Archive | September 2012

An Autumn of Discontent is the Result of Europe’s Endless Pursuit of Austerity

September was advertised as a turning point in the Euro Zone crisis, but after a week of mass anti-austerity protests in Spain, Portugal and Greece, the only thing I can take out of this month is that politicians are still unable to stop the continent’s unrelenting decline into social turmoil. Despite the efforts of the European Central Bank to stabilize the banking and monetary aspects of crisis, the recession deepened by austerity measures threaten any stability earned by central bank action.

Heading into October, Europe faces three trouble spots on its southern “periphery”. Like in previous years, Greece is nearing a confrontation both inside and outside parliament whenever the latest austerity measures are brought forward for a vote. The Greek state is in collapse with police turning residents to the fascist militia of Golden Dawn in crime disputes involving migrants. Social services are in free fall with the former ranks of the Greek middle class turning to charity services for food and medicine. This level of dysfunction being deepened by another round of painful budget cuts is too much for the Greek public to tolerate.

When the IMF recently pushed Greece’s finance minister to pursue more wage and pension cuts, the finance minister pointed to a bullet hole in the window and asked the IMF representative: “Do you want to overthrow the government?” Europe, again pushing for more counter productive austerity, risks sending Greece into a full nervous breakdown with unpredictable consequences. It’s not only EU and Euro Zone membership at stake, but the viability of Greece’s post military junta democracy and even the wider stability of the Balkans if extreme nationalists like Golden Dawn continue to advance into Greek mainstream politics.

While Greece is further along in a painful austerity program, Portugal is quickly catching up in terms of political dysfunction, public opposition to austerity, and an entrenching economic depression with no obvious exit. Any semblance of political stability in Portugal was lost in one speech by prime minister Passos Coelho when he announced a 7%  increase on the contributions of workers to social security. If that wasn’t politically explosive enough, he added that there would be a tax cut on the social security contributions of employers. The measures were justified by the prime minister in the name of economic competitiveness. A week later, around 660,000 protesters filled the streets in outrage over the government’s plans. A day after the protest, the crucial coalition partner in the government came out against the tax measure. The measure would formally die at a summit of Portuguese statesmen on the 21st of September. All of this still leaves the Portuguese government scrambling to find the billions of euros in budget cuts and tax increases needed to comply with the country’s IMF and European Union adjustment program. In a tactic borrowed from Greece, Portugal’s creditors have threatened to withhold loans if the austerity drive doesn’t continue.

While smaller countries like Portugal and Greece have been of sufficient concern to European policymakers since the crisis erupted, the deterioration of a country the size of Spain threatens to bring the whole European project crashing down on itself. Austerity has intensified long standing regional tensions in Spain with Catalans in the northeast desiring more political autonomy while the ruling Popular Party in Madrid and European Union seeks more centralization to eliminate regional budget deficits. The regional authorities in Catalonia threaten Madrid with a referendum on independence, while Madrid insists it has the constitution and national authority on its side in preventing a referendum. In October and November, Galicia, the Basque Country, and Catalonia all have regional elections, all three regions having longstanding and relevant nationalist movements. With a “bailed-out” Spain only promising additional rounds of austerity, the political center of Spain risks losing more voters to regionalist parties who promise a better future with stronger autonomy or even outright independence.

This retreat of the political center is happening across Southern Europe. It’s most obvious in Greece with once dominant parties like center-left PASOK polling 8% as opposed to the 43% it won in the 2009 general election. Following the latest austerity announcements in Portugal, the ruling social democrats lost 12% in just a few weeks with the Portuguese Communist Party and Left Bloc (ally of Greek Syriza) rising to 24% of public support. In Italy and Spain, voters are similarly shunning the parties that have governed for decades. Europe’s plan to keep the monetary union together depends on national politicians complying with austerity in exchange for loans. As we are seeing this autumn, the streets of Barcelona, Madrid, Lisbon and Athens are increasingly restive and ready to sweep those politicians aside.

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A Pitched Battle in Madrid Over Approaching IMF/EU Intervention:

Tuesday’s protest kicked off with thousands of protesters concentrated in Plaza de las Cortes. Ahead of the protest, a fortress had been set up by Spanish riot police to prevent crowds from even approaching the Spanish Congress. On streets approaching parliament, a series of barricades were set up with lines of riot police on guard:

video showing protesters stopped at police barricades on small side streets near congress:

Later on in the protest, the barricade to congress was breached by a group of protesters, followed by a violent and generalized  police charge directed at the huge crowds around Plaza de las Cortes:

aerial footage of the skirmish:

By nightfall, the crowds in Madrid had swelled in Plaza de las Cortes:

After several hours of protests, tensions exploded in a very violent episode between police and the many thousands gathered near Congress:

Attention was quickly turned to the individuals who provoked the violent clash shown above. The following video shows similarly dressed individuals helping riot police make an arrest:

Whether the violence was orchestrated or not, the result was indiscriminate violence by police in Madrid. The sound of rubber bullets pierced the night. There were possibly dozens of individual baton charges directed at overwhelmingly peaceful protesters:

With the bulk of the protesters dispersed from around congress, police continued to pursue people, firing volleys of rubber bullets and swinging their batons at anyone in reach:

The attack even continued at a train station:

Across social media platforms, calls have gone out for protesters to return tomorrow at 7pm local time to continue this protest so forcefully put down.

Update:

Additional clips have surfaced, this of an undercover officer being arrested by police. He pleads that he is a colleague before the police eventually confirm he is indeed a police officer:

This clip gives you the chronology of the violence that unfolded through the night:

Finally, clip showing two police officers dragging an elderly man down the sidewalk before arresting him:

Sights and Sounds of a Historic Day of Protest in Portugal

Estimates put the total number of anti-austerity protesters at over 660,000 people. Naturally, such a protest has captured the front pages of Portuguese newspapers. Diário de Notícias going with the headline “Outrage took to the street”:

Jornal de Noticias went with a photo of the mass protest in Porto, the other two papers showing crowds in Lisbon.

During the height of the protests in the capital, news helicopters filmed the jammed streets along the march:

Protesters assembled outside Portugal’s two largest cities. Thousands march and chanted against the IMF in Setúbal:

In Santarém, crowds chanted that the time has come for the government to go:

In Lisbon, Praça de Espanha was transformed into an expansive sea of humanity:

By night fall, thousands spontaneously gathered around the parliament in Lisbon, a small group of the crowd attempting to break past the police blocking the steps to the national assembly:

Latest Austerity Plunges Portugal into Deeper Crisis

The past two weeks has been nothing short of a blitzkrieg of austerity. Last Friday, a crushing hike on social security contributions for workers was announced by prime minister Passos Coelho. During this week, finance minister Vitor Gaspar followed up before anyone had a chance to recover from the previous announcement. Mr. Gaspar brought news of a change in the tax code, promising higher income taxes next year as the number of tax brackets are reduced.

The bad news failing to relent, we learned that the budget deficit is wide of its target, the austerity of last year failing to achieve its purpose. Rather than stepping back from this plague advertised as medicine, the government will up the dose, bringing more tax hikes that drive the people into poverty, and cuts to the welfare state that deny them a safety net to break their fall.

It is in this context that upwards of 660,000 protesters took to the streets across all of Portugal. From small towns to the large coastal cities, from Braga in the north to Faro in the south, from Castelo Branco in the east, to Ponta Delgada on the Azores islands out in the Atlantic. These were crowds consisting of workers, pensioners, youths, and entire families, all out on the streets to reject the prime minister’s efforts to condemn the country to total impoverishment, his efforts to carry out a controlled demolition of society, bringing the middle class crashing down into poverty and the working poor into a state of homelessness and hunger.

All of this suffering is passing in the name of competitiveness, as if German politicians and employers aren’t ready to do the same to workers there, negating any “competitiveness” Portugal may achieve. All of this suffering is passing in the name of reducing the deficit, austerity measures that fail to heed the lessons of Greece. With a wide deficit, the last thing a country needs is more unemployment and reduced wages, the wages  from which government collects taxes. It is an absurd, irrational and brutal policy, and it is why there is such reason in the chants on Saturday, chants saying that it is time for this government to go.

But there were doubters, those who couldn’t imagine such force of numbers. Such doubters existed in the New York Times for example, the newspaper published an article claiming “Perhaps nowhere… are people quite so acquiescent as in Portugal”. This acquiescence was a myth, but there was something missing in previous protests of the government and the Troika. If it is truly believed that there is great power when the people are in the streets, than it is insufficient for this power to be used on just three days a year on a 365 day calendar.

This is not to argue that there must be a protest everyday of the year, but the government can’t be given the assurance that the resistance to its policies only last the duration of a protest march. Yesterday, such assurances were denied to the Portuguese government. After the march concluded along its predetermined path, thousands of protesters proceeded toward the national assembly with more arriving through the evening, bolstering the initial protest. Less than 24 hours after these nationwide protests, additional protests are being organized on social media. Later this month, CGTP, the biggest trade union confederation in Portugal, joins the protests with a day of struggle that will mobilize its vast membership. A general strike can be expected in the following weeks. There’s no return to the Portugal before the 15th of September. There’s only two directions, to the social collapse made inevitable by the Troika and the prime minister, or a course charted by Saturday’s huge crowds, a course to a more egalitarian Portugal.

Catalonia Marches by the Hundreds of Thousands for Independence:

One and half million people marched in Barcelona for independence according to police. Organizers put the crowd at two million. Broad avenues were filled end to end with people, Catalan flags were everywhere and of each kind, the more liberal one with the white star, the left-wing one with the red star. It was an historic day. Previously, such masses had been mobilized but for sovereigntist claims rather than a demand by organizers for outright succession from Spain. At one point, protesters hung a “Spanish Embassy” sign on the delegation of the national government of Spain.

Even the traffic lights were yellow on this day:

The streets of Barcelona singing the Catalan national anthem “Els Segadors” and chanting for independence:

The protests for independence even went on while people were waiting for the metro:

After this mass protest, there’s a certain inevitability about Catalonia’s pursuit for independence. But with Spain in a deep crisis and needing wealthy Catalonia’s tax revenue, I fear that a show down with Spanish Nationalism is unavoidable.

The Austerity Regime in Portugal Attempts Its Most Brazen Theft Yet

My last post went into how austerity has failed in Portugal just as it failed before in Greece. Friday was another landmark day in the crisis, showing how Portugal is moving from a deep recession to economic meltdown and the accompanying social and political meltdown. Prime Minister Passos Coelho announced a 7% tax hike on both private and public sector workers. This represents a full month’s wage being taken from workers next year while the government simultaneously cuts the social security contributions for businesses and employers.

The reaction was quick and certain outrage. An anti-austerity protest planned for Saturday had been met with complacency the last two weeks. After the latest austerity measures, the protest has taken off, with the protest in the capital now being matched with demos in other major cities. Retired members of the ruling party have even expressed shock at this 7% tax hike on the wages of workers. The regional governor of Madeira from the same ruling party distanced himself from the national party. The political consensus on austerity is fast eroding with the harshest austerity now being generalized in its implementation.

It’s worth retracing recent events as Portugal is overlooked with a European continent covered with depressed economies. The constitutional court struck down a measure that cut two months worth of pay for public sector workers. The court considered the provision unfair, as it weighed the greatest sacrifices on public sector worker. The tax hike announced on Friday for both private sector and public sector workers is meant to fill the gap in next year’s budget from the constitutional court ruling. How cutting taxes for businesses and raising them on workers complies with the constitutional court’s demand for fairness? I have no idea and I will leave it to constitutional experts in Portugal.

The key is this brutal austerity will destroy consumer demand and increase unemployment as the country sinks into an economic depression. And to make matters worse, it is just the tip of the iceberg with the Troika currently in Lisbon seeking compliance with the deficit program that is well off track. The government in the weeks ahead will be forced to apply emergency cuts to spending this year while having to pass another austerity budget for 2013 in October. Rather than showing leniency after driving Greece into disaster, international creditors are intent on keeping Portugal on the same perilous course.

In terms of the Portuguese public, they’ve reached their capacity to absorb austerity, a claim being echoed by opposition parties. This inability to tolerate more tax hikes and budget cuts will be demonstrated next Saturday and in the following weeks with left-wing labor unions stepping up resistance with three days of protest and work stoppages just in the first half of October. I expect the UGT union confederation to rejoin the left-wing unions in social struggle with the government showing total unwillingness to pursue pro-growth measures desired by the centrist union confederation.

At this point, the door to slow or stagnant economic growth has been closed by the government’s commitment to austerity. Instead, the country will slide into deeper misery, poverty and unemployment. The reality is that the recession will not end next year as promised by prime minister Passos Coelho in recent weeks. Rather, it will be worse than even this year. It’s overdue now for the public to conduct their own political intervention and cease the total mismanagement of the country by the government and its international creditors.

Austerity Failing in Portugal Just as it Failed in Greece:

As reported by AFP:

“Portugal’s public deficit is expected to reach 6.7 to 7.1 percent of output for the first half of this year, far off the government’s target of 4.5 percent, experts commissioned by parliament said. ‘If this forecast is confirmed, the expected budgetary consolidation measures will not be sufficient to meet the budget deficit target’ of 4.5 percent of GDP for year end, the report sent to Portuguese parliamentarians said.”

And if one suspects that the first half of the year might be balanced out by a better performance in the second half, the same expert unit warned: “o perfil histórico do défice que tradicionalmente sofre um grande agravamento no último trimestre do ano.” Translation: the expert unit warns that “the historic trend of the deficit traditionally suffers a major deterioration in the final three months of the year.”

In Portugal, the cuts to social services, wages, and benefits failed to achieve their objective of balancing the public deficit, just as they failed before in Greece. Even if the measures worked in tackling the deficit, it wouldn’t justify the enormous social cost of unemployment and poverty. It’s time to break with austerity before it breaks us.