Atlantic Sentinel

Tag: Southern Europe

  • Populism Endangers Portugal’s Austerity Reforms

    Portugal’s ruling liberal conservatives have, since they came to power in 2011, strived to balance incompatible pressure groups. Local elections in Portugal have precipitated tensions.

    Prime Minister Pedro Passos Coelho’s Social Democrats and their conservative coalition partners came to power with a clear mandate: to do what the left could not and implement the painful but necessary economic and fiscal reforms prescribed by Portugal’s international creditors. The parties have carried out the task with some difficulty but for the most part the conditions set out by other European countries and the International Monetary Fund were met. Hikes in taxes, frozen salaries and incentives for civil servants to retire early have all slowed spending and eased the market pressure on Portuguese government bonds.

    International demands for credible commitments to austerity, however, conflict with another influence that equally shapes the Portuguese government’s composition and policies: a populist party machine that propelled Passos Coelho into the leadership of his party and then of the government.

    These influences are at odds as campaigning for the local elections that are due later this month is making clear. (more…)

  • Berlusconi Revamps Old Party as Senate Moves to Eject Him

    In a dense night for Italian politics, former prime minister Silvio Berlusconi used a video address Wednesday night to announce the revival of his twenty year-old party Forza Italia after the Senate had voted to deprive him of his seat hours earlier.

    A majority of senators rejected Berlusconi’s defensive motion which argued that he should remain a member despite a tax fraud conviction earlier this year. Under a 2012 anti-corruption law, which was then supported by his own party, any politician sentenced to more than two years imprisonment should lose his seat.

    The vote came after Berlusconi’s appeal to a parallel verdict for corruption was rejected by the courts. The former premier and business tycoon was ordered to pay almost €500 million in damages for the illicit acquisition of a publishing company in 1991. This closed another escape hatch for the disgraced politician as President Giorgio Napolitano is not allowed to grant amnesty to anyone who has been convicted twice — as Berlusconi’s devotees had requested.

    A second vote is expected to be called in the Senate within ten days but the outcome is unlikely to be different. The final act should come next month when a plenary session of the body is to confirm the decision to rob Berlusconi of his seat. (more…)

  • Italy’s Letta Fails to Stabilize Coalition with Tax Cut

    After a months-long internal struggle that jeopardized the stability of Italy’s ruling coalition, Prime Minister Enrico Letta announced the lifting of two payments of a controversial housing tax last week. While a victory for the former premier, Silvio Berlusconi, who had conditioned his support for the government on repeal of the tax, the announcement did little to guarantee stability in the coalition for the long term.

    Although the housing tax was implemented with Berlusconi’s party’s support during Mario Monti’s technocratic government, its abolition was the linchpin of his election campaign and one of the reasons he recovered so quickly in the polls ahead of February’s election, given that almost 80 percent of Italians own their own homes. (more…)

  • Caspian Pipeline “Victory” for Italy, Possibly Russia

    Late June, the Shah Deniz consortium chose the Trans Adriatic Pipeline project as its partner of choice for exporting Caspian Sea gas from Azerbaijan to Europe, excluding competing Nabucco West.

    The European Union and the United States welcomed the decision as another concrete step toward decreasing the former’s dependence on energy exports from Russia. They would probably would have reacted likewise if Nabucco had won instead.

    The news was received even more positively by Italy. Premier Enrico Letta declared it “a great victory.” The reason for this enthusiasm can be easily understood by looking at any map depicting the routes of all the competing projects. They were all designed to link with Turkey’s Trans Anatolian Pipeline, but then each would have taken a different path.

    Nabucco would have headed northwest through Bulgaria, Romania and Hungary to connect with existing pipeline infrastructure in Austria and is aimed at servicing mainly Central European countries.

    TAP instead heads west through Greece and Albania, crossing the Adriatic Sea to end up in southern Italy. It will mainly serve Southern European countries. (more…)

  • Prospects for Increased Balkan Security Cooperation Dim

    Southeastern European countries that were once joined in Yugoslavia battle similar economic and security challenges yet prospects for enhanced cooperation in both areas seem dim.

    Many of the West Balkan republics are coping with economic stagnation and high organized crime rates, the roots of which can often be traced to the political top, frustrating efforts to curb them. Regional cooperation to strengthen economies ties as well as the fight against organized crime promises improvement but chances of a true security community emerging are slim. (more…)

  • Cyprus: A Small Country Raises Big Questions

    Recent negotiations over Cyprus’ bailout plan tested the hard wrought stability of a union which seemed finally to have solved a few of its core problems.

    Few imagined that the Mediterranean country’s financial problems, well known in advance, could rattle the European Union anew. Yet an economy approximately one tenth the size of Greece’s, where the estimated sum of a bailout package would reach a maximum of €18 billion, in relative terms a paltry sum, raised more existential problems for the euro. (more…)

  • Montenegro Reelects Pro-European Incumbent President

    Montenegro reelected incumbent president Filip Vujanović last week by less than 8,000 votes, the Balkan nation’s electoral committee announced on Monday. Both the ruling socialist party’s candidate and his conservative challenger Miodrag Lekić had claimed victory.

    Vujanović has held the presidency since Montenegro seceded from Serbia in 2006. The post is largely ceremonial. Real power is held by the prime minister, Milo Đukanović, also a Social Democrat.

    Whereas Lekić campaigned against corruption and the political status quo, accusing the ruling party of monopolizing power and comparing his opponent’s premature victory claim to a “coup d’état,” the incumbent promised a “European” Montenegro by intensifying negotiations for accession to the European Union which began last year. Montenegro is considered next in line to join the bloc.

    Of the former Yugoslavian states, only Slovenia is currently in the European Union. Croatia will join in July. (more…)

  • Cyprus Refuses to Be Drawn Into Russia’s Orbit

    After the European Union agreed to a financial rescue of Cyprus on Monday, the Netherlands’ Jeroen Dijsselbloem, who chairs the group of eurozone finance ministers, announced, “We put an end to the uncertainty for Cyprus and the eurozone.”

    Yet much of the uncertainty was created by the bloc’s unwillingness to bail out Cyprus altogether and the possibility of Russian involvement in its rescue. (more…)

  • British-Spanish Relations Sour After Gibraltar Incursion

    In part of its ongoing dispute with the Spanish government over the sovereignty status of Gibraltar, Spain’s ambassador to the United Kingdom, Federico Trillo-Figueroa, was summoned to the Foreign Office before the weekend for what was undoubtedly a heated exchange.

    The redress was in reaction to a recent naval incident wherein a civilian vessel from Gibraltar was almost seized by the Armada Española and Spanish customs officials, were it not for the intervention of the Royal Gibraltar Police.

    Europe Minister David Lidington explained on Thursday that Britain had “repeatedly made diplomatic protests to Spain over attempts by Spanish state authorities to exercise jurisdiction in British Gibraltar territorial waters.” He condemned Spain’s “provocative incursions” and urged its government “to ensure that they are not repeated.”

    The minister furnished other details of the latest incident, reporting that a Spanish “warship” took a tour of Gibraltar’s territorial waters for some time, followed by the arrival of Spanish customs vessels seeking to intercept the civilian boat. (more…)

  • Mediterranean Engenders Tyranny of the Majority

    As predicted, the fate of the “Arab Spring” democracies is leaving much to be desired. Liberal societies can simply not arise from illiberalism and the alternative is, and has always been, to either have secular, authoritarian, pro-Western elites or Islamist, populist, unreliable governments. Between liberal dictatorship and Islamist democracy, the choice is a dilemma.

    What makes the choice more difficult is that it is also one between civil rights and political freedoms. In all of last year’s Arab revolutions, the observed constant was ethnic or ideological majorities politicizing the Mediterranean spillover of the Western financial crisis in order to unseat minority regimes. In Tunisia, the Islamists removed the secularists. The same happened in Egypt. In Bahrain, the Shia majority tried to overthrow a Sunni regime; vice versa in Syria, and in Libya there was no majority to be had. (more…)

  • Spain Bringing Stormy Economic Weather This Summer

    As Europe tries to enjoy its summer amid ever changing weather and bond yield rates, one of its most popular destination is still in the midst of a potentially crippling recession.

    According to Spain’s national statistics institute this week, the nation’s economy has contracted for the third straight quarter, shrinking another .4 percent off. Spain’s stubbournly high unemployment rate is not being helped by this, topping the table in terms of those without a job coming close to a quarter of the able working population.

    The government have already outlined a forthcoming 3 percent sales tax increase to put it at 21 percent, on a par with Belgium and its potential bailout brother Italy. This move has been dismissed by most economists as a stumbling block to helping kickstart consumer demand which has been especially weak given the poor perfomance of the country’s economy on a domestic level.

    Further adding to the fire is the spending cuts. An American style debt ceiling has been put in place at an average of just over 15 percent of gross domestic product across Spanish regions to save the central government in Madrid from bailing them out for an unprecedented fifth time. This in part has led to Spain having limited and almost unsustainable collateral which should sound alarm bells in Brussels and Frankfurt.

    However, it may prove to be worse on a domestic front as some of the regions have suspended talks in protest of the continuing cuts across the country.

    Despite the largely negative response to austerity measures at home, Spain has showed signs of improvement, albeit a moving slightly along. Spain’s ten year bond yield rate has falling .8 percent in the last week to 6.7 percent but will need a sizable injection of investment from the European Central Bank in order to keep the rates in a sustainable manner.

    The head of the Spanish treasury Iñigo Fernandez de Mesa has rejected calls for the central bank to buy up sovereign debt from his country, signaling that it was not currently in the Spanish plans to instigate such a move. The ECB is nevertheless expected to step up in its efforts to prevent Spain from going into the direction that Greece and other bailout nations have found themselves in which would cause additional contagion for the single currency’s woes.

  • Spain’s Economic Climate Not Reflecting the Season

    With summer fast approaching, millions of holidaymakers will make the annual trip to favored destinations in Spain including the southern region of Andalucia, the Canary Islands and the capital of Madrid. These are just three of the eight places that have been placed for a downgrade by rating agencies across Europe and beyond however. The creditworthiness of some regions now borders on junk status.

    Spain has not had the best of luck in the economic game in the last year. It has now become the second main threat to the euro after Greece.

    Investors and wealthy Spaniards have been pulling their money out of the banks and moving it to financially more secure countries. The scale of the removal of funds is unprecedented and will do no good to help the country’s public finances.

    News that the banking giant Bankia needs a €19 billion bailout has been met by the government with a rescue package but the markets have shut the door on Spanish agencies that need assistance due to the sheer size of the debt buildup and the likely need for further bailouts.

    Despite reassuring investors and other countries alike that Spain will maintain its economic sovereignty and not require a bailout that could cripple the single-currency union, Prime Minister Mariano Rajoy will be hard pressed to get more of his own workers.

    Spiraling unemployment has led to a stubbournly high 24.4 percent of the working population being out a job. The figures regarding the youth who cannot find a place of employment is almost double that.

    The government will attempt to slash the deficit to a mere 5.3 percent of economic output this year and down further to 3 percent the following year. With the economic climate currently battering Spain’s investment worthiness, this will be an ambitious feat to manage even in what has always been the most financially productive time of the year for the country in a foreign investment context.

  • The New G-Pariah States: Welcome to Greece!

    A Greek exit from the eurozone would make the country the poster child of what the political scientist Ian Bremmer has dubbed the “G-zero world.”

    Bremmer in his recent book Every Nation for Itself: Winners and Losers in a G-Zero World (2012) argues that Europe and the United States can no longer set the global economic and political agenda. The ongoing battle to bolster the eurozone will discourage European leaders from searching abroad for new ways to extend the influence of their governments while leading developing states face too many challenges both at home and in their immediate neighborhoods to embrace the risks and burdens that come with a larger share of global leadership. (more…)

  • Africa, Eurasia or the Levant Calling? Greece’s Dilemma

    Greece’s debt crisis has brought to the surface a serious question — where actually does Greece belong in financial, geopolitical and social terms?

    The modern Greek state was founded on a strange mix of Arab, European, Levantine and Ottoman influences. Two of its greatest leaders of the last century, Eleftherios Venizelos and especially Konstantínos Karamanlís, firmly believed that the nation was an inseparable part of the West. (more…)

  • Greek Debt Agreement Met With Cautious Optimism

    Last Friday saw the culmination of efforts that had started their official trajectory in the last days of July of last year when it was made official that Greece would be allowed to write off part of its sovereign debt.

    Controversial at the time was the insistence on private bondholder participation, a demand that many felt increased the volatility in the sovereign debt market for all the countries that were vulnerable — Italy, Portugal, Spain.

    Beyond this, the insistence by the European Central Bank that this would not trigger a credit event, effectively a way of claiming that Greek had defaulted, would not be allowed to happen. The rationale was that this would impede the ability of the bank to legally provide Greece with funds. (more…)