Exclusive: Euro-Crisis Report Links Bailouts and Austerity To Fascism's Rise Across Europe

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Exclusive: Euro-Crisis Report Links Bailouts and Austerity To Fascism's Rise Across Europe

Exclusive: Euro-Crisis Report Links Bailouts and Austerity To Fascism's Rise Across Europe
Fri, 8/1/2014 - by Steve Rushton

Across Europe human rights, due process and democracy are eroding. On the surface, this seems most evident in the continent's electoral lurch in May toward parties of the far-right – especially Greece’s Golden Dawn, which secured the third most votes while demonstrating open Nazi affiliation.

The far-right’s rise connects directly, of course, with escalating conditions of social deprivation and economic hardship. The International Labor Organization recently announced public spending cuts have caused poverty to rise to 25% across the continent. In essence, we're watching austerity breed fascism.

Yet the greatest actual attack on democracy has come from neoliberals working within the system who generated those austerity policies – without any electoral mandate. Such policies diminish people’s rights, ignore national legal frameworks and disregard democratic sovereignty. The neoliberal attack is explained with striking detail and clarity in a forthcoming report by Christina Laskaridis, entitled False Dilemmas. (Laskaridis gave Occupy.com a pre-publication copy before its release by the U.K. research group Corporate Watch.

False Dilemmas aims to “dispel any illusions that the E.U. might reform into anything other than an authoritarian institution imposing socially harmful policies. The [Euro] crisis led to the creation of the Troika (the European Commission, the European Central Bank and the IMF), three institutions that are unaccountable, opaque and fundamentally undemocratic,” Laskaridis writes.

The report opens with an overview of key European bodies, such as the ECB, which are run by and in the interests of private bankers. Laskaridis explains the way that those behind the European project are above all furthering the interests of big business, free trade and deregulation. This includes the Euro currency project, which was initiated by a business and banking lobby.

The composition of the European Union, council of Ministers, European Council, the European Parliament and other institutions are examined in this work, presenting a complex web of power. Next, Laskaridis explains key economic theories to help understand why the Euro-crisis happened – and why officials chose to respond to it the way they did.

She attacks the neoliberal myths about the crisis that continue to be pedaled in the mainstream media: for instance, that southern European countries needed a bailout because they work too little, spend too much money or retire too early. Laskaridis substantiates her claims with graphs, tables and statistics footnoted with academic rigor. And her evidence shows that if it weren't for massive corporate tax evasion, countries would have gained billions of Euros and avoided the need for bailouts in the first place. Tax evasion is estimated to cost the E.U. approximately $1 trillion per year.

The report suggests, however, that simple myth-busting is not enough – nor will tackling corporate tax evasion alone solve the problem. Laskaridis instead wants us to look beyond corporate welfare and consider systemically why capitalism and neoliberalism have made society so inequitable.

Origins of the crisis

The Euro-crisis tracks back to the sub-prime mortgage crisis in America, with problems emerging as far back as 2001 – with even deeper ties connecting back to the 1970s oil crisis and neoliberal reforms that followed. According to Laskaridis, the 1970s crisis resulted in a greater reliance on debt to fuel the economy, which went hand-in-hand with that era's liberalization of markets and deregulation of finance.

Highlighting the impact of financial globalization, the report pinpoints structural causes of the Euro-crisis – such as European organizations’ control of monetary policy. Not surprisingly, the power imbalance in the Euro-club for both financiers and the Northern countries meant they set mechanisms like interests rates in their favor and against the interests of the Southern or peripheral nations.

Compounding the anti-Southern bias were the trade deficits that hit countries which joined the Euro at an over-inflated value to their national currencies. This in turn drove up their imports and lowered their exports.

Other problems preceding the crisis included good old-fashioned corruption, like in the case of Northern countries such as Germany selling weapons to Greece that they did not need – and which did not even work.

Crucially, the report catalogues the private debt that was shifted onto the public, particularly through the bank bailouts. Not only did the European bodies bail out the banks, but they used the bailout money to spiral the Southern countries into debt. “European finance was rescued, only to turn and bite its rescuer,” writes Professor Costas Lapavitsas in one of the many quotes that pepper the report.

Remembering Who Benefitted

Laskaridis stresses the importance of understanding that those who created the Euro-crisis made millions, if not billions, in the process. This includes vulture funds, finance and privatization profiteers who bought state assets at fire sale prices.

Even the bailouts themselves, she writes, were a mechanism for profiteering. The Euro institutions lent money to private banks cheaply in order that those banks could lend to Greece and other countries at much higher rates. A great deal of the bailout money, as a result, went right into private banks. As this report in 2013 made clear, “49% [of the Greek bailout of €206 billion] went straight back to the creditors and 28% was used to bailout (recapitalize) the Greek banks."

In other words, the very institutions that gave money to the private banks, which those banks used to escalate the crisis, could have done the reverse. Instead, the banking sector and its neoliberal partner institutions used the crisis to further their wealth and power, forcing through austerity policies that created a framework in which national governments had no choice but to make drastic public cuts. Meanwhile, Laskaridis's report reveals that national governments accepting the Troika consensus were all too often happy to go along with the push toward privatization.

The holistic description of this attack on democracy, and the societal devastation it created, opens up the question: how was it all allowed to happen? Laskaridis answers this, in part, by looking at the ways that popular dissent and protest were quelled by widespread police crackdown.

Additionally, she explains that austerity policies relied on a corporate merger of media, government and public institutions – and that the crisis of the last decade is still being used as an excuse by economic elite to force down more of the same "medicine" on populations, even if that medicine is the same poison that caused the condition.

And yet, with its focus on Greece, the report offers hope and alternatives. The crisis has not just bred fascism, maintains Laskaridis, but progressive counter movements as well. These include doctor-run community health clinics, worker takeovers of factories, people's assemblies, pan-European Blockupy actions against the ECB in Frankfurt, and other movements that have joined around the basic idea, “Don’t owe: won’t pay.”

This sentiment leads into the report's final section on debt audits: a tool to challenge the debt narrative and mobilize people around the concept that debts themselves are illegitimate. Laskaridis begins this section with a quote from Strike Debt's "Debt Resistor's Operations Manual":

“There is strength in numbers. Individually our debts overwhelm us; collectively our debts can overwhelm the system. There are ways of fighting back and reclaiming our lives and our communities from the current state of affairs. We are not looking for debt ‘forgiveness’; what we seek is the abolition of debt profiteering and its replacement by a society that nurtures the common good.”

It is noteworthy that American campaigns against debt have focused on private debt, whereas European campaigns focus primarily on public debt. Taken together, Laskaridis shows how resistance movements on either side of the Atlantic are challenging debt as a fundamental way to reclaim sovereignty and reassert democracy.

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