Sunday, July 21, 2013

Wolfgang Schäuble's very controversial visit to Greece.

On Thursday the 18th of July, the German Finance Minister Mr. Wolfgang Schauble visited Greece. It was his first visit to the country since 2009, where he is undoubtedly very unpopular if not hated.

He is after all the politician who has personally prescribed the harsh austerity measures on the Greeks.

His visit was inevitably very controversial from the beginning, but how it was dealt by the Greek authorities sparked the anger of many Greeks.

Riot police have turned Athens into a garrison town, its roads sealed off in one of the biggest security cordons thrown around the capital in living memory. (The Guardian). Any attempt for protests were blocked and the Athens' city center was emptied.

His visit, but also the Greek government's attempt to stamp out any protests, was highly criticized by many opposition figures. “Who does Mr. Schauble think he is that Greek citizens may not protest about his presence and his policies on Greece? What kind of regime is this, you seal off all of downtown Athens and even the airport ring road so that Mr. Schauble does not hear his subjects’ cries?” demanded Syriza MP Panagiotis Lafazanis during a sitting. (Euronews).

His trip was seen by many in Greece but in Europe too, as a PR campaign with Mr Schauble playing the role of the "stern parent" to the Greeks and it comes just two months before the federal elections in Germany. So he is probably trying to show to the German public, that perceives Greece as this pit they throw tax money into, that they can be assured their government has the situation under control.

Sadly, that is the picture that the media have created in Germany about Greece. And so his visit did not have much of a meaning for Greece itself, rather for the German voters. On one hand he praised the Greek government and people on their efforts and claimed that he was "happy" to be in Greece.

On the other though he smashed any of the Greek government’s hopes for a gesture of support. Mr Schauble came to Athens "bearing no gifts" other than a promise that Europe will keep helping Greece post-2014 when the economic aid financed by the Troika ends. (Euronews)

Not all in Germany of course approve of their government's policies or attitude. Officials in the German governing coalition, in private say Schauble has been nothing but "rude and aggressive" and were hesitant to support him on Thursday. Instead, they admitted that Greece was locked in an economic death spiral – its indicators going from bad to worse – as a result of the punitive medicine Berlin was determined to mete out. (The Guardian).

It is a bad idea for German officials to take the lead and initiatives right now, on the problems that Greece and many other euro-zone countries are facing. Germany maybe the leading economy of Europe and the euro-zone, but the rest of us feel that we did not elect either Mrs. Merkel or Mr. Schauble, so why they should decide what is best for us and visit just to lecture us?

Technically only EU officials could come to evaluate the situation and offer criticism or feedback on the progress. But the sad reality is that Germany currently dictates EU policy, so visiting EU officials would probably not matter much in the end.

The Greek public's usual reaction, that is reduced to call names and describe any German official a Nazi, is not doing us any favors either. It is very immature in a time when the country's image, not just its economy is also at stake. But that is sadly the mentality of the mob. A populist attitude that is encouraged by the leftist parties.

Given this reality, the Greek government had no choice but to forbid any protests on the occasion of Mr. Schauble's visit, as they would not offer anything constructive. This of course looks like a limitation of the people's right to protest, a very important freedom in every fully functioning democracy.

What good would it make to take to the streets and shout names at Mr. Schauble? Nobody likes him in the country and he knows that, we made that clear in previous protests. We have a very fiery nature, that sometimes does not do us any favors. Many other crisis hit nations held protests against the German inspired austerity, but in no other case they insisted on calling the Germans "Nazi."

Of course most of the other nations did not suffer as much under the Nazi occupation as Greece did. But in the end, we do need their assistance and we are close partners with the Germans. A little more thought in our actions would work better in our favor.

On the other hand, the Germans and Europe in general, must understand the Greek people's anger and frustration. They are right to feel that way, since Europe's and Germany's treatment on Greece is totally unfair. The "loans" to Greece are anything but an assistance, rather an investment.

The donors will receive a substantial lump-sum in loan repayments plus the interest on top them. Thus it is clear that the crisis in Greece favors the German and other donor countries' economies. We should not be talking about aiding the Greek economy only, but the whole of euro-zone in general. It is not just Greece that is in trouble financially, but it is the country that is used as a scapegoat, to cover the mistakes that the European leadership made when they were creating the euro.

I find it very offensive that Greece must endure such attitudes by its partners, just so they can satisfy their voters back home. Instead of telling them the truth and revealing the reality of the crisis, they prefer to humiliate Greece and its people, to cover their true actions. This is highly offensive to the Greeks, as it should be for all Europeans. Our leaders are undermining our intelligence and are using populist methods to keep the public opinion under control.

But such attitude is not very constructive in our efforts in unifying Europe, if that is still in our leaders' agenda and interests. By using the Greeks as scapegoat and treating them as the poor, corrupt and failed nation that constantly needs European assistance or surveillance, or by calling the Germans "Nazi," we create deep divisions between the European populations. And we may never be able to heal our relations, or proceed with the necessary reforms to create a more equal, united Europe.

The whole euro-zone must go through radical reforms, but at the moment it is only the peripheral states that are placed under the scrutiny and supervision of the richer states. They want to make sure that the poorer nations proceed with the reforms that they want them to go through. But when will the rich nations proceed with theirs? Is the salvation of the euro-zone based solely on the peripheral economies and how can we built a united Europe with such bullying practices?

Generally Germany should stop appearing to be leading the austerity programs right now and take a step back, keep it low for a while. It really harms European unity and any further integration attempts, when the German leaders appear to lead Europe and tell the weaker states what to do.

As long as the crisis prevails, Germany should leave it to the European institutions to keep an eye on the progress that the countries under the EU/IMF bail-out program have made. By sending a very arrogant German official to play a theatrical role just so he can satisfy the German voters, they are only pouring oil to the fire.

The Greeks are suffering from the policies he imposed on them, plus they have to constantly be smeared by the European media and be used as the scapegoat for this crisis. As we have repeatedly proved to Europe, we know our history very well and we never forget it, so Europe must tread very carefully in Greece.

Otherwise any future attempts of a European federal entity, that will require the consent of its citizens may be torpedoed not by the more Euro-skeptic nations, but by one that was originally in full favor!

Tuesday, July 16, 2013

EU Commission's role in Greek privatizations.

We read a lot about the need for reforms in Greece, to privatize and modernize its economy in order to reach the same levels of economic growth with its European partners.

The country has come under huge pressure from the EU and IMF to proceed with these reforms and they use the loans dispense, in order to force Greece to comply.

Indeed the country has gone through massive reforms in its infrastructure, that very few nations have achieved in such a short time. Lots more need to be done, but during the reformation period the EU and the Greek government, must also take into consideration the ability of the Greek people to cope.

Such drastic reforms have certainly taken a huge toll on the citizens' ability to adapt to the ever increasing demands of the EU Commission, that overseers the procedures.

Privatization of all Greek national assets and companies, was among the most popular reforms that the bail-out deal dictated, together with the reduction of the Greek public sector and its salaries.

Last month certain events have put the EU Commission's proposals or involvement in Greece, under an interesting perspective. The Greek state, after huge pressure by the EU Commission and its European counterparts to privatize its public companies, started negotiations with the Russian oil and gas giant, Gazprom. The plan was to sell DEPA, the state controlled natural gas provider, to the Russian multinational.

The deal failed the last minute. Greece's PM Mr. Samaras, announced the outcome of the negotiations in a live television broadcast, stating that the reasons of the collapse of the talks were "outside of the Greek government's responsibility or powers."

There was speculation that Moscow's decision to pull out had been dictated by geopolitical pressure. The United States and the EU have both made clear their distaste for Russia further increasing its influence over the European energy market. Brussels has openly grumbled about Moscow's business practices.

"I think the message the Russians got, especially from the European commission, was that the deal was not going to be approved," said Thanos Dokos who heads Greece's leading think-tank Eliamep. "In those circumstances they felt, 'why bother?'". (The Guardian).

The EU Commission's involvement in national affairs is unavoidable, since all EU states have agreed to give up some of their sovereignty in order to become EU members. It is in some cases favorable, as they can keep in check any national government's actions, law making and policy implementation procedures.

But in this case the EU Commission, which is well-known to be influenced by various lobbies located around its base in Brussels, intervened to promote these European and American companies' interests. It is clear now that they do not only demand privatizations, but they dictate Greece to whom to sell their national resources.

This bid by the Russians would instantly offer Greece a €900m deal, a much needed cash injection to the country that suffers the most during this crisis. The EU Commission seems to be delaying solutions, while it is positioning itself openly to a wider clash of interests. 

Is their involvement for the benefit of the Greek people or Greece itself? Their actions seem to be more as a part of the great geopolitical struggles in the region and beyond, that Europe and America in one side, are playing against the Russians.

Tension between the two sides has already been heightened by disagreements over Syria, with Moscow warning Britain and France against exporting arms to rebels fighting Bashar Assad and Russia reportedly providing the Syrian President with S-300 missiles. (New Europe).

The scandal of the bail-out agreement in Cyprus involving mainly Russian deposits in the Cypriot banking system, was also another fiasco that had consequences for the citizens of the island nation.They too paid the price for Europe's drastic crack down on the growing Russian influence in the region.

Throwing oil on fire, ahead of an EU-Russia summit that was scheduled for 3-4 June, Gazprom’s Deputy Chief Executive Alexander Medvedev on 30 May accused the European Commission of a politically-motivated attempt to bring down EU gas prices.

The Commission opened an investigation last September into Russian gas monopoly Gazprom, concerned Russia was abusing its position in central and eastern Europe and imposing unfair prices. EU member states such as Lithuania, which are almost totally dependent on Russian gas supplies, complain that they pay much higher prices for it than other EU countries.

The cost of energy is an issue for the EU as a whole. On 21 May, EU leaders meeting in Brussels vowed to bring down energy prices. The Commission has also questioned Gazprom’s business model and its preferred method of pricing gas - via expensive oil-pegged contracts.

“We have doubts about the motivation,” Medvedev told industry and EU officials, asked if the Commission's move was an attempt to “depress gas prices by artificial means” as opposed to through commercial negotiation. (New Europe).

So because Europe, Russia and America are caught in a trade and geopolitical war, the EU Commission decided that it was in the whole Europe's interests to kick the Russians out of Greece. For compensation they no doubt agreed to accept the Trans-Adriatic pipeline (TAP) crossing Greece, (also Albania and Italy) as the route to transport natural gas from Azerbaijan.

They are trying to solve the energy issue of Europe and that is a valid cause. But either we like it or not we are dependent to Russia for our gas. So unless we find alternatives to Russian gas, compromise with the Russians or try to find a carrot deal that will make them lower their prices, then we can't keep engaging in a diplomatic war for ever.

The deal itself may or may not have been the best for Europe or Greece, but the escalation of deterioration of our diplomatic relations is worrying. Especially when small and vulnerable states are caught up in the middle.

It is good that Europe is standing up, seemingly united against the Russian monopolies. But this solution can not be a permanent one. If we want cheaper energy, then perhaps it is time to invest in exploiting our own natural resources under a common European energy policy, rather rely on foreign multinationals or third party countries.

There are plenty of energy resources that we haven't exploited yet, both "green" and renewable or more conventional ones. If we show the Russians that we are not desperately relying on them for our gas, then they will be the ones who will offer us cheaper prices to keep us as their customers. As things stand, they do have a monopoly and they are doing nothing wrong in asking whatever price they want.

They simply are playing the rules of the open market. When you have a monopoly on something, you are exploiting it. That is how it works not just with Russia, but with all multinational companies. The ones who should be blamed is us, that we are too dependent on their gas exposing ourselves to their interests.

We will have to invest collectively in untangling the former USSR democracies like Lithuania, from their dependency in Russian energy. These countries, because they were a part of the Soviet block, are still relying on Soviet infrastructure to cover their energy needs. And that exposes them to Russian interests.

So instead of arguing with Russia trying to corner them in a compromise, we should diversify our energy needs and help those EU members that where formerly under Soviet rule. But does the EU Commission has such plan, or it is limited by either the national governments, or the lobbies that influence the policies it pursues?

Monday, July 8, 2013

Tax havens, Europe's hell?

www.presseurop.euFour years after the outbreak of the economic crisis in the euro-zone, we finally see some real evaluation of the European economic system and reality by our leaders. We have some strong voices stating that the EU needs a closer political integration, if it wants to keep the euro.

We see the first attempts of a banking union and deeper financial coordination. But also our leaders are realizing that one of the problems of the European economy was the very system that it was based on until now.

A system that it allowed, if not encouraged rich individuals or companies to retain their wealth by tax evading and transferring their wealth in off-shore shadow companies. It also allowed banking secrecy in some countries, better known as tax havens. Tackling tax evasion seems to be high on the political agenda at the moment, and it was even one of the main themes of the recent G8 summit in Lough Erne.

The European tax evasion problem is very high. Just look at the number of tax haven states in Europe, plus how rich they are and then you will understand how big the problem is. And no, tax evasion is not something that exists in the poor "corrupt" countries of the South or Eastern Europe. The biggest problem in fact exists in the richer nations.

Just notice where the majority of the tax haven states lie and under which nation's administration they fall. From Gibraltar, Monaco, San Marino, Liechtenstein, Ireland, Andorra, the City of London, Malta, Luxembourg, Austria, Switzerland, Channel Islands, Isle of Man and Cyprus. Most of them are in Western Europe and are attached to a rich Western European country.

But it does not stop only here. Off shore European territories and dependencies are also in the tax evading list. States like Bermuda, the British Virgin Islands, the Cayman Islands, Anguilla, Montserrat, Turks and Caicos Islands, Jersey, Guernsey are operating as tax havens and these are only the British territories.

If you look at the world map of tax haven nations, half of them are located in Europe or are under a European country's administration. Never mind those who have close links with a European country due to their colonial links. Despite Europe being the second smallest continent in the world, it is to be blamed for more than half of the tax havens on it!

So personally I find it a bit rich and daft, when our European partners pointed the finger at the Greeks for being tax evaders. Tax evasion is a European disease and the worse offenders are the citizens of the richer nations, not those of the poorer. So as tax evasion is a European problem it should be dealt, like every other problem in our continent on a European level and with a single coordinated response.

Until now our leaders had the terrible habit of  going after the working class to collect taxes from, instead of going after the rich. This was part of the economic model and system that Europe and America were following, a liberal agenda that was encouraging rich people to tax evade.

According to them, if you place high taxes on the rich, they are going to leave the country and move somewhere else. Or as they claim, taxing the rich would hinder any investment in the country, as it would put off rich multinational companies and investors.

In result the working class and the small local companies had to carry most of the burden of taxation and that made it difficult for any small/medium company to flourish. And so any of us the "average Joes" can not enjoy a more comfortable life or start our own business, unless we tax evade too.

It seems that the very purpose of existence of the tax haven states is to function as such. Small states that have limited natural resources and are dependent to their former colonies or larger neighboring countries, do not have much of a choice if they want to thrive on their own. They can either be tax havens or be absorbed into a larger neighboring state. Also the economic system of the Western countries needs and feeds such havens, in order to have a place to stash their money when in times of crisis.

But that results in a huge loss in tax revenue across Europe. An estimated 1 € trillion is the potential tax revenue lost annually to tax evasion or avoidance in the EU only. Of that, 514 € billion was the EU's total budget deficit in 2012 alone. It is clear that in times of crisis, that is a lot of money. And that the average tax payer will somehow be forced to cover this huge deficit, in order to put his country's and Europe's finances back in order.

Arguably that is not at all fair. We need to find solutions to this problem and either make tax evasion to off shore companies less attractive, or we need to clamp down on the practice altogether drastically. One solution would be to put pressure or even eventually place sanctions on states that are not willing to cooperate with us and encourage this practice. We place sanctions in every other state that disagrees with us for political reasons, so why can't we proceed with something like that?

Well the main problem is that many EU states are themselves tax havens, so we need to first start working from the inside before we tell others how to sort their own finances. And that can be very difficult while some very rich and powerful countries like Britain are tax havens, or some others like Ireland are totally dependent on foreign investment in order to keep their economy going.

If they agree to give up their tax haven status, then the rest of Europe must agree to somehow compensate them for their loss of revenue. In Ireland's case, that it really needs the investments coming from American multinationals, any change on their taxation system will be disastrous. When the American multinationals leave Ireland if any Irish government agrees to harmonize their taxation system with the rest of Europe, then European multinationals must fill the gap and establish branches in the country to keep their economy going.

Otherwise the Irish economy will collapse and will be in need of constant financial support from its partners, but that will leave it totally dependent on them. If there will ever be a decisive solution to the tax evasion issue, it must be collective and with the absolute cooperation of all EU states. When we sort our own finances, then we can ask other states to follow our lead or abide with our rules if they want to do business with us.

Another solution would be to make the whole of EU a tax haven and allow big multinationals to be established across Europe. Lower the tax rate in all EU states and allow companies to flourish. But if such thing ever happens it must also apply to SMEs and every single citizen, not just the large multinationals or big companies. It must be fair to all and not create an unfair environment that will favor the rich again.

We could all pay less taxes and rely on private companies, not the state to provide us with services, social protection and security. That will lead to massive privatizations and I am not sure that countries like Sweden, that has formed a very successful model based on high taxes but very effective public services, will be willing to redesign its model from scraps.

Also what will happen if all do what Switzerland does, can we all allow bank secrecy across the EU? Perhaps nobody should pay any taxes to the state and so it won't be needed anymore. We should let the corporate companies to provide us with health and social security, roads, water, schools and education, public services.

I do not think that any of us is ready to go through with this plan and I do not believe that our leaders are willing to stop receiving any taxes from their citizens. Besides banking secrecy and corporate malpractice have led us to this crisis, so giving more power to the banks and allowing them to be dominant in our continent should not be part of the solution. If anything else, we need to create regulations that will keep the banking sector and the multinationals answerable to some state authority, to avoid another future mess.

Once we sort our own economy we could put pressure on others to follow suit. Since we are the largest market on the planet, multinationals can not afford to avoid us forever. And if we really put our effort in becoming one of the world's main economic powerhouses, then with a united voice we could influence other countries to join us in our battle in limiting tax revenue loss.

We should also crack down on tax evasion of any kind in our countries, upgrading our taxation system by reducing the red-tape and bureaucracy and of course eliminating the black market. The black market is widespread in countries like Greece and Italy, with cheap goods or copies arriving mainly from China , finding their way into our markets.

Tax, salary and retail prices harmonization across the EU will end the practice of importing cheaper goods from poorer member states, into the markets of the rich ones. But that will take even longer to achieve and will need a lot of compromises, mainly from the richer nations. They will have to allow the poorer nations to catch up with them in economic and social terms.

I am curious to see how our leaders plan to limit tax evasion, but I am glad to see that they recognize that this practice is a part of the problem. Will they decide to radically reform our economic system and make it fairer?

Well the European Commission and EU leaders have promised to create one of the toughest tax transparency regimes in the world by passing a new Savings Tax Law by the end of the year.You may read more about their plans here. So things are eventually moving towards a right direction and that is good news for all of us.

Monday, July 1, 2013

Do EU and eurozone expansions bring hope and stability for the block?

Today Croatia becomes the 28th state of the EU and we are only a few months before Latvia officially adopts the euro. It seems that despite the economic crisis that brought much doubt about the block's credibility, there are plenty of countries that still want to join.

The enlargement efforts of EU to include the Western Balkans region also got a new boost, with the EU Council agreeing this week to start accessions talks with Serbia.

Despite the crisis, the EU remains an attractive block and a considerable player in our continent and the world. And it is indeed heartening to see that the enlargement efforts have not stopped during the crisis, but Europe continues to strive towards its unification.

It is important to stay on track and continue with our efforts, but it is also crucial to have a health check every now and again and ponder on where we stand as a continent. Despite all the cheering for Croatia and Latvia, I can not ignore the fact that some other European countries chose to reject or be skeptical about EU membership.

We have the case of Iceland that since applying for membership in 2009 following its economic meltdown, its new government chose to suspend its application just two weeks ago. This echoes the case of Norway, another Nordic nation and its two failed attempts to join the block.

Switzerland and Norway, together with Iceland are the only Western European states that continue to reject EU membership. Any future European federation won't be fulfilled without these countries being part of it.

EU rejection does not always come from outside the block, but from inside as well. The crisis has given the opportunity to many euro-skeptic groups to become more vocal, organized and gain influence in many EU countries. Notably in the UK, who although is a member of the EEC/EU since 1973, it is now considering to have a referendum and leave the Union altogether.

All the above are not things to be cheerful of. Europe needs to have the UK as a committed member and it is very important to have access to the North Pole through Norway and Iceland, a key region of the future. The Western Balkans are also important of course and I am not trying to diminish the success of the block in this region.

But it is obvious that the EU is still mainly an economic project and practices politics that are attached to the financial interests of each European country. It should develop to a political, cultural and even a military union if it wants to succeed and become a key player in the world.

Iceland although in trouble financially, it has very good state infrastructures and it would benefit very little from an EU membership in this sphere. Croatia, Serbia and the other Eastern European countries though need the EU to receive not just financial help, but also assistance to improve their infrastructure.

In other words it was financial reasons that pushed Iceland towards the EU, despite the country's traditional skepticism. Now that they have somewhat recovered from the crisis, they have decided to backtrack to their previous stance towards European integration.

This may be due to the overall Nordic mentality of euro-skepticism and reluctance to commit to an international organization, in fear of losing their independence, resources or wealth. But it may well be due to other reasons too.

During the first months since the Irish EU/IMF bail-out, there have been numerous Irish TV programs featuring debates and information about the crisis that had swept the country. In some of these debates, there have been guest speakers from other crisis stricken nations like Greece or Iceland.

In one RTE program a speaker from Iceland stated clearly, that his country will keep an eye on how the EU is treating the smaller nations during the crisis, in order to decide on their EU membership bid. Judging on how the richer and powerful nations have treated their poorer partners in the recent years, with all the spat between them and constant arguments, is it any wonder that the Icelandic public opinion turned sour on EU membership?

I mean who would want to join a club that its members treat each other with such disrespect? It seems that only nations in dire need of an economic and structural boost would do so. As it happens, these are the states of the Balkans or Eastern Europe and that to me is a clear failure of the European way of thinking and political reality.

The richer nations of our continent still avoid EU membership, because simply they would gain nothing out of it. All that they want to gain from the European project, they already receive with their EEA/EFTA membership. A full EU membership would cost them more.

And that is the reason why the UK wants out too. Because according to them their membership is becoming more expensive than they originally thought, or are happy to contribute into. Like the Swiss or the Norwegians they are pleased to receive the benefits from the Single Market, but they do not want to pay the expensive bill.

That is simply disappointing. Firstly because it shows that the true motives of EU membership are financial, then political and because the real interests of the people, together with democracy itself are compromised for the financial interests of the elites in each country.

The European project must have a vision together with political, cultural and social dimensions added to it. By simply being an economic pet project of our elites, it is doomed to be always incomplete and indifferent to the citizens of Europe.

What good is to me if I can travel, shop, work or study in every European country if I do not have the same rights or living standards in each one of them. Why should I be happy about the cap of roaming charges across the EU, while there is great inequality on salary, pensions, work conditions, education and development opportunities among the Union's member states? 

The Single Market monopolizes the bulk or EU regulations and debates, while Europe must start investing funds, time and effort in many other spheres like its military, foreign policy, education and coordinating its social policies.

And of course we should all stop seeing the EU as an economic block, rather a political, social and cultural project too that we all contribute equally and benefit from. Either rich or poor, all European nations must become members and work together for the development and reformation of our continent collectively.

The notion that one state is rich and does not need to become a member is rubbish. Even the rich nations need to have access to the Single Market and the markets of the poorer nations. We all benefit from it and we all must have a say in formatting it.

At last I would love to see all European nations sit around the same parliament seats and debate, contribute and forming a better continent for tomorrow. An equal partnership and real solidarity among our continent's states, not the opportunistic, technocratic and elitist sort that we have at the moment.