I.M.F. Report Shines Uncomfortable Light on Greece’s Financing Gap
By JACK EWING
JULY 15, 2015
The end of an affair for France and Germany
The faultlines on Greece are set to deepen and widen, writes François Heisbourg
by: François Heisbourg
The often-forgotten secret is that France and Germany rule the roost not because they agree but because they do not: De Gaulle wanted a Europe of nation states, Adenauer was a self-avowed federalist, and a few days ago Berlin was actively considering Grexit, while Paris worked to keep Greece in the single currency. Because the two countries often represent polar opposites within the mainstream EU conversation, a deal struck by Germany and France can usually be accepted by all, minus the UK. This does not mean the couple’s balance remains unchanged. During the cold war, a strategically dependent Germany ceded the central role to France. Nowadays, German leadership on issues such as Ukraine is made acceptable thanks to cover provided by France. Similarly, the deal struck in Brussels on Greece bears the “no-debt-forgiveness” footprint dear to Germany.
Last Monday, France was one of only three countries out of 18 ready to sign on to a new bailout deal with Greece (Italy and Cyprus were the two others). But it is France and Germany together who took the final decision. Germany kept debt restructuring off the table. France also got what it wanted: no Grexit. Mr Hollande received high acclaim on his return from Brussels.
So the tired old couple still works some of its magic. The fact Ms Merkel and Mr Hollande share character traits may have helped: unabrasive and diffident, they are born proponents of the quest for compromise, important in German coalition-building and the Socialist party’s art of synthesis.
Unfortunately, by having avoided what they loathe — debt forgiveness — the Germans may now be hoist with their own petard. Adding billions to Greek debt, enforcing pro-cyclical pension cuts and tax increases in the middle of renewed recession, and positing as in 2011 a €50bn privatisation programme: this is as unlikely to work now as it was in the past. Now it has acquired the formal status of plan B, Grexit is likely to come back. France would then be faced with an impossible choice: to flow with the German-led tide of Grexit, clearly as a subordinate, or to fight a losing battle to prevent a country from being forced out of the European family.
Even Franco-German co-management may not be up to striking a workable compromise. The change behind the scenes is that the Paris-Berlin bond can no longer take strength from the shared project of European integration: France’s 2005 rejection of the proposed EU constitution was a turning point. The relationship has instead become utilitarian and as a result the EU’s days of ever closer union may be at an end.
The writer is special adviser at the Paris-based Fondation pour la Recherche Stratégique
Another Greek Can-Kicking
There won’t be light at the tunnel’s end until Germany kicks itself out of the eurozone.
By Holman W. Jenkins, Jr.
July 14, 2015 7:59 p.m. ET
Photo: tobias schwarz/Agence France-Presse/Getty Images
If you’re a Greek who no longer has much money in the Greek banks, Grexit is looking better and better. That’s even with the latest tentative bailout deal, which is the extend-and-pretend variety: It’s unlikely to get the Greek economy moving or end Greece’s destabilizing cycle of crisis upon crisis.
If you still have money tied up in Greek deposits, you might feel differently. Another bailout might seem another chance to get your money out without suffering a haircut (to recapitalize Greece’s broken banks) and conversion to the drachma (an outcome still in the cards). You are willing, then, to sacrifice the economy’s return to long-term health to maximize your chance of reclaiming your life savings.
If you’re Angela Merkel, you’re willing to settle for another extend-and-pretend bailout of Greece because you don’t want Grexit on your watch. But you also don’t want a shellacking from your domestic German voters who are weary of seeing their money go to prop up the Greeks. That’s why you’re pleased with co-conspirator France stepping out as defender of Greece and promoter of fake plaudits for the Greek bailout. A European tradition is that Germany likes to be seen deferring to France to quell any idea that Germany is becoming strident and imperialistic again.
No actual long-term problem of Greece or the eurozone is being solved here, however. At the same time, don’t believe cries that Greece must be saved or the European project is doomed.
This is a case of the propaganda that was used to sell the euro in the first place coming back to haunt. Stop lying to yourselves, Europeans. Currency integration was not necessary for the European Union to succeed. It isn’t necessary so Europe can have clout in the world. It’s not necessary in order to avoid another war, as former German Chancellor Helmut Kohl was fond of implying.
If anything, the single currency is undermining the larger European project. The antidote to fascism is becoming a stimulant to fascism as the eurozone overreaches to impose what amounts to nation-building on Greece even as it continues to accommodate France and Italy, whose debts pose the real long-term threat to European togetherness.
Let’s quickly add that the euro is a failure only because it wasn’t allowed to work. If we have learned anything about “optimal” currency zones, fiscal discipline has to begin with lenders, not borrowers—with bankers and fund managers knowing their money will be lost if they lend to countries on unsustainable paths.
That said, authentic market discipline was never realistically compatible with modern European welfare and interest-group politics, as the eurozone lately has been proving over and over.
Which brings us to Hans-Olaf Henkel. Back in the day, pro-business Europhiles like Mr. Henkel—he ran IBM Europe and headed a prestigious German trade group—embraced the common currency as a lever to compel pro-market policy change. “Structural and competitive weaknesses will now be mercilessly exposed,” he preached.
Alas, it was not to be. The euro, which was supposed to be the rod that spanked the Europeans into reforming their welfare states, became the opposite, the enabler of Europe’s growing debt addiction.
Mr. Henkel saw the error of his ways. He co-founded Germany’s version of the anti-euro political party that has been popping up all over the Continent, but with a difference: His party, Alternative for Germany, still believed in the European Union, it still believed in the common market, just not the single currency.
As of last week, though, he separated himself from the party over its growing anti-immigrant wing, a sign of troubles percolating across Europe. Last year he warned that a British vote to exit the European Union would be the “worst scenario” for the forces trying to save Europe from itself.
Mr. Henkel wrote a book proposing a bifurcated currency system. The uncompetitive southern countries, including France, would keep the euro. They would be spared messy currency conversions.
They would be spared bank runs. Germany and other creditor nations would bear much of the cost of adjustment by adopting a new, strong currency, essentially a deutsche mark in all but name.
What about the supply-side reforms that were also part of this week’s Greek deal? If enacted, wouldn’t they contribute to genuine recovery inside the euro system? It can’t be repeated often enough: The currency the Greeks use matters less than the domestic policies they adopt for true prosperity. But missing is any evidence from recent experience that such changes of heart can be imposed successfully from outside.
In Mexico, Crime Is Bigger Than a Crime Boss
Mexico's geography enabled drug traffickers like Guzman to operate on a global scale. As international law enforcement effectively dismantled the powerful Colombian cartels and stymied their maritime trafficking routes through the Caribbean in the 1980s and 1990s, Mexico became the lynchpin of new smuggling routes into the United States. This evolution took place just as the Mexican criminal networks that trafficked drugs broke down into smaller groups. Though crime bosses like Guzman rose in stature relative to others, all organized crime groups in Mexico are the result of a systematic decentralization in cartel structure that continues today.
In fact, by the time Guzman was arrested in February 2014, the Sinaloa Cartel was already fragmenting. Groups that operated in areas such as Chihuahua, Sonora, Sinaloa and Baja California states — areas that were once part of El Chapo's criminal network — were already acting autonomously. Some of them were even fighting one another. The arrest of Guzman and the subsequent capture of some of his lieutenants only accelerated this trend. Now, geographic domains that were controlled by Sinaloa-based crime bosses for decades are now controlled by other groups, including the Cartel de Jalisco Nueva Generacion, which expanded from the Tierra Caliente region, and La Linea, which was once the enforcement group for the Juarez cartel.
Among the myths surrounding El Chapo were tales pertaining to his purported role as an arbiter of organized crime in Mexico. According to some of those myths, his organization preferred to expand its business operations through negotiation, rather than through violent conflict. But Guzman, in fact, was party to some of the most violent turf wars in Mexico, introducing rampant insecurity in places such as Tijuana, Nuevo Laredo and Ciudad Juarez.
These conflicts had subsided by the time he was arrested but not before nationwide turf wars devolved into more localized conflicts. Guzman may attempt to re-consolidate the control he once had over Mexico's organized crime activities, but his previous efforts to do so failed, and the task would be even tougher now that his network has become even thinner.
Since 2012, Mexican organized crime has become increasingly balkanized amid government efforts to revamp public security institutions, and nationwide levels of organized crime-related violence have gradually diminished. Though having more crime groups means there are more bosses, these leaders have not been able to sustain violent offensives against their rivals and fend off the state as well as their predecessors did. And while waves of extreme violence can still emerge in places like Tamaulipas, they typically weaken as soon as security forces move in — in contrast to past conflicts in places like Juarez, where violence continued to climb despite repeated deployments of federal troops.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
Archivo del blog
- ► marzo (155)
- ► febrero (150)
- ► enero (170)
- ► diciembre (177)
- ► noviembre (196)
- ► octubre (179)
- ► septiembre (182)
- ► agosto (205)
- ► julio (205)
- ► junio (199)
- ► mayo (194)
- ► abril (246)
- ► marzo (280)
- ► febrero (268)
- ► enero (245)
- ► diciembre (236)
- ► noviembre (233)
- ► octubre (137)
- ► septiembre (271)
- ► agosto (278)
- ▼ jul 19 (4)
- ► junio (265)
- ► mayo (195)
- ► abril (252)
- ► marzo (279)
- ► febrero (256)
- ► enero (257)
- ► diciembre (223)
- ► noviembre (251)
- ► octubre (253)
- ► septiembre (103)
- ► agosto (165)
- ► julio (174)
- ► junio (182)
- ► mayo (159)
- ► abril (155)
- ► marzo (183)
- ► febrero (156)
- ► enero (143)
- ► diciembre (157)
- ► noviembre (181)
- ► octubre (174)
- ► septiembre (191)
- ► agosto (185)
- ► julio (184)
- ► junio (137)
- ► mayo (117)
- ► abril (167)
- ► marzo (166)
- ► febrero (136)
- ► enero (155)
- ► diciembre (163)
- ► noviembre (174)
- ► octubre (102)
- ► septiembre (188)
- ► agosto (171)
- ► julio (182)
- ► junio (182)
- ► mayo (107)
- ► abril (152)
- ► marzo (154)
- ► febrero (149)
- ► enero (160)
- ► diciembre (166)