coun­try more attrac­tive for spe­cial­ists from non-EU coun­tries.

    Ger­man Insti­tute for Labour Mar­ket Research esti­mates that the coun­try will face a short­age of around 6.5 mil­lion spe­cial­ists and skilled work­ers by 2025 as a result of an age­ing pop­u­la­tion if effec­tive steps were not tak­en to off­set the decline through migra­tion and by devel­op­ing domes­tic resources.

    Anoth­er insti­tute fore­casts Ger­man labour mar­ket will have vacan­cies for up to 240,000 engi­neers by 2020.

    The open­ing of Ger­man labour mar­ket for job-seek­ers from East Euro­pean mem­bers of the EU on May 1 did very lit­tle to alle­vi­ate the short­age of spe­cial­ists because the influx of work­ers so far were main­ly in the low-wage seg­ment, the stud­ies said.


    At the same time, the gov­ern­ment also wants to open the areas of engi­neer­ing, auto­mo­bile con­struc­tion and health care for spe­cial­ists from non-EU coun­tries, Merkel said.

    Until now, Ger­man firms were allowed to recruit only cooks spe­cial­is­ing in for­eign cui­sine and foot­ball pro­fes­sion­als and top-rank­ing ath­letes from non-EU coun­tries with­out a pri­or exam­i­na­tion that local or EU can­di­dates were avail­able.

    “This is only just the begin­ning and more needs to be done” to make the coun­try more attrac­tive for high­ly qual­i­fied spe­cial­ists and skilled work­ers from out­side the EU, Ms Merkel said.

    How­ev­er, Chan­cel­lor Merkel’s Chris­t­ian Demo­c­ra­t­ic Union and its coali­tion part­ner Free Demo­c­ra­t­ic Par­ty (FDP) could not agree on reform­ing a con­tro­ver­sial rule that spe­cial­ists and skilled work­ers from non-EU coun­tries should have a min­i­mum annu­al salary of 66,000 euros to obtain a res­i­dence per­mit in Ger­many.

    Many experts and labour mar­ket ana­lysts argue that this min­i­mum salary require­ment is the biggest hur­dle for high­ly qual­i­fied job-seek­ers from non-EU coun­tries to migrate to this coun­try.

    It is esti­mat­ed that less than 700 spe­cial­ists came to Ger­many in 2010 through this arrange­ment.

    Ger­man Eco­nom­ics Min­is­ter Philipp Roesler, who is also the chair­man of the FDP, described the present min­i­mum salary require­ment for non-EU job-seek­ers as “too high” and demand­ed that it should be brought down to 40,000 to make the coun­try more attrac­tive for spe­cial­ists out­side the EU.

    He said a min­i­mum salary require­ment of 40,000 euros would be ide­al for spe­cial­ists from non-EU coun­tries and dis­missed fears expressed by his coali­tion part­ners from Merkel’s CDU that it will con­tribute to a mass migra­tion from out­side the EU.

    Roesler was sup­port­ed by Labour Min­is­ter Ursu­la von der Leyen and Edu­ca­tion Min­is­ter Annette Scha­van, who shared the view that the present min­i­mum annu­al salary require­ment is too high and it will make Ger­many unat­trac­tive for spe­cial­ists from out­side the EU.

    Leyen called for har­mon­is­ing the min­i­mum salary require­ment with Ger­many’s EU part­ners.

    This will make sure that Ger­many will not be dis­ad­van­taged on an inter­na­tion­al lev­el, she said.


    Ok, so the Ger­man labor mar­ket is about to get the shock doc­trine (applied across the wage scale), espe­cial­ly for high­ly skilled work­ers. And the FPD is even call­ing for migrant work­er min­i­mum wage pol­i­cy har­mo­niza­tion with the rest of the EU mem­bers. This could get inter­est­ing:

    The Chris­t­ian Sci­ence Mon­i­tor
    Rebel­lious unions upend Ger­man order

    Ger­many has a tra­di­tion of good rela­tions between unions and employ­ers, but as sup­port erodes for well-estab­lished groups, work­ers are join­ing small­er unions will­ing to buck the con­sen­sus.

    By Isabelle de Pom­mereau, Cor­re­spon­dent / March 12, 2012

    Frank­furt, Ger­many

    Strand­ed pas­sen­gers doz­ing on their suit­cas­es and grum­bling over can­celled flights because of strikes is a scene one might expect in France or Greece, but not in Ger­many, where good labor rela­tions have been fun­da­men­tal to its eco­nom­ic suc­cess.


    GdF’s strike, which had far-reach­ing effects despite the small num­ber of par­tic­i­pants, high­lights a shift in Germany’s orga­nized labor sys­tem: the rise of small­er, bold­er unions who buck the tra­di­tion of con­sen­sus-build­ing between indus­try-wide unions and employ­ers.

    After decades of allow­ing unions to essen­tial­ly gov­ern them­selves through spe­cial labor courts, more and more Ger­man politi­cians are call­ing on the gov­ern­ment to rein in these rebel­lious unions.


    Strikes are a com­mon form of protest against unpop­u­lar poli­cies through­out Europe, but in Ger­many strikes can only be staged against issues of pay and work­ing con­di­tions. When France raised the min­i­mum legal pen­sion age from 60 to 62 in 2010, the weeks of nation­wide strikes threat­ened the cen­ter-right gov­ern­ment. When the Ger­man par­lia­ment raised the retire­ment age from 65 to 67 in 2007, there were no strikes.


    A splin­ter­ing of con­sen­sus

    In the past cou­ple of decades, indus­try-wide unions have splin­tered into small­er ones, often made up of more high­ly qual­i­fied employ­ees. They say they have been neglect­ed by the big­ger unions.

    “You now have cer­tain groups in a strong nego­ti­at­ing posi­tion break­ing off and demand­ing their own, much bet­ter deals,” says Low­ell Turn­er, chair­man of the inter­na­tion­al and com­par­a­tive labor depart­ment at Cor­nell Uni­ver­si­ty. “That’s a threat for the Ger­man mod­el of indus­tri­al rela­tion and social part­ner­ship.”

    Air­line pilots were among the first to do so, break­ing ranks with the white-col­lar employ­ees’ union and strik­ing to obtain their own deal. Six years lat­er, a union rep­re­sent­ing doc­tors aban­doned an agree­ment with the ser­vice sec­tor union, which rep­re­sents 1,000 pro­fes­sions, in order to obtain a bet­ter deal than the one they thought the mega union could offer them.

    Then, in 2007, an old, small, pre­vi­ous­ly insignif­i­cant union rep­re­sent­ing Germany’s train dri­vers halt­ed train traf­fic across the coun­try to demand a bet­ter deal for their dri­vers than the one secured by the rail­roads’ major union. It was the biggest strike the coun­try had seen since 1945.

    “Unions are becom­ing more self-secure; they’re increas­ing­ly using the threat poten­tial,” says Gerd Held of Berlin’s Tech­ni­cal Uni­ver­si­ty.


    Posted by Pterrafractyl | March 12, 2012, 10:27 pm
  10. Ha! Deficits....yeah, THAT’s the big prob­lem with what’s going on in Hun­gary.

    I nev­er thought I’d see anoth­er major demo­c­ra­t­ic com­mu­ni­ty dis­cred­it itself as rapid­ly as the US lead­ers man­aged to do dur­ing the recent Bush era, but in recent years the euro­zone lead­ers are giv­ing the Bushies a real run for their mon­ey.

    Posted by Pterrafractyl | March 13, 2012, 8:58 am
  11. The grow­ing con­cerns over a poten­tial bailout of Cyprus’s bank­ing sys­tem high­lights some­thing the euro­zone’s pro-seces­sion move­ments might want to con­sid­er if they’re plan­ning on stay­ing in the euro­zone after gain­ing inde­pen­dence: Big banks in small nations become tick­ing time bombs in the euro­zone:

    Cyprus’s now-cer­tain default
    By Felix Salmon
    Jan­u­ary 25, 2013

    Many con­grat­u­la­tions to Stephen Fidler, who has man­aged to get some actu­al news in Davos: EU eco­nom­ics com­mis­sion­er Olli Rehn went on the record telling him that Cyprus is going to have to restruc­ture its debt — just two weeks after rul­ing such a thing out.

    That might come as lit­tle sur­prise, giv­en that Cypri­ot banks were loaded up to the gills with Greek debt, and Greek debt suf­fered a 70% hair­cut. Cyprus is tiny, and could nev­er afford the €17 bil­lion need­ed to bail out the banks and the gov­ern­ment — espe­cial­ly since that would bring the country’s debt load up to more than 140% of GDP.

    Still, after the EU forced Greece to default, it drew a line in the sand: no more sov­er­eign defaults, it said, since Greece was “unique and excep­tion­al”. So this does go to show that you can’t real­ly trust Europe’s promis­es. What’s more, Cyprus’s now-cer­tain restruc­tur­ing is going to be sig­nif­i­cant­ly messier than Greece’s was.

    Greece’s debt restruc­tur­ing was essen­tial­ly unstop­pable for one main rea­son: most of its debt was issued under domes­tic law, rather than for­eign law. A tweak to domes­tic law, and sud­den­ly the vast major­i­ty of Greece’s cred­i­tors were bailed in to any deal, whether they vot­ed for it or not. Cyprus, in con­trast, doesn’t have that lux­u­ry: its bonds are most­ly issued under for­eign law. And that means any restruc­tur­ing is going to be much more dif­fi­cult.

    Lee Buch­heit and Mitu Gulati have a poten­tial solu­tion to that prob­lem, which involves amend­ing the treaty gov­ern­ing the Euro­pean Sta­bil­i­ty Mech­a­nism. But the oth­er big prob­lem in Cyprus will still loom: the ques­tion of the country’s bank deposits.

    In a coun­try like Cyprus (or Ice­land, or Switzer­land), where the bank­ing sec­tor is many mul­ti­ples of nation­al GDP, there’s very lit­tle dis­tinc­tion between res­cu­ing the banks and res­cu­ing the coun­try. And if the asset side of the banks’ bal­ance sheet is full of Greek sov­er­eign debt, the lia­bil­i­ty side is equal­ly dodgy: Cyprus is a noto­ri­ous cen­ter of dodgy off­shore bank­ing, espe­cial­ly for Rus­sians. If Cyprus is going to restruc­ture its lia­bil­i­ties, it’s going to have to face one huge ques­tion: will those restruc­tured lia­bil­i­ties include Russ­ian and oth­er for­eign deposits?

    If there’s any hint that Cyprus might force for­eign depos­i­tors to take some kind of hair­cut, of course, there will be a mas­sive run for the exits, and Cyprus’s cur­rent sol­ven­cy prob­lem will become a much more seri­ous and imme­di­ate liq­uid­i­ty prob­lem. The last thing that Cyprus or any oth­er coun­try needs is a bank run, which will leave the nation­al bal­ance sheet in the clas­sic pinch where “on the left, nothing’s right, and on the right, nothing’s left”. What’s more, in many ways the prece­dent of forc­ing depos­i­tors to take a hair­cut would be even more dam­ag­ing than the prece­dent of impos­ing a hair­cut on Greek bond­hold­ers: at that point there would be real­ly no rea­son at all to have deposits in any Mediter­ranean coun­try.


    As the above arti­cle indi­cates, there are an enor­mous num­ber of impor­tant ques­tions regard­ing the struc­ture of a Cyprus bank bailout giv­en the poten­tial size of the bailout com­pared to the size of the nation. But there’s also the ques­tion of whether or not Cyprus should get a bailout at all. It might be too tiny:

    Ger­man Cam­paign Buf­fets Cyprus Talks as Shiar­ly Seeks Res­cue
    By Rain­er Buer­gin and Bri­an Parkin on Jan­u­ary 31, 2013

    Cyprus is begin­ning a diplo­mat­ic effort to win the bailout it request­ed sev­en months ago as elec­tion-year pol­i­tics in Ger­many threat­en to impede talks.

    With Cyprus Finance Min­is­ter Vas­sos Shiar­ly speak­ing to skep­ti­cal Dutch law­mak­ers in The Hague today, Ger­man Finance Min­is­ter Wolf­gang Schaeu­ble is seek­ing to sat­is­fy doubters in his Par­lia­ment in Berlin to back a fifth euro-area bailout.

    By demand­ing that the so-called troi­ka of cred­i­tors deem Cyprus a threat to euro-area sta­bil­i­ty before aid is pro­vid­ed, Schaeu­ble has restat­ed Euro­pean Union rules in an appeal to aid- weary vot­ers spooked by reports of Russ­ian mon­ey-laun­der­ing in Cyprus. He has also rat­tled small­er euro states.

    “Schaeuble’s hes­i­ta­tion is for domes­tic con­sump­tion, a good cop, bad cop game to con­vince law­mak­ers that there’s no alter­na­tive to aid to Cyprus and to raise the price” for Ger­man approval, Carsten Brzes­ki, an econ­o­mist at ING Group in Brus­sels, said by tele­phone.

    Cyprus has been bogged down in nego­ti­a­tions since June with the troi­ka, com­pris­ing the Euro­pean Com­mis­sion, Euro­pean Cen­tral Bank and Inter­na­tion­al Mon­e­tary Fund. Shiar­ly speaks to law­mak­ers at 11:15 a.m. in the Nether­lands, where Finance Min­is­ter Jeroen Dijs­sel­bloem heads the group of euro finance offi­cials. He may trav­el to Berlin at a lat­er date.
    ‘Mis­lead­ing’ Reports

    Ger­man Chan­cel­lor Angela Merkel’s spokesman, Stef­fen Seib­ert, was the lat­est offi­cial to thump the EU rule­book, say­ing yes­ter­day that to qual­i­fy for aid, a coun­try must pose a risk to “all of the euro area.” He dis­missed media reports that Ger­many was soft­en­ing its stance as “very mis­lead­ing.”
    In small­er euro cap­i­tals, which are required to con­tribute to the ESM, Germany’s mes­sage may come across as a threat.

    “Aid to euro-zone mem­bers can’t depend on the size of the coun­try,” Slo­vak Finance Min­is­ter Peter Kaz­imir said Jan. 29 in an e‑mailed reply to ques­tions. “But of course, not meet­ing the rules can’t remain unpun­ished.”


    Merkel must also per­suade allies such as Michael Fuchs, a deputy par­lia­men­tary leader of her Chris­t­ian Demo­c­ra­t­ic Union, which is fac­ing pres­sure from vot­ers to rein in Germany’s oblig­a­tions.

    “I can­not accept that all of a sud­den small Cyprus is sys­temic,” Fuchs said Jan. 29 in an inter­view with Bloomberg Television’s Francine Lac­qua. Cyprus is “def­i­nite­ly not” a sys­temic risk, he said.

    ‘No Oth­er Way’

    Schaeuble’s insis­tence on sys­temic rel­e­vance is “a kind of needling to bring the sub­ject to a head in order to force a clear deci­sion,” Brzes­ki said. “That will allow him to say there was no oth­er way and the troi­ka report proves it.”

    Shiar­ly will prob­a­bly face sim­i­lar resis­tance when he speaks in the Dutch par­lia­ment today.

    “It hasn’t been decid­ed if the Nether­lands will sup­port Cyprus,” said Eddy van Hijum, a Chris­t­ian Demo­c­rat law­mak­er. Henk Nijboer of the Labor par­ty, agreed. “If there’s going to be a pack­age for Cyprus there must be con­di­tions like Greece had on health care, tax eva­sion, a com­plete fis­cal pack­age.”


    To sum­ma­rize: small states in the euro­zone may not want to have a large sys­tem­i­cal­ly impor­tant bank­ing sec­tors because at some point those banks will face a cri­sis and require a bailout. And bailouts equate to pub­lic aus­ter­i­ty because some­body has to pay off all the banksters:

    Cyprus faces bailout row over fears of ‘hair­cuts’ for investors – and savers

    IMF’s rad­i­cal pro­pos­als to reduce the size of Nicosi­a’s fund­ing needs could spark pan­ic in oth­er coun­tries strug­gling to main­tain pub­lic con­fi­dence in their banks

    John Hoop­er in Nicosia
    The Observ­er, Sat­ur­day 2 Feb­ru­ary 2013

    Euro­zone finance min­is­ters are expect­ed to delay a bailout for the Mediter­ranean island state of Cyprus tomor­row as its prospec­tive lenders con­tin­ued to wran­gle over terms that some fear could spark pan­ic in oth­er vul­ner­a­ble mem­ber states.

    Irate bond­hold­ers took to the streets of Nicosia last week after Cyprus’s finance min­is­ter, Vas­sos Shiar­ly, warned that local peo­ple who had invest­ed in bank debt face loss­es as part of the pro­posed deal. Shiar­ly said in The Hague on Thurs­day: “Pro­vi­sions have been made [for a write­down] – unfor­tu­nate­ly, for junior bond­hold­ers, a very unhap­py sit­u­a­tion.”

    This rep­re­sent­ed a vic­to­ry for the Inter­na­tion­al Mon­e­tary Fund – one of the “troi­ka” of like­ly res­cuers along with the Euro­pean com­mis­sion and the Euro­pean Cen­tral Bank – which is known to fear that Cyprus could need so much fund­ing that its debts would become unsus­tain­able if bank investors were not forced to take loss­es.

    The Greek-Cypri­ot con­trolled south of the divid­ed island got into trou­ble because of its ties with Greece. Its banks lost more than €4bn (£3.4bn) when Cyprus’s pres­i­dent, Demetris Christofias, agreed to a “hair­cut” of Greek sov­er­eign bond­hold­ers with­out seek­ing exemp­tion for his island.

    Shiar­ly told the Observ­er the move added 25% to Cyprus’s debts overnight. No oth­er mem­ber state had tak­en on more than an extra 1%. “We’re accept­ing these loss­es. We’re not ask­ing for a gift from our part­ners. We’re ask­ing for this under­stand­ing of our exces­sive sol­i­dar­i­ty in 2011.”

    The Cyprus gov­ern­ment needs cash for its pub­lic finances. But the banks need more – up to €10.3bn, accord­ing to leaks from a pro­vi­sion­al assess­ment by US invest­ment firm Pim­co, com­mis­sioned by the troi­ka and Greek-Cypri­ot offi­cials.

    Fiona Mullen of Nicosia-based con­sul­tan­cy Sapi­en­ta Eco­nom­ics esti­mates that, by 2016, that would inflate Cyprus’s debts to more than 140% of its annu­al GDP. The euro­zone has ruled out fur­ther Greek-style write­downs for hold­ers of euro­zone gov­ern­ment bonds on the grounds that they weak­en the banks of oth­er mem­ber states. In any case, they would drain cap­i­tal from the very Cypri­ot banks that so des­per­ate­ly need recap­i­tal­is­ing.

    To reduce the size of the bailout, there­fore, the IMF has argued behind the scenes for hair­cuts not just for hold­ers of bank debt, but for savers too – a prospect that appals EU and ECB offi­cials, who fear it could fright­en account-hold­ers in parts of the euro­zone where con­fi­dence in the bank­ing sys­tem is still low.


    Sev­er­al ways of reduc­ing the size of Cyprus’s bailout are being explored. Merkel favours pri­vati­sa­tions, which could raise €2bn. Greece was forced to put pub­lic assets, from air­ports to casi­nos, up for sale to help reduce the size of the res­cue pack­age it need­ed.

    Christofias has flat­ly reject­ed the idea of pri­vati­sa­tions, but he is not stand­ing in the gen­er­al elec­tion on 17 Feb­ru­ary. His like­ly suc­ces­sor is cen­tre-right can­di­date Nicos Anas­tasi­ades, who backs asset sales.


    Yes, Cyprus’s banks expe­ri­enced mas­sive loss­es from the Greek implo­sion and now need a 10 bil­lion euro bailout in order to recap­i­tal­ize the banks. With a GDP of 18 bil­lion euros this is the kind of sit­u­a­tion that could bank­rupt Cyprus itself and require a bailout of the state. And because Cyprus is tiny nation com­pared to the entire euro­zone it first needs to be deter­mined if Cyprus’s bank­ing sys­tem is “sys­tem­i­cal­ly impor­tant”. If Cyprus’s banks aren’t deemed to be sys­tem­i­cal­ly impor­tant the banks will pre­sum­ably be allowed to implode, inflict­ing who knows what dam­age on the pub­lic. And if they are deemed to be sys­tem­i­cal­ly impor­tant then a bailout might pro­ceed but with steps tak­en to reduce its size like state asset pri­va­ti­za­tions and a pub­lic aus­ter­i­ty pro­gram. It’s a cur­rent con­text inde­pen­dence move­ments that include large bank­ing sec­tors might want to con­sid­er.

    Posted by Pterrafractyl | February 3, 2013, 11:06 pm

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