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	<title>FrontPage Magazine &#187; Merkel</title>
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		<title>Greece and the Last Gasp of European Fiscal Sanity</title>
		<link>http://www.frontpagemag.com/2012/rick-moran/greece-and-the-last-gasp-of-european-fiscal-sanity/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=greece-and-the-last-gasp-of-european-fiscal-sanity</link>
		<comments>http://www.frontpagemag.com/2012/rick-moran/greece-and-the-last-gasp-of-european-fiscal-sanity/#comments</comments>
		<pubDate>Mon, 14 May 2012 04:55:18 +0000</pubDate>
		<dc:creator><![CDATA[Rick Moran]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[crisis]]></category>
		<category><![CDATA[default]]></category>
		<category><![CDATA[Euro]]></category>
		<category><![CDATA[Euro-zone]]></category>
		<category><![CDATA[Greece]]></category>
		<category><![CDATA[Hollande]]></category>
		<category><![CDATA[Merkel]]></category>
		<category><![CDATA[Sarkozy]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=131896</guid>
		<description><![CDATA[Beleaguered country on its way out of the euro-zone? ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2012/05/EUROPE-articleLarge.gif"><img class="alignleft size-full wp-image-131913" title="EUROPE-articleLarge" src="http://cdn.frontpagemag.com/wp-content/uploads/2012/05/EUROPE-articleLarge.gif" alt="" width="375" height="259" /></a>Voters across Europe have spoken in the last week and the message they have sent has upended the fragile consensus that budget cuts and fiscal discipline would bring the continent back from the brink of debt Armageddon.</p>
<p>In national elections in <a href="http://www.foxnews.com/opinion/2012/05/06/meaning-sunday-european-elections/">Greece and France,</a> as well as local elections in <a href="http://online.wsj.com/article/SB10001424052702304371504577402741617671800.html?mod=googlenews_wsj">Germany</a> and <a href="http://www.guardian.co.uk/world/2012/may/08/anti-austerity-italian-local-elections">Italy,</a> voters turned out governments that backed so-called &#8220;austerity&#8221; programs that would have brought a measure of sanity back to budgeting and debt management, while electing socialist politicians who promised that economic problems could be solved by implementing &#8220;growth&#8221; policies &#8212; policies that include massive new spending, tax increases on the &#8220;rich,&#8221; and a rollback of budget cuts.</p>
<p>Greece <a href="http://www.reuters.com/article/2012/05/13/greece-idUSL5E8GD2Z120120513">appears to be a nation</a> in full denial, <a href="http://www.neurope.eu/article/troika-athens-comply-or-face-consequences">rejecting the coalition </a>that negotiated a bailout package worth 180 billion euros that would have kept the nation in the euro zone, and embracing a radical socialist party that wants to scuttle the deal. French voters <a href="http://www.telegraph.co.uk/news/worldnews/francois-hollande/9250075/France-election-Francois-Hollande-gives-Bastille-victory-speech.html">had other problems </a>with former President Nicholas Sarkozy, but it was primarily his tepid attempts to reform labor laws and the education system that led to his downfall in the May 6 election.</p>
<p>President-elect Francois Hollande <a href="http://www.telegraph.co.uk/news/worldnews/francois-hollande/9250075/France-election-Francois-Hollande-gives-Bastille-victory-speech.html">has promised</a> to restore what Sarkozy cut, while making it clear that he wants to &#8220;renegotiate&#8221; the carefully crafted <a href="http://en.wikipedia.org/wiki/European_Fiscal_Compact">&#8220;fiscal compact&#8221;</a> that sets budget and deficit guidelines for the entire euro zone. The compact was the work of German Chancellor Angela Merkel and Sarkozy &#8212; &#8220;Merkozy&#8221; as the duo was referred to in the European press. The defeat of Sarkozy calls into question the <a href="http://www.telegraph.co.uk/news/worldnews/francois-hollande/9259743/Francois-Hollande-Angela-Merkel-meeting-not-decision-making.html">France-Germany relationship</a>, which is largely responsible for keeping the EU from disintegrating in these last two years of crisis, as the leaders of the two largest economies in Europe successfully navigated the panics that almost tore the euro zone apart.</p>
<p>In Spain, where one in four workers are unemployed, the government has come under <a href="http://www.nytimes.com/2012/05/14/world/europe/tens-of-thousands-protest-austerity-in-spain.html">massive pressure</a> from the left to change course from the painful medicine of cutting services and firing government employees and embrace massive increases in spending. Prime Minister Mariano Rajoy is determined to stick with <a href="http://www.washingtonpost.com/business/economy/european-austerity-bites-deep-into-spain/2012/05/13/gIQAYZVJNU_story.html">his budget cutting</a> and deficit reduction. Madrid announced this weekend that it may take over the finances of <a href="http://www.nytimes.com/2012/05/14/world/europe/tens-of-thousands-protest-austerity-in-spain.html">an entire region </a>because the local government may not be able to meet his deficit targets. He has also vowed to clean up Spain&#8217;s tottering banking sector, <a href="http://www.nytimes.com/2012/05/14/world/europe/tens-of-thousands-protest-austerity-in-spain.html">taking over</a> Bankia, the country&#8217;s largest mortgage lender, just this week.</p>
<p>But for all of Rajoy&#8217;s cutting, it is likely he will not <a href="http://www.washingtonpost.com/business/economy/european-austerity-bites-deep-into-spain/2012/05/13/gIQAYZVJNU_story.html">meet his deficit target</a> for the year. Instead of a projected deficit of 5.3% of GDP, Spain is likely to see a 6.4% shortfall. This is down from 8.3% last year, but is not likely to appease investors in Spanish debt who will demand a premium that may lead to even more financing problems for the country. Ten year notes ballooned to over<a href="http://www.washingtonpost.com/business/economy/european-austerity-bites-deep-into-spain/2012/05/13/gIQAYZVJNU_story.html"> 6% this past week</a> &#8212; an unsustainable level that would set off a ruinous debt spiral of increased deficits due to costlier debt servicing, which would panic investors even more, leading to higher interest rates on bonds to finance the debt.</p>
<p>Spain&#8217;s economy is <a href="http://www.bloomberg.com/news/2012-05-11/euro-economy-to-shrink-as-spain-italy-re-enter-recession.html">expected to contract </a>almost 2% this year, with anemic growth projected for 2013. With budget cuts just beginning to bite and no growth in sight to bring the unemployment rate down significantly, the future is not bright for Rajoy&#8217;s efforts. Hundreds of thousands <a href="http://www.nytimes.com/2012/05/14/world/europe/tens-of-thousands-protest-austerity-in-spain.html">took to the streets</a> on Saturday in Spain&#8217;s major cities to protest against Rajoy&#8217;s efforts to bring Spain&#8217;s fiscal crisis under control. It is doubtful, given what we&#8217;ve seen across Europe this past week, whether he can hold together the consensus to continue his austerity program.</p>
<p>Spain may flirt with disaster in the coming months, but the spotlight this past week was on France, and especially Greece, where national elections have unleashed the socialist left and promise to bring the euro zone back into a full fledged crisis sooner rather than later.</p>
<p>The election of Francois Hollande in France &#8212; the first socialist to win the presidency since Mitterand 16 years ago &#8212; has had the <a href="http://www.telegraph.co.uk/news/worldnews/francois-hollande/9259743/Francois-Hollande-Angela-Merkel-meeting-not-decision-making.html">immediate effect</a> of breaking the alliance between Merkel and Sarkozy that proved to be the linchpin that held the EU together during the worst of the sovereign debt crisis. Their partnership produced <a href="http://www.bloomberg.com/news/2012-05-13/euro-officials-begin-to-weigh-greek-exit-from-common-currency.html">several measures</a> that will allow the European Central Bank more leeway in dealing with future crisis while their collaboration on the EU fiscal compact has tied the economies of the EU together in a way never before attempted.</p>
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		<title>Back with a Vengeance: the EU Debt Crisis</title>
		<link>http://www.frontpagemag.com/2012/arnold-ahlert/back-with-a-vengeance-the-eu-debt-crisis/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=back-with-a-vengeance-the-eu-debt-crisis</link>
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		<pubDate>Mon, 16 Jan 2012 04:21:33 +0000</pubDate>
		<dc:creator><![CDATA[Arnold Ahlert]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[credit]]></category>
		<category><![CDATA[debt crisis]]></category>
		<category><![CDATA[downgrade]]></category>
		<category><![CDATA[european union]]></category>
		<category><![CDATA[France]]></category>
		<category><![CDATA[Merkel]]></category>
		<category><![CDATA[Sarkozy]]></category>
		<category><![CDATA[standard and poor's]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=119341</guid>
		<description><![CDATA[Fears raised that a repeat of 2008 -- or worse -- is on the horizon. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2012/01/Picture-2.gif"><img class="aligncenter size-full wp-image-119379" title="Picture-2" src="http://cdn.frontpagemag.com/wp-content/uploads/2012/01/Picture-2.gif" alt="" width="375" height="244" /></a></p>
<p>On Friday the 13th, ratings agency Standard &amp; Poor&#8217;s (S&amp;P) <a href="http://www.cnbc.com/id/45989399">downgraded</a> the credit status of nine European nations. The ratings of Cyprus, Italy, Portugal and Spain were lowered by two notches while Austria, France, Malta, Slovakia and Slovenia were lowered by one. Italy&#8217;s rate cut from A to BBB+ <a href="http://www.bloomberg.com/news/2012-01-13/s-p-cuts-italy-two-levels-to-bbb-on-rise-in-costs-of-financing-debt.html">reflects</a> the second S&amp;P downgrade since September 19th, and Portugal&#8217;s debt has now reached &#8220;junk&#8221; status. &#8220;Today&#8217;s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone,&#8221; said S&amp;P in a written statement.</p>
<p>The downgrade was hardly a surprise. On December 5th, S&amp;P put 15 European nations on review, warning them that the decisions made during the European Union (EU) summit ending on December 9th would be the primary basis for determining those nations&#8217; credit ratings going forward. The result of that meeting, the EU&#8217;s fifth attempt to stem its credit crisis, produced a &#8220;deal&#8221; best described as an agreement to come to an agreement. The only real highlight of the summit was English Prime Minister David Cameron&#8217;s <a href="http://www.dailymail.co.uk/news/article-2071952/Eurozone-crisis-David-Cameron-vetoes-EU-treaty-save-euro.html">rejection</a> of the treaty in favor of a concept increasingly out of favor among other EU leaders: national sovereignty.</p>
<p>Despite the warning by S&amp;P, the downgrade is being characterized as a &#8220;rebuke&#8221; of the EU&#8217;s prime movers, French president Nicolas Sarkozy, and German Chancellor Angela Merkel. Both are on politically shaky ground. Sarkozy is running for re-election in the spring and the downgrade of France to AA+ for the first time since 1975 does not bode well for a man who had often <a href="http://www.nytimes.com/2012/01/14/business/global/euro-zone-downgrades-expected.html?hp">cited</a> his country&#8217;s AAA rating as a &#8220;badge of honor.&#8221; In Germany, one of Merkel&#8217;s partners in her governing center-right coalition, the Free Democrats Party (FDP), is <a href="http://www.spiegel.de/international/germany/0,1518,807988,00.html">sliding</a> deeper into crisis, threatening her grip on power as well.</p>
<p>Germany was the only EU nation to emerge from this latest downgrade completely unscathed. It retained both its AAA rating <em>and</em> a stable outlook going forward. 14 other EU countries&#8211;Austria, Belgium, Cyprus, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain&#8211;were put on a &#8220;negative&#8221; outlook. This means the S&amp;P believes that there is a better than one-in-three chance a country&#8217;s rating will be lowered in 2012 or 2013. “It will make it harder to erect firewalls around struggling euro zone economies and convince investors that things are more sustainable,” said Simon Tilford, chief economist for the Center for European Reform in London.</p>
<p>Two countries to watch in that regard are Italy and Spain. Both began the year with fairly successful debt sales, but after Friday&#8217;s downgrade both countries saw their bond yields <a href="http://www.reuters.com/article/2012/01/13/markets-bonds-spreads-idUSL6E8CD2XV20120113">rise,</a> along with those of France and Belgium, while safe-haven German Bund futures hit a new high of 140.22, up over a full point for the day. Another possible complication arising from the downgrade is the likelihood that the European Financial Stability Fund (EFSF) will also <a href="http://www.cnbc.com/id/45991470">lose</a> its AAA rating as well, because its guarantor nations have had their ratings cut. An EFSF downgrade could be avoided if the four remaining AAA nations&#8211;Germany, the Netherlands, Finland, and Luxembourg&#8211;would increase the size of their guarantees, but such a move is not considered likely.</p>
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		<title>Germany, Wavering Ally</title>
		<link>http://www.frontpagemag.com/2011/kenneth-r-timmerman/germany-wavering-ally/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=germany-wavering-ally</link>
		<comments>http://www.frontpagemag.com/2011/kenneth-r-timmerman/germany-wavering-ally/#comments</comments>
		<pubDate>Fri, 09 Dec 2011 04:15:31 +0000</pubDate>
		<dc:creator><![CDATA[Kenneth R. Timmerman]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[France]]></category>
		<category><![CDATA[germany]]></category>
		<category><![CDATA[Merkel]]></category>
		<category><![CDATA[Russia]]></category>
		<category><![CDATA[Sarkozy]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=114987</guid>
		<description><![CDATA[A crucial European ally drifts away from America -- and towards Russia and Iran.]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2011/12/sarkozy-merkel.jpg"><img class="aligncenter size-full wp-image-114990" title="sarkozy-merkel" src="http://cdn.frontpagemag.com/wp-content/uploads/2011/12/sarkozy-merkel.jpg" alt="" width="415" height="289" /></a></p>
<p>As German Chancellor Angela Merkel and French president Nicolas Sarkozy do their best to put on a public face of cooperation in resolving Europe’s escalating sovereign debt crisis, behind the scenes both leaders are seething.</p>
<p>They are angry with each other, angry with each other’s policy choices, angry with each other’s friends and allies.</p>
<p>It’s well-known that German taxpayers are <a href="http://www.spiegel.de/international/europe/0,1518,763294,00.html">fed up with footing the bill</a> for Greeks who take longer vacations than they do and retire on full government pensions many years earlier than they can. Less known is that the German government is actively considering allowing Greece – and possibly Portugal and even Italy and Ireland – to drop out of the Euro-zone.</p>
<p>“If the Euro fails, it will be Merkel’s fault,” a senior advisor to French president Sarkozy told me recently. “Germany has been resisting efforts to prop up the Euro. If the Euro collapses, it will be as much Germany’s fault as it will be that of the over-indebted Euro-zone members.”</p>
<p>Europeans are used to duplicity. That’s why they weren’t surprised to hear President Obama sharing derogatory personal remarks about Israeli prime minister Benjamin Netanyahu to French president Sarkozy when both leaders apparently thought the microphones were off.</p>
<p>But the duplicity of German Chancellor Merkel – smiling at Sarkozy in public, while throwing daggers at him in private – takes the cake.</p>
<p>The European media often talks of the Paris-Berlin axis, a code phrase meant to signify a marriage of reason between Europe’s two biggest economies.</p>
<p>But the extent of the falling out between Merkel and Sarkozy goes way beyond a marital spat. It is verging on divorce.</p>
<p>As the French rely increasingly on Britain and the United States, Germany is leering to the east. “What we are seeing is the emergency of a new Berlin-Moscow-Tehran axis,” the Sarkozy advisor warned.</p>
<p>There are many signs of trouble just beneath the surface.</p>
<p>First, there is Germany’s ongoing trade with Iran. Despite strong European Union sanctions on Iran, top German firms continue to do a booming business with Tehran.</p>
<p>Even worse: German trade associations are actively promoting exports to Iran, even as the EU calls for halting trade entirely.  Here are a few of these trade promotion events from just the past two months:</p>
<blockquote><p>-          On October 10, 2011, a delegation from southwest Iran visited Dresden seeking to expand Iran’s purchase of oil and gas field technology from German firms. (The organizers of this event have no sense of irony, <a href="http://www.eivent.de/khuzestan.html">as their website slogan shows:</a> “European-Iranian ventures, Your Economic Success”)</p>
<p>-          On October 26, the <a href="http://de.stopthebomb.net/fileadmin/editors_de/D-Iran/11-10-26_Einladung_Reza_Farzin.pdf">German Foreign Policy Association</a> hosted Iran’s Vice Minister of Economics and Finance, Dr. Mohammad Reza Farzin, to a public forum to promote cooperation with Iran and oppose sanctions.</p>
<p>-          On November 8, the German Business Association hosted a German-Iranian Business Congress in Berlin, spotlighting “<a href="http://de.stopthebomb.net/en/d-iran/eivent.html">Iranian Business Women Power.”</a></p>
<p>-          On November 22, the Bavarian Ministry for Economics held its annual Export Promotion Day, with a special emphasis on exploring <a href="http://de.stopthebomb.net/en/d-iran/economic-promotion.html#c1851">“better market chances in Iran, possibilities to invest, finding business partners in Iran.”</a></p></blockquote>
<p>(Hat tip to the enterprising group known as <a href="http://de.stopthebomb.net/en/d-iran/economic-promotion.html#c1851">Stop the Bomb</a> for keeping close tabs on German exports to Iran).</p>
<p>We’ve been through this song and dance before with Libya and Iraq in the 1980s, where the Germans were building poison gas factories and ballistic missile plants. It became known as trade <em><span style="text-decoration: underline;">über alles.</span></em></p>
<p>At the same time, Merkel’s government has been pressing hard behind the scenes to <a href="http://www.welt.de/print/wams/politik/article13737433/Die-deutsche-Iran-Connection.html">block EU sanctions against the Iranian Central Bank,</a> an initiative being promoted by French president Sarkozy.</p>
<p>So what’s going on? At a closed door meeting among European intelligence czars recently, top officials at Germany’s BND (their equivalent of the CIA) shocked their counterparts with the virulence of their ant-American remarks.</p>
<p>There’s a 1930’s style resurgence of nationalism in Germany that has caught the attention of many Europeans, the top Sarkozy advisor told me. “It’s Germany first, and to hell with Europe,” he said.</p>
<p>At the same time Germany is eager to protect its business ties to Tehran, Chancellor Merkel has been forging a closer political and economic relationship with Russia.</p>
<p>Some observers see the covert hand of Russia’s SVR intelligence service in the recent anti-nuclear campaign that led to <a href="http://www.google.com/url?sa=t&amp;rct=j&amp;q=merkel%20says%20nuclear%20plants%20will%20close&amp;source=web&amp;cd=1&amp;ved=0CCAQFjAA&amp;url=http%3A%2F%2Fwww.nytimes.com%2F2011%2F05%2F31%2Fworld%2Feurope%2F31germany.html&amp;ei=9KreTrnfLITq0gGH4eGoBw&amp;usg=AFQjCNFBmQWgwzJY2HrERD936Bqgd6DEZA">Merkel’s surprise announcement on May 30</a> that Germany will close all of its 17 nuclear power plants by 2022.</p>
<p>The French, of course, are particularly sensitive to such things since they rely on nuclear power to produce around 80% of their electricity and are the world’s foremost exporter of nuclear power technology.</p>
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