Cassandra Voices

Tag: European Union

  • Covid-19: E.U. Teeters on the Brink

    The five hundred billion euro rescue package agreed by E.U. Finance Minister, subject to approval from their national governments, has received a lukewarm reception.

    The compromise was forged in typical EU fashion at the third attempt after the Dutch Finance Minister led stiff resistance to a push from France, Spain, Greece and Italy for a ‘corona bond’, programme involving direct grants to those countries hardest hit by the pandemic.

    The package is mainly made up of an emergency credit line worth 240 billion euros along with a 100 billion euro work subsidy plan. There are plenty of loose ends to be tied up – not least precisely how the rescue fund will be paid for.

    North v South

    The deal comes amid signs that the Union could itself be coming apart at the seams, with growing popular disillusionment with the project in southern Europe.

    The Spanish Prime Minister, Pedro Sanchez, did not pull his punches when he warned his EU colleagues recently : ‘Either we respond with unwavering solidarity, or our Union fails.’

    Of the large European states, Spain has suffered more deaths than any other on a per capita basis, though the horrors visited on northern Italy – the powerhouse of the Italian economy – stand out as a warning to us all.

    Southern Europe is also heavily exposed economically. All the Mediterranean countries depend on tourism. The evisceration of the travel trade will hit them particularly hard. Coming into this crisis, Italy was particularly exposed, with a stagnant economy and a national debt of around 135 per cent of gross national product.

    The Covid-19 crisis has brought back to the surface many of the intra national tensions that blighted relationships within the EU during the long sovereign debt crisis.

    Once again, the so called thrifty northern member states led by Germany and Holland, with Finland and Austria in the background, find themselves facing down the group of southern European states including Spain, Italy, Portugal and Greece. A decade ago, they fell along with Ireland into a club of financially stressed states known as the PIGS.

    French Switch

    The Irish Government – steered by the caretaker Finance Minister, Paschal Donohue, has quietly been making common cause with the southern European group on the core issue of fiscal solidarity. However, the big switch of sides has involved France. That country – mighty in EU terms – adopted a hard line stance back in 2010 towards Ireland, acting in concert with the German Government.

    With backing from the then Central Bank Governor, Jean Claude Trichet, the Irish Government was forced to sign on to a bailout where enormous bank debts were taken onto the books by the sovereign.

    These days, France is far less well placed. The pandemic has hit home with savage effect. Its banking system is exposed to that in Italy.

    It is now counting on a degree of solidarity at the heart of the Union which would have been unthinkable a decade ago when President Sarkozy worked side by side with Chancellor Merkel – a rare survivor from that period.

    Post-Brexit U.K.

    So how should one rate the response of European institutions and Governments to the Covid-19 crisis since it erupted on the Continent more than two months ago? It may be worth looking at how the U.K. has engaged with the economic threats posed.

    In public health terms, the London Government failed to grasp the scale of the crisis and it has been playing catch up ever since. But one bright spot to date has been the decisive approach since mid-March of the new Chancellor of the Exchequer Rishi Sunak.

    When he unveiled his Budget, his initial measures did not capture the full scale of the looming tsunami in human and financial terms. However, he has proved himself to be pretty adaptable. Sunak committed to pumping in thirty billion euros in his March Budget, soon following this up with a £30bn ‘furlough’ scheme to compensate employers who hold on to their employees in the crisis.

    Recently, the Chancellor went further, effectively strong-arming the Bank of England into making an announcement that it would directly finance the operations of the British Treasury. While the Bank has insisted that the expansion in its balance sheet will not be permanent, the move is regarded as historic.

    It is a move that would be considered as unthinkable by most officials in the German Bundesbank.

    Since then, he has thrown the kitchen sink in an effort to staunch the flow of blood out of the economy. Economists have calculated that the package of tax reliefs, grants and business loans amount to £350 billion.

    Perilous Period

    Across Europe, national Governments have moved to tackle the crisis by propping up incomes. Northern European states tend to have efficient bureaucracies and reasonable resilient national balance sheets. But even in places such as prosperous Denmark, there are concerns that many businesses will not reopen after what is increasingly looking like a long shut down.

    The picture in Southern Europe is as mentioned much more bleak. In Italy and Spain, there is a real sense of let down amid the crisis, though better off nations like Germany have latterly moved to show solidarity by sending supplies and flying some patients from Eastern France and northern Italy to their hospitals for treatment.

    The recently appointed President of the European Central Bank, Christine Lagarde caused consternation when she suggested that the Bank would not bail out any Eurozone member state running up a large deficit. These were remarks her predecessor, the sure-footed Italian central banker, Mario Draghi, would never have uttered.

    Lagarde was backed up at the time, by the Bundesbank head, Jens Weidmann, although she reversed her position, soon after.

    Since then, the Bank has unveiled a series of measures aimed at propping up demand and supporting the countries hardest hit in the crisis, but Lagarde’s misstep will not have been forgotten.

    The Commission

    The European Commission under its new President, Ursula van der Leyen, has appeared to grasp the scale of the crisis, acting quickly to suspend the normal state aid procedures and relaxing the rules on national government deficits. It has deployed much of its budgetary resources, but its fire power is limited as Ms Van der Leyen has made clear.

    Mario Draghi has entered the debate with a call for a ‘huge stimulus’ aimed at preventing a depression: ‘Countries risk permanently lower employment and capacity unless they flood their economies with liquidity using bond markets, banks, even post offices.’

    He warns that sharply higher levels of public debt will become a ‘permanent feature of our economies.’

    Banks must rapidly lend funds at zero cost to companies prepared to save jobs. Given that the banks would be acting as vehicles of public policy, the Government should guarantee all additional overdrafts or loans that they make.

    The ECB has taken action by launching a €750 billion bond buying programme.

    Charles Grant, director of the Centre for European Reform, describes this move as ‘impressive’, but cautions that such action will not suffice by itself. ‘The EU needs to take on a role in fiscal policy.’

    Many have joined calls for the launch of a so called ‘Corona bond’.  The Irish academic, Brigid Laffan Director of the European University institute in Florence, argues that what is required is ‘the largest deployment of public finance and public power in peacetime in Europe.’

    Domino Effect

    The response to date from E.U. Governments – where effective decision-making is concentrated – has been less than inspiring. The Dutch Finance Minister Hoekstra caused particular annoyance in Madrid, Rome and Paris over his rather brutal dismissal of the ‘Corona bond’ proposal.

    Matters were not helped by a headline in a leading Dutch tabloid following the conclusion of the ‘rescue’ deal: ‘The Netherlands wins European battle’ crowed the newspaper.

    The splits go right to the top. The E.U. Commissioners, Thierry Breton and Paulo Gentiloni, have called for the creation of an Economic Recovery Fund, pointing out that ‘no European state has its own means enabling it to deal with the shock alone.

    While E.U. governments have put in place contingency plans aimed at meeting the short-term cash flow needs of businesses, the scale of the crisis is only now being appreciated.

    The French economist, Jean Pisani Ferry, has warned that the fall in economic activity as a result of Covid-19 could approach fifty per cent, with any recovery from a relaxation in the confinement likely to be both gradual, and subject to big interruptions.

    The Belgian economist, Paul de Grauwe, warns that without coordinated action, we could be about to witness a domino effect, as the financial virus spreads from the corporate into the banking sector, and on to the sovereigns.

    In his view the only solution is for E.U. Governments and institutions to think outside the box. The ECB, he argues, must follow the Bank of England in indicating a preparedness to buy Government bonds in primary markets, effectively issuing money to fund members state deficits.

    Were this to happen, other leading  central banks would follow suit and a 1930s-style meltdown could be averted. The alternative scenario does not bear thinking about.

  • Can the European Project be Kept on Track?

    Czech border police snoop along the rail carriage as we pass the frontier from Germany. They seem to linger outside our compartment long enough to survey the light pigmentation of the young Dutch couple and this Hiberno-Norman specimen inside, passing by without seeking identification.

    White skin remains a passport – carte blanche – to unspoken liberties in ways most of us carriers hardly understand; a darker hue, with an out-of-date visa, might bring quiet indignities inside a dank room in some god-forsaken border-town.

    Born in the city of Brody, near Lviv in present-day Ukraine in 1894, the novelist Joseph Roth wrote: ‘a human life nowadays hangs from a passport as it once used to hang by the fabled thread. The scissors once wielded by the Fates have come into the possession of consulates, embassies and plain clothes men.’ A melancholic alcoholic and wandering Jew, Roth committed suicide in Paris in 1939 before the cosmopolitan Old Europe he had evoked was consumed by the flames of racial hatred.

    Human lives are dangling like threads from passports in Europe again as borders perceptibly harden: the sword of Damocles hangs over the Good Friday Agreement in Ireland, while in the UK at large, drawers are being scoured for the birth certificate of that long-lost grandparent that will yield the Paddy-pass. Throughout Europe, dour forms of patriotism exclude diversity; even in liberal, social-democratic Scandinavia shutters are coming down, as the Far Right surges.

    Entirely open borders might be unworkable, but widespread anti-immigrant sentiment in Europe is rarely based on any rational assessment of the pros and cons of migration, but appears as an unconscious turning away from the world. After all, the European population is aging and many countries are short of workers in fields indigenous populations are reluctant to enter.

    Racists identify the physical features of classes of people with defined cultural traits. This error is often a product of isolation, usually emanating from individuals living in ethnically homogeneous areas, especially small towns. Demagogues prey on those left behind by free-wheeling market economies, but the imagining of ‘them’ and ‘us’ is not purely economic in origin. It is also linked to a patriarchal sense of traditional family units being undermined by liberated women, open sexuality and even dietary choices. The ‘person of colour’ is another unwelcome intrusion of a modern world in flux.

    Thus Hungarian President Viktor Orban’s offer to make women who bear four or more (presumably ‘pure-blooded’) children exempt from taxation is a chilling reminder of a time when women’s bodies were pressed into service for the imagined community of the nation. Across Europe an irrational fear of a ‘promiscuous’ Semitic ‘other’ is used to stoke hatred by unscrupulous politicians.

    There is also a growing reassertion of the nation state, beyond Brexit. Thus the French government has withdrawn its embassy from Rome in the wake of the Populist Italian administration’s outspoken support for the revolutionary gilets jaune ‘yellow vest’ movement.[i]

    Is this a turning of Europe’s mythological gyres: a cycle of one hundred years of recovery and prosperity, before decline and confrontation? The continent really needs to outgrow the truculent teenager phase, and instead rise to the challenge of making our way of life sustainable, and ultimately assist other parts of a world we have made in our own image of nation states.

    Any retreat into sullen autarky appears untenable unless most of us are prepared to revert to being small farmers. We are, nevertheless, right to wonder whether European institutions have been overtaken by shadowy lobbyists serving multinational corporations. Big brands are strangling small enterprise, homogenising streetscapes, and upholding the grand theft of in-built-obsolesce underpinning our model of economic-growth-without-end. It begs the question: what keeps the European dream on track?

    Romantic Travel

    An extensive rail network is perhaps Europe’s greatest asset, and guarantor of a fluid community. Like the capillaries of a great oak, it connects the high branches of Scandinavia to the roots of Italy, and beyond. Whether high-speed behemoth, or squealing rust-heap, train-travel permits a form of contemplation distinctively European; where a delay is simply an invitation to read one’s book, engage in light conversation with travelling companions, or fix lunch.

    I wonder whether future generations will experience the slow transitions in scenery, the fading grandeur of old world stations, and the whistle of the guard to set you on your way. Perhaps railways will give way to electric pods or warp drives, but I fear the best-laid techno-Utopian plans of Elon Musk and others will only cater to a select wealthy few. The benefits of railways, a technology that catalysed the Industrial Revolution, altering life on Earth forever, are likely to endure.

    As Minister for Transport the current Irish Taoiseach Leo Varadkar described train travel as being for romantics.[ii] This suggests it is sensible to depend on stifling airports with queues and intrusive searches, before the deep vein thrombosis and ear-popping altitude of air travel. The rapid conveyance of tourists to safe spaces in historic cities has brought uniform hotels, chain restaurants and stores selling the same products, in different selfie locations.

    For those unable to afford air travel there are bus services leaving from anonymous stations on the asphalt fringes of cities, before cramped seating and desolate road stops. Otherwise, there is the false freedom of a car, wheeling at high speed along a motorway from which nothing can be seen, and where road deaths are a permitted tribute to the car gods evoked by advertisers. All other passenger experiences pale by comparison with a train journey.

    Sail-Rail

    At times even I, a born-again railer, weary of train travel in Britain. The effects of a decidedly unromantic privatisation are apparent in the sardine can-spacing between seats, the gaudy plastic furnishings, and staggering crowds at peak times, which no doubt make bean counters beam. Wholescale privatisation of an inherently monopolistic service seems to have been the height of folly.

    Unmistakably London.

    Ticket prices are jarringly expensive too. For example, a journey of eighty-odd miles from Oxford to Birmingham costs over £38 one-way. A return costs much the same, which is of little use if you aren’t going back on your tracks.

    There are cheap deals if you reserve in advance – though not on the Oxford-Birmingham line as it happens. A one-way ticket from Oxford to London is available for under £10, compared to the standard rate of £27. But booking weeks in advance negates the old world appeal of train travel, which is to turn up at a station, purchase a ticket and catch the next available service – setting off on a whim perhaps, along with a picnic basket.

    One of the great mysteries of this life is how the Sail-Rail deal between the UK and Ireland has endured into present, unromantic, times. I can simply turn up at Dublin Port, purchase my ticket which includes the price of the ferry, before catching a train at a flat rate from Holyhead – with marginal increments depending on distance and speed of ferry – to anywhere in the UK. Very occasionally, after Christmas, or at summer’s end, there is insufficient space on the ferry for all passengers, but this is rare indeed. I only book in advance to avoid the small handling fee charged by Irish Ferries when you purchase at the Port.

    Going Sail-Rail from the UK is even easier, as you purchase your ticket at any station – without the handling fee – just like a regular ticket. The full price of approximately €50 between London and Dublin may not be as low as the ludicrous cost of some plane tickets – a form of transport which, perversely, is not subject to the added cost of VAT on its fuel. But by the time you have born the cost of the Stansted train to London (usually costing £18), having avoided the crushing two-and-a-half-hour cheap bus alternative, you won’t be thanking uncle Michael.

    Last time on Sail-Rail I went as far as Oxford, met friends for a lavish Indian supper, before wobbling cheerfully back to the station to resume my journey to London. At such times the Sail-Rail pass seems like a golden ticket inside Willy Wonka’s factory, as bemused attendants waive you onwards.

    On the Irish side, the main inconvenience is the lack of a decent public transport connection between Dublin city and Port, which has no trains running along the tracks out to it. The 7.15am 153 bus from Westmoreland Street won’t even get you to the Port in time for the 8am sailing. Alas, the Dún Laoghaire-Holyhead connection, conveniently linked to a DART rail service, came to an end in 2015.

    The other annoyance is the apparent unwillingness of the UK train companies to align their timetables with the arrival of the ferries, often meaning delays on arrival in insalubrious Holyhead. Contrast this with how on some European train-ferry lines – between Sicily and the Italian mainland, and Denmark and Germany – trains actually mount a ferry and trundle out the other side.

    Delays, usually on Wales’s underfunded Arriva line, may require a longer stretch in the less than charming entrepôt, on an otherwise underrated coastline. The town’s appeal has changed little since Jonathan Swift’s 1727 evocation:

    Lo here I sit at Holyhead
    With muddy ale and mouldy bread
    All Christian victuals stink of fish
    I’m where my enemies would wish
    Convict of lies is every sign,
    The inn has not one drop of wine
    I’m fasten’d both by wind and tide
    I see the ship at anchor ride
    The Captain swears the sea’s too rough
    He has not passengers enough.

    Holyhead notwithstanding, it is now possible to travel in one day, using Sail-Rail and Eurostar, from Dublin Port, via London Euston, proceeding by foot to King’s Cross St. Pancras, to Brussels or Paris. I dream of more links from Holyhead to major UK cities, especially London, and perhaps even a high speed spur through Wales. That might tempt a few more romantics out of taking flights, and make life on our island seem less insular.

    Inter-Rail

    Last month I purchased an Inter-Rail pass, giving me five days of unlimited travel within a month throughout Europe for €300; albeit with some high-speed lines (especially, inconveniently, in France if you are arriving from Ireland) requiring a reservation, and/or the payment of a supplement. There are, however, reductions available on ferry prices, and with an overnight journey you only need to use up one day of your allotment.

    Having taken the Eurostar from London on the new service to Amsterdam, I proceeded immediately to Hamburg, Germany’s understated and cosmopolitan second city. I then headed north, through Denmark, crossing the Copenhagen-Malmo bridge into Sweden, arriving above the snowline in Oslo. I had not maximised my first three day’s travel, but made it as far as I needed.

    Cross-country skiing near Oslo, Norway.

    After enjoying an all-too-brief cross-country skiing trip with Irish friends now resident there, which included another short train journey into the hills, along with our skis, I returned south. This time taking two days (overnighting in Copenhagen) to get to the Czech Republic.

    Arriving in a continental climate with further snow cover, I proceeded east by train out of Prague towards the Jesiniky mountains. This involved a journey on one of a growing number of private lines – the Leo Express – which provides a degree of pampering and efficiency beyond that associated with the state railway company, Cesky Drahy, and cheap deals if you book in advance.

    At first blush, this would suggest partial or limited privatisation brings benefits. But I rather suspect that once this neo-liberal genii of de-regulation is let out of the bottle it will be reluctant to return. I expect further calls (in a subservient media) for privatisation in the name of efficiency, preceding a carve-up unfavourable to Czech rail-users, with ‘uneconomic’ lines phased out – as occurred in the UK – and prices hiked, once the ‘dead wood’ of the state company is phased out of existence.

    The Czech Republic is endowed with almost ten million kilometres of track, giving it one of the densest networks in the world, and making it a Mecca for train-lovers. Most people, even those living in rural villages, can reach their place of work without a car. The capital, Prague, also has two metro lines and an extensive tram network. It still costs a pittance to get to the airport by Metro and feeder bus.

    But more and more Czechs are embracing car culture, in part, no doubt, due to the skillful advertising of this ‘indispensable’ source of freedom. A way of life is being jeopardised by the appeal of autonomous vehicles, but for the moment the railway blood still flows.

    Jesiniky Mountains, Czech Republic.

    ‘the enemy within’

    In a worryingly development last January a seventy-one year-old man, Jaromir Balda was sentenced to four years imprisonment for terrorism. He felled trees to block railway lines, pretending Islamists were responsible by leaving messages at the scene proclaiming Allahu Akbar – ‘God is great’ in Arabic. Two passenger trains hit the trees, but fortunately no one was injured. The far-right sympathiser admitted he had hoped to spread fear of Muslim migrants.[iii]

    One may assume Balda – like the really murderous Anders Breivik in Norway – considered his actions a form of tough love to his countrymen: waking them up to the danger posed by the ‘enemy within’ – the miniscule Islamic population of the Czech Republic, a country that has, by and large, displayed an unsympathetic attitude to the plight of refugees, especially those with darker skin.

    This racism can partly be attributed to long-standing antipathy towards the indigenous Romany (‘gypsy’) people. In contrast, the pale-skinned foreigner, ‘the ex-pat’, is treated with deference, and a little envy, albeit marauding stag parties have sullied the reputation of the English at least.

    Balda’s choice of target was darkly symbolic, potentially evoking fears in day trippers from rural parts into cities; and among city dwellers who take trains all the way to remote regions, along with their bikes and skis. This gives way to the delusion of safety offered by the autonomous car journey, and further fracturing of community.

    Inter-continental

    Three years ago I travelled by train and bus from Portugal as far as Ukraine, on what was a redemptive trip, fulfilling an ambition to visit the former Soviet Union. Crossing the border from Slovakia into Trans-Carpathian Ukraine a distinct culture came into view. At the interchange of Çop trains halt on account of the different rail gauges used on either side. Stalin had ordered this inconvenience in order to slow down invading armies, and prevent people from easily escaping. An enduring cultural fault line is the result. It felt as if I had reached the limit of a Europe I know as a backyard I have not fully investigated.

    I hope to continue regular overland peregrinations, ideally by train, but the cost seems to rise each year, with further privatisations on the horizon. I fear that as train connections lapse, the life blood of Europe will cease to flow. Then we will experience the false freedom of driving our cars on anonymous highways, or taking flights to green zones in historic cities, conveniently cleared of native populations that don’t fit with the desired impression the authorities wish to leave.

    As Europeans grow wary of diversity it is worth considering the vital role played by railways in fostering community and tolerance. An annual holiday by train ought to be available to anyone living on the continent, even those on a peripheral island that tore away its tracks after independence. Connecting Europeans, in real comfort, to cities, mountains and the sea is perhaps the greatest service the railways still provide, and with continued intermingling our heterogeneous communities might seem more inviting.

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    [i] Angelique Chrisafis, ‘France recalls Rome envoy over worst verbal onslaught ‘since the war’’, 7th of February, 2019, The Guardian, https://www.theguardian.com/world/2019/feb/07/france-italy-ambassador-macron-di-maio-salvini-second-world-war, accessed 18/2/19.

    [ii] Online Editors, ‘Leo Varadkar: ‘I’m romantic. I love the railways. I had a train set as a kid’’ April 3rd, 2014, https://www.independent.ie/irish-news/leo-varadkar-im-romantic-i-love-the-railways-i-had-a-train-set-as-a-kid-30152502.html, accessed 18/2/19.

    [iii] Untitled, ‘Czech pensioner jailed for terror attacks on trains’, January 14th, 2019, BBC, https://www.bbc.com/news/world-europe-46862508?fbclid=IwAR1rLbhjW_fpVyao8MjooDZe4muAR8bYCyyg5I_x1JzL6HytguW0PPoPFPU, accessed 18/2/19.