Economic Nationalism—Will the PIGS Blow Up Europe?
Among the mega-forces moving the
tectonic plates and imperiling the nation-states of the
world from above and below are these:
First, ethno-nationalism, which
threatens nations with secession and break-up. We see it
Uighurs of China, the Naga of India, the Baluch of
Iran and Pakistan, the Kurds of Iran, Syria, Iraq and
Chechens of the
Russian Caucasus and the
Walloons of Belgium.
Second, transnationalism. This is
the project of
global elites who seek to reduce nations to
ethno-cultural enclaves in a new world order run by
these same bloodless bureaucrats whose loyalty is
neither to the land nor people whence they came.
in progress, the European Union, however, is
For the EU just took a great leap
forward to force Europe`s most indebted nations to
surrender their economic independence or be expelled
from the European Monetary Union. The
PIGS—Portugal, Ireland, Italy, Greece and Spain—may
Indeed, we may see cascading
rebellions across Europe recalling 1848, but with a
What brought the EU to this day of
reckoning is its decision to go for a trillion-dollar
bailout of Greece, Portugal and Spain rather than let
them default or restructure their debts. These nations
are now being directed by the EU and International
Monetary Fund to slash public spending and raise taxes,
though all suffer from high unemployment, with Spain`s
at 20 percent.
If Berlin gets its way, these
nations may also be forced to submit their budgets in
advance to Brussels and accept EU-dictated limits on the
deficits they will be permitted to run. This would
entail a sweeping surrender of sovereignty, independence
and economic freedom.
Moreover, as the pain of this
"rescue" is to be borne by the debtors, while the beneficiaries are
the French and German banks that hold tens of billions
in PIG paper, this question arises: Why should Athens
make Greeks suffer and risk political ruin at the polls,
rather than default and let the banks and bondholders of
Europe share in the pain?
Why not quit the EMU, default,
repudiate the euro, restore the drachma and devalue?
That would make Greek exports more competitive and make
Greece a more desirable place in which to site one`s
next factory. And with its currency devalued, Greece
would also become a more attractive destination for
But a Greek default is not the only
threat to the EU.
The European Central Bank has been
buying Greek debt from the banks both to relieve them of
the risk of a default and to restore market confidence
in Greek, Portuguese and Spanish bonds. Only when such
confidence returns will investors buy new debt from the
Club Med countries, all of which must issue new bonds to
finance deficits and roll over maturing debt.
A problem, however, has also arisen
here. As the ECB is buying up the debt of the PIGS,
holders of Greek, Spanish and Portuguese bonds are
unloading them, getting out of Club Med paper while the
getting is good.
The ECB seems to be substituting
itself for the banks as the chump to be left holding the
bag when the defaults begin.
The plunging euro is a sure sign
the markets are coming to see that the only way the
bonds of indebted European nations are going to be paid
off is with a huge infusion of euros, which may end that
currency`s status as a reliable store of value.
"if the euro
fails, it is not only the currency that fails,"
says German Chancellor Angela Merkel.
fails. The idea of European unity fails."
Especially enraged are the Germans.
To show that they were good Europeans, they gave up
their beloved mark. Now, in recent elections in
North-Rhine Westphalia, the Christian Democratic Union
of Merkel took a thrashing, falling 10 points below the
CDU`s 2005 vote, and losing the upper chamber of the
Germans may be ready to shed the
sackcloth and ashes they have worn for 65 years and
start looking out for Deutschland uber alles.
Given the strains on the European
Monetary Union and EU, neither of which enjoys the love
or loyalty that people render to the countries of their
birth, the great unraveling may be about to begin. Why,
after all, should the indebted nations of Europe impose
suffering upon their peoples to pay off old debts now
held by distant banks?
How does imposing austerity on
Portugal, Spain and Greece enable them to grow their way
out of indebtedness? How does it help the EU grow if a
large slice of the union is forced into austerity?
And why should Germans who pay
themselves modest pensions and hold off retirement put
their savings at risk to bail out the Club Med?
Many have predicted that economic
nationalism would one day tear apart the European Union.
The hour may be at hand.
CREATORS SYNDICATE, INC.
Patrick J. Buchanan
no introduction to
VDARE.COM readers; his book State
of Emergency: The Third World Invasion and
Conquest of America, can
be ordered from Amazon.com. His latest book
Hitler, and "The Unnecessary War": How
Britain Lost Its Empire and the West Lost
Paul Craig Roberts.