The Danger of Economic Collapse in Europe

No one in the punditocracy has raised the issue yet, but their are drastic dangers in the collapse of the Eurozone in Europe. The European Union (EU) voted an austerity rescue package for Ireland and Dublin accepted it. It then voted one for Greece, and Athens accepted it, but with the proviso of first holding a referendum on it. Commentators have even come up with an acronym for the danger of a Southern European collapse: PIGS--Portugal, Italy, Greece and Spain. If any of the three other PIGS defaults then Europe will be plunged into a depression, the Euro will collapse, and the effect will likely be felt across the Atlantic in America. Go here for a timeline of the debt crisis as it developed from late 2009 to the present. Go here for an article on the dangers of Italian default on their debt.

This is then the opposite of the Great Depression of the 1930s when the depression began on Wall St. and very quickly moved across the Atlantic to Europe and South Africa. America was providing the financing for the system of revolving finance in which America loaned money to Germany, which then paid that same money to the Allies as reparations for World War I, and then the Allies repaid American war loans. Once America could no longer provide the funding to Germany the system collapsed.

The best description of the link between politics and economics in the 1930s is The Dark Valley by British historian Piers Brendon. It demonstrates that as the decade began fascism was confined to Italy and Portugal and neither country was doing very well. The Nazi Party was polling under three percent in German elections and France was ruled by the Radicals (a centrist party despite the name). Soon the Nazis began to rise very quickly as most voters abandoned the parties of the center in favor of either the Communists or the Nazis. By the end of January 1933 Hitler was chancellor of Germany; eighteen months later he was a dictator. Fascist paramilitary groups began to dominate the streets of Paris and other French cities until they were finally outlawed following a bloody clash with the police in 1934. The depression led the Japanese army to invade Manchuria in 1931 and then much of the eastern half of China in 1937.  The military took over running the government from the civilians during the 1930s. In Eastern Europe traditional dictatorships gradually gave way to fascist parties, which then established their own more radical dictatorships. Fascism then spread to the Arab world--to Egypt and Palestine and then to Syria.

I think that Western Europe is safe from a return of fascism as democracy is well entrenched there after two generations since its introduction following 1945. But east of the Czech Republic and south of Slovenia it is another story. Fascism was introduced in Yugoslavia by Slobadan Milosevic in the late 1980s. Serbia, Macedonia, Bosnia, Kosovo, and even Montenegro and Croatia remain at danger from an economic collapse.  In Serbia and Croatia democracy remains weak with ultra-nationalist challengers. In Bosnia politics is dominated by Serb, Croat and Bosniak ethnic nationalist parties. The central government is dysfunctional. In Macedonia there is the danger of demands by the Albanian minority and repression by the Slav majority. Nationalism could return to the Balkans in a big way if there were a Euro collapse. The Bosnian war of 1992-95 led to at least 100,000 deaths and a million refugees leaving the country for Western Europe and the United States. Unlike the Albanians in Kosovo, most never returned.

Central Europe north of the Balkans is safer but there are danger zones there as well. Democracy is probably quite safe in the Czech Republic, Poland, and the Baltic States. But in Slovakia there could be problems as the economy is dependent on heavy industry--military industries were very important in Slovakia. There is a Hungarian minority in Romania; if ill treated by the Romanian majority this could lead to a return of nationalism in Hungary with irredentist claims over Transylvania. Like Dracula in the Hammar films of the 1950s and 1960s, fascism could rise from the dead in Budapest.  

These are things that Angela Merkel, the Germans, the Greeks, and the Italians should all think about very hard.

The advantage of democracy--Ireland goes to the polls

As the population of Tripoli, Libya and other Libyan cities brave the bullets of regime mercenaries and risk being strafed by pilots who have not yet defected to Malta and elsewhere, the voters of Ireland go quietly to the polls. They are now taking the opportunity to throw out a government that was so feckless that it presided over a property boom that makes America's similar boom look restrained. The Anglo-Irish Bank has collapsed and other banks are in various stages of insolvency--being bailed out by a loan package from the European Union that has very stiff repayment conditions. It is estimated that the Irish debt now amounts to approximately $500,000 per capita. No wonder common skilled laborers could afford summer homes in Ireland or abroad before the debt was called in.

Since 1932, the third election it contested, Fianna Fail has been the largest party in Ireland. It has since that day always received at least 39 percent of the popular vote and until 1989 when it governed--which was most of the time--it governed alone, with either the support of independents as a minority government or as a majority government. Recent polls have Fine Gael at 40 percent giving it possibly enough deputies--TDs--to govern with support from independents.  If not, or possibly simply to gain more stability, Fine Gael will rule Ireland in a coalition government with Labour, its junior partner in coalition governments in the 1970s, 1980s, and 1990s.

Both Fianna Fail and Fine Gael are Center-Right parties, closer to each other in ideology than to their competitor parties. They represent the two sides of the Irish Civil War of 1922-23, fought over the Anglo-Irish Treaty of December 1921 that ended the Irish War of Independence. Ultimately, the war was fought over whether or not to take an oath of loyalty to the British sovereign before entering the Dail. Fine Gael is the successor to the party that won the war and ruled Ireland for its first decade of independence. Fianna Fail is the party of the man, Eamon de Valera, who vowed never to utter the oath and after losing the war did so three years later.  For the next sixty years elections were fought over the civil war and then during the 1980s and 1990s over economic issues and Northern Ireland.  Irish politics were until late last year much like American politics following the Civil War and up until the New Deal and possibly even the 1960s.

It looks like Fianna Fail's junior coalition partner during the 2000s, the Green Party, will be obliterated in this election. Sinn Fein, the former political wing of the Irish Republican Army, looks to at least double its representation in the Dail from five to ten. Sinn Fein President Gerry Adams, the man who claims to have never been in the IRA (but whose nephews and uncles ran the organization in Belfast for decades) quit his always-vacant seat in the British parliament from West Belfast and traveled south to Co. Louth to contest a seat in the Dail. That is where the body of Jean McConville, a Belfast woman murdered by the IRA for either informing for the British or comforting a dying British soldier, was discovered in 2003. A recently published book based on interviews with a former senior IRA operative in Belfast claims that Adams gave the order for McConville's murder. Her daughter has been trailing Adams on the campaign trail acting as a one-woman truth squad. Most politicians have figurative skeletons in the closet; Adams has real skeletons in figurative closets!

Social Democratic and Labour Party leader Margaret Ritchie recently traveled south and injected herself into southern politics to claim that Sinn Fein is acting like "green Communists in the South and red Tories in the North." In other words, they are hypocrites accepting severe cuts in Belfast as part of the ruling coalition but condemning Fianna Fail, Fine Gael and Labour for doing the same in Dublin. 

From the 1840s to the early 1990s the Irish working class has always use emigration as a primary means of earning a living. First it was to America, then to Britain and Australia. And finally to the European mainland after Ireland joined the EEC with Britain in 1972.  The migration flow reversed itself in the mid-1990s as the Celtic Tiger economic miracle took hold and business boomed. For a dozen years the Irish had it good! Now graduating university students will be once more departing to try their luck abroad.  Ireland's loss is the world's gain as well-educated English speakers flock to America, Britain, and the Continent once more.

How the new Irish government handles the new austerity program will be a weather vane for the PIGS (Portugal, Italy, Greece, Spain), which are on the verge (or over the edge and on the way to the bottom in Greece's case) of economic insolvency as well.  All of Europe will be watching Dublin closely for signals. Those interested in the fate of the European Union should as well.