Category Archives: Susan George

Susan George: End financial control of European governance

extracts from the interview


Who do you think is responsible for the crisis?

It’s the financial sector plus local politicians plus European politicians plus of course the Lisbon Treaty and European Central Bank structures that keep the Euro zone in an economic straight-jacket.

Nobody forced the French and German banks to buy so much Greek debt. The financial markets just assumed that Greek bonds were the same as German bonds: now they’ve figured out that Greek bonds are Greek and they’re determined to get back as much money as possible at the highest interest rates possible regardless of social costs.

And plenty of European governments clearly govern on behalf of their financial sector. But they are playing with fire and can yet blast open the Euro zone, at which point all bets are off.

What are the structural problems with the Euro that have contributed to the crisis?

I am a fervent European, so I want the Euro to last, but we don’t currently have the economic and social machinery to go with it. We have a common currency but don’t have a common fiscal, economic or social policies. Instead of increasing taxes, governments are competing to reduce them as in Ireland with its 12.5% corporate tax rate.

We have a ridiculous European budget, no Europe-wide taxes, no tax on financial transactions. World-wide transactions just on currencies markets are now at an astronomical $ a day. Even if you taxed that at only 1/10.000 it would bring in $400 million a day. You could solve a lot of problems with that kind of money!

The European Central Bank is the obstacle to success, not the Euro

The European Central Bank is the obstacle to success, not the Euro per se. The ECB doesn’t lend to governments but to banks, at 1% or less, and then banks lend to governments—short term Greek and Irish debt has “junk” status and is now priced at 20%.

The ECB unlike every other central bank doesn’t issue Eurobonds.So we have government by the banks and the ratings agencies. We need Eurobonds not just to discourage rampant speculation against individual countries but also so that Europe can invest in large ecological and infrastructure projects no country can manage by itself.

Are there other issues in EU’s economic governance that have contributed to the crisis?

One of the reasons we fought so hard in France against the Lisbon Treaty was that it enshrined neoliberal economic policy at the heart of Europe, and set us up for the kind of crises we now face. Now the European Commission wants to examine all individual country budgets before their parliaments vote on them to make sure they meet certain standards. This is a blatant attack on democracy.

Everything under the European Commission is now judged in terms of “competitivity” which includes suicidal competition between European countries themselves. Not everyone can be Germany. In the Euro zone, government spending is still around 50% of GDP but corporations and capital want to get control over as much of that as they can. Once again, we’re being slowly dragged back into the 19th century.

via Transnational Institute | End financial control of European governance.