'Fifty billion out: blunder or deception?'

21 August 2011

'Fifty billion out: blunder or deception?'

Has Prime Minister Mark Rutte committed a blunder in his explanation of Greece’s support package? Or has he made a conscious attempt to mislead the people by setting the figure for expenditure lower than it really was? This is the question that SP leader Emile Roemer answered during the debate over the crisis in the Eurozone and Rutte’s ‘slip’ over the billions in aid to Greece.

Roemer also spoke out against the far-reaching proposal from German Chancellor Angela Merkel and French President Nicolas Sarkozy to transfer more powers to the European Union: ‘There is no support amongst the European population for a political union,’ he said. ‘That’s why the SP is resisting increasing the powers of Europe via an increase in the emergency fund, Eurobonds or an undemocratic European budgetary authority.’

Below is an edited version of Emile Roemer’s contribution to the Dutch Parliament’s emergency debate on the financial crisis:

The European Monetary Union which led to the introduction of the euro was intended to bring Europeans closer together. Instead, the common currency is driving us apart. At the time many warned that monetary integration should be the crown on political integration, but that reversing this represented a dangerous experiment. This government and a majority in this House now seem to want to make the leap forward towards a political union in addition to the monetary union.

No support for political union

A political union for which there is no support amongst the European population. That is, however, in the SP’s view, always dangerous. A further transfer of powers to Brussels and Frankfurt will undermine our hard-won democracy. Because European democracy does not work, because as things stand we in Europe do not form a single country; because democratic control works less well in proportion to how much further from us, in a literal sense, is the executive; because the practicality of Europe is that the big countries will then determine if the little Netherlands will lose its veto. That’s why the SP is resisting increasing the powers of Europe via an increase in the emergency fund, Eurobonds or an undemocratic European budgetary authority. Will the Prime Minister be happy to become chair of the Province of the Netherlands within a United States of Europe?

Tackle speculation by the financial markets

What we are missing is an EU which would come out with a Europe-wide approach to speculation. We are being held hostage by the financial markets, which, through generating panic and speculation, launch attacks on essentially healthy countries. We don’t want simply a ban on speculation in the four countries which have been stripped clean by means of so-called short selling – which in simple English means selling something that you don’t own – but a ban on this in the whole of Europe. In the real economy you can’t take out fire insurance on your neighbour’s house, because this would give you a perverse interest. Yet in the financial world you can do much the same thing, taking out insurance against say Italy going bankrupt, which means that you can speculate on just such an event. We want to see a Europe that acts against this instead of offering speculators a free run via liberalised financial markets. We want to see a Europe that comes forward with a tax on financial transactions in order to counter speculation. Such a financial transaction tax would also stimulate investment in the real economy and discourage the placing of money in speculative investment. But Europe does no such thing. Why?

Greek risks borne by public

In today’s letter to Parliament from the Finance Minister, it is now happily enough generously acknowledged that the banks’ contribution is not roughly fifty-fifty with the contribution from the public sector. The sums may appear close to equal, but this disguises the fact that due to guarantees from the public sector the banks are running hardly any risk. The banks may be extending loan periods, but the risks that Greece will not repay are borne by the public sector.

50 billion out: blunder or deception?

But not everything is in this letter. The Prime Minister yesterday went into great detail regarding his presentation following the European Council summit of 21st July. The big question is whether the Prime Minister knew what he was saying yes to during the summit. Was he under the impression that it was a contribution from the banks of 50 billion out of a total package of 109 billion, as he expressed it during the press conference? In that case he made a considerable blunder involving more than fifty billion. Or did he know that what was involved was a much bigger package, namely one of €215 billion additional support for Greece? And if he did know, why didn’t he say so during the press conference? This would appear to be a conscious attempt to make it seem as small as possible before the Dutch public, in the knowledge that support amongst the people is very limited.

The Prime Minister called this his first mistake. You’ll understand that we have counted more than this. The PM called it unlucky, clumsy, even a stupidity, that sort of terminology, but that’s what you use if you are really at fault, if you’re talking about careless arithmetic. But as a former teacher who has stood at the front of a classroom I can tell you that clumsy arithmetic doesn’t exist, only correct and incorrect sums. And your sum was not clumsy, but wrong. The total package was not 109 billion of which 50 billion would come from the banks, not now, not in 2014. We have since given you four chances to put this right. But you continue to maintain that your arithmetic was not incorrect, while it is quite obvious that this was indeed the case.

This concerns not a peccadillo but an enormous difference of €50,000 million. Furthermore it appears that the Prime Minister did this consciously to minimise the amount. I ask you here once more: was your arithmetic wrong or clumsy? And if you push us to the limit, we won’t let this lie.

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