Parchment in the Fire

Politics, Political Theory and History

Free-market era in Sweden swept away as feminists and greens plot new path | World news | The Observer

Free-market era in Sweden swept away as feminists and greens plot new path | World news | The Observer.

For a man who is a near-certainty to become Sweden‘s prime minister after today’s general election, Stefan Löfven has had a miserable campaign.

In his latest misstep, Löfven, a burly union leader, was accused last week of “shoving” the female enterprise minister and head of Sweden’s Centre party, Annie Lööf, during a televised election debate. A Twitterstorm ensued and the political news the next morning was dominated by the fracas.

That unhappy episode came during the last of eight leader debates in which Löfven has consistently failed to shine. After eight years of centre-right rule, the Social Democrats are set to claim back power, but no one is pretending they have set the campaign trail alight.

Nicholas Aylott, a politics professor at Södertörn University, just outside Stockholm, believes Löfven, a former welder who has never been elected as an MP let alone served as a minister, has “done OK” on the campaign, given his party’s “extremely cautious” election strategy.

He thinks the real problems will come when, as almost everyone expects, he is tasked with forming a new government this week. “It’s really complicated and it’s really uncertain,” he says. “We haven’t had a similar situation since 1991 … and the result was a large degree of chaos, which doesn’t bode well.”

A poll at the start of last week from Sweden’s leading pollsters, Sifo, showed a late surge in support for the three main left-of-centre parties, giving them a six-point lead over the centre-right alliance that has ruled Sweden for eight years.

But at the makeshift row of election huts that has sprung up in the main square of Malmö, each a variant on a traditional Swedish summer cottage, it is the huts of the Green party and the new feminist party, Feminist Initiative, rather than their Social Democrat allies, that are doing most business.

Gustav Fridolin, 31, the Greens’ clean-cut joint leader, puts this down to what he calls the “red-green wind” sweeping Sweden. “People are tired of the government … The common feeling is enough. Enough of privatisation, enough of big profit within the school system and within the health system.”

The last four years have seen a string of scandals at privately run, state-funded care homes and kindergartens, the bankruptcy of one of Sweden’s largest free school chains, and the plummeting performance of Sweden’s students as ranked by the OECD’s Pisa study, all of which have helped turn the country against the centre-right and its reforms.

An opinion survey by Gothenburg University’s SOM Institute found last year that seven out of 10 Swedes believed the country’s experiment with letting private companies profit from public welfare had been a mistake.

But the Social Democrats have singularly failed to benefit. Sifo’s previous poll, at the start of September, put the party on only 27%, by far the lowest figure since Löfven took over as leader in January 2012. Repeated on Sunday, it would mark the party’s worst election result since working men got the vote in 1909. At the Social Democrat headquarters in Malmö, Björn Gudmundsson, the first ombudsman, or chief organiser, for the city, smiles wryly at the mention of that poll. “When I educate local party members, I tell them that a good local election leader has to ‘eat ice’,” he says. “Take it cool. Don’t react to everything that happens, or you lose your own compass.”

For a party that located its postwar power base in Sweden’s manufacturing heartlands and port cities such as Malmo, the post-industrial era has proved treacherous to navigate. Gudmundsson displays a table showing how since 1970 the party has had to rely first on the Left party for power, and then, from 1988, on the Greens, losing about a third of its vote over the period. It’s a story repeated across the country.

Outside a vegan cafe off Möllevången square, a Malmö district of immigrants, students and creative types, Henry Bergström and Josefin Eigert, both 22, typify the new left-of-centre voters the party has failed to win over. “We were just talking about, ‘do you vote for yourself, do you vote for your nation, or for the world?’,” says Bergström, who is studying computer programming at the city’s university. “So we discussed the effect of having a militant feminist party in the government. ‘Did you know Sweden has a feminist party in government. Yes, pure feminist!’ That would echo throughout at least Europe, probably the world.”

Feminist Initiative is the big new draw for younger leftwing voters in Malmö. A few weeks ago it briefly rose above the 4% threshold needed to get into parliament in the polls.

The risk for the Social Democrats is that it slips below the threshold on the day, eliminating more than 3% of the left’s votes, and all but ensuring a weak, minority coalition reliant on the anti-immigration Sweden Democrats to get anything through parliament.

“It’s a very technical, difficult position for all these voters who want to support the feminist party but who very much dislike the Sweden Democrats,” Ulf Bjereld, a politics professor at Gothenburg University, says. “Shall they vote with their heart and support the feminist party, and maybe the feminist party will win a place in the parliament, or will they help the Sweden Democrats to get this pivotal position?”

None of this worries Bergström. “That’s so boring to think like that! To be tactical!” he says.

Eigert, who works at the local hospital, says: “No, just vote what you think is right, and see what happens.”

Mariam Ismail Egal, an activist taking a rest at Social Democrat headquarters after a morning pounding the streets in one of the city’s middle-class districts, dismisses Fi, with its populist feminist, anti-racist message, as little more than a vehicle to get its leader Gudrun Schyman back into parliament.

“I don’t buy it,” she says. “I’m black and I’m a very proud Social Democrat, because what we are trying to do isn’t to fight only for the stigmatised groups. We see people for who they are, not for their colour, age or background.”

She is more worried about the Sweden Democrats, who she says are making inroads into Malmö’s immigrant vote by pitting immigrants of European origin and those who arrived in the 1960s against newer immigrants and those from African countries. “There are some immigrants who buy their bullshit, so we shouldn’t underestimate their strength,” she says.

Two of this month’s polls showed the Sweden Democrats overtaking the Greens to become Sweden’s third largest party. At the party’s election cottage, which is guarded by a threatening Doberman with a collar saying “security dog”, activists boast of how strong their position will be. “Whoever takes the lead, they will have to come to us to get their 50%,” boasts Rickard Åhman-Persson, one of the local leaders.

“It looks as if the left-of-centre parties won’t get a collective majority,” Aylott agrees. “It will be a weak government, unable to implement anything terribly consequential and that’s a really risky situation for the Social Democrats to find themselves in.”

He believes that if the Sweden Democrats do indeed gain a pivotal position, that might justify one of the smaller centre-right parties crossing over and striking a deal with the new government.

He adds: “One of the other centre-right parties could make the claim that they’re doing a deal with the left to try to save Sweden from the malign influence of the Sweden Democrats, taking responsibility in order to save Sweden from this ghastly scenario.”

This is the most likely to be the Liberal party, but Löfven might also need the Centre party, the former farmers’ party whose leader, Lööf, was still milking the previous night’s mini-scandal. “I was scared he was going to get me in a jujitsu hold,” Lööf told one interviewer

If he’s going to get through the coming year, Löfven may need to eat a lot of ice.

Spain prepares for an autumn of discontent by buying €1bn of riot gear | World news | The Guardian

Spain prepares for an autumn of discontent by buying €1bn of riot gear | World news | The Guardian.

The Spanish government is readying itself for an autumn of discontent, spending nearly €1bn on riot gear for police units as disparate protest groups prepare a string of demonstrations.

Since June, the interior ministry has tendered four contracts to purchase riot equipment ranging from shields to stab vests. The ministry also finalised its purchase of a new truck-mounted water cannon, an anti-riot measure used during Spain‘s dictatorship and the transition to democracy but little seen in recent years. Despite attempts by opposition Socialist politician Antonio Trevín to paint the purchase as “a return to times that we would rather forget”, the ministry said in its tender that the water cannon was necessary, “given the current social dynamic”.

The government’s spending spree comes as groups across Spain are predicting a season of protests. “We’re calling it the autumn of confronting power and institutions,” said the activist group Coordinadora 25-S which has its roots in the indignados movement.

Rallies are being planned to counter draft laws by the governing People’s party that would curtail access to abortion in Spain or see unauthorised protests levied fines of up to €600,000. Months after former King Juan Carlos abdicated the throne in favour of his son King Felipe VI, protests are also being planned to demand a referendum on the monarchy. In Catalonia, the push continues for a vote on independence, while the Canary Islands has said it wants to put the idea of oil exploration in the waters around the region to a referendum.

Amnesty International in Spain said the purchase of riot gear was a worrying development. “They say they buy this material to control disturbances, but how exactly will it be used?” said Amnesty’s Ángel Gonzalo. “In Greece we have documented how these water cannons, when used a short distance, can provoke severe injuries and commotions.”

In April, the organisation warned in a report that the Spanish government was using harassment and excessive police force to limit the right to protest. Through first-person accounts from several protests in Madrid and Barcelona, they noted that while the vast majority of protesters were peaceful, police treated them similarly to those who incited violence.

The Amnesty International report was made public just one week before a ban on the use of rubber bullets by police came into effect in Catalonia, after a long-fought campaign by seven people who had each lost an eye in Barcelona.

The police officers’ union said that the purchases were likely just part of an effort by the government to update obsolete equipment. “We have a problem with equipment,” said Javier Estévez of the Sindicato Unificado de Policia, pointing to a protest last March that left 67 police officers injured. “We don’t have the best or even up-to-date equipment,” he said, despite the obligation that the government has to protect the police.

While his group opposed the purchase of the water cannon, he waved aside concerns over the other purchases, noting: “When this gear is used properly, there’s nothing wrong with it, because it’s in line with Spanish legislation.”

Eurozone fears of stagnation grow as France and Italy suffer | World news | The Observer

Eurozone fears of stagnation grow as France and Italy suffer | World news | The Observer.

 

Francois Hollande

Francois Hollande and Paris’s mayor, Anne Hidalgo, at a ceremony on 25 August marking the 70th anniversary of liberation. Photograph: Joel Saget/AFP/Getty Images

François Hollande removed his government’s leading anti-German, anti-austerity leftwinger last week. By the following day the French president had already co-opted part of the message of the departed disloyal firebrand, Arnaud Montebourg.

As France’s ambassadors from around the world converged on Paris for their annual presidential pep talk, Hollande launched a fresh broadside against Berlin and Brussels. He called for an emergency eurozone summit to shift the troubled currency zone’s policies in a more expansionary direction. He demanded more leeway in spending cuts to get his budget deficit in line with the euro rulebook, although he has already twice been cut some slack by Brussels.

Europe is threatened by long, perhaps endless, stagnation if we do nothing,” he warned. “Because the recovery is too low, inflation is too low, the euro is too expensive.”

Hollande may be beleaguered, but he is far from isolated in that judgment. A week earlier the president had found a form of support in the unlikeliest of places, the European Central Bank in Frankfurt. Ordinarily a bastion of Teutonic monetary rigour and fiscal rectitude, the ECB is sounding the alarm at Europe’s maddening failure to dig itself out of its post-crisis hole.

In a speech in the US, Mario Draghi, the Italian head of the ECB, intimated a major policy shift towards fiscal stimulus, quantitative easing and asset purchases. It was time for Europe’s governments to stop cutting and start spending, he suggested, coupling his words with the usual nostrums about the imperative for structural reforms, particularly in France and Italy.

“Everyone’s concerned about France and Italy,” said a senior EU official. “The debate in the autumn will be difficult. We’re not back at the existential threat of the euro crisis that ended in 2012. But we risk slumping into low-to-minimal growth. The economic figures look a lot less promising than they did.”

More than two years into the Hollande presidency, the French economy stubbornly refuses to grow while joblessness rates continue to rise. Italy, with youth unemployment at a staggering 43%, is in its third recession in six years.

According to figures from the European commission last week, eurozone inflation was at 0.3%, well below the official ECB target of 2%, while business and consumer confidence fell by 1.6 points in the eurozone.

Over the last 12 months there has been an air of complacent self-congratulation among eurozone leaders at having weathered four stormy years of bailouts and bad banks, recession and soaring unemployment with the survival of the euro at stake.

Euro GDP Euro GDP by quarter, annualised As the leaders gathered this weekend in Brussels to squabble over top jobs and the shape of the new regime running the EU for the next five years, complacency gave way to a returned sense of gloom, a deepening realisation that Europe is entrenched in a demoralising era of deflation, stagnation, no growth, no recovery, and no jobs, especially for young people. The economic gloom descending in the wake of the debt and currency crisis is shifting some of the main lines of conflict in European politics, as shown by the drama in Paris over the last week.

Montebourg called austerity “absurd” and lambasted Berlin for imposing the spending straitjacket on everyone else. He had to go because of his disloyalty towards Hollande. But his criticisms of Angela Merkel, of austerity, of the hopelessness that German-led policies are breeding, resonated well beyond Paris.

The formation of Hollande’s more reformist team in Paris, the emergence of Matteo Renzi in Italy as a young populist centre-left agent of change, and Draghi’s apparent conversion to looser, more expansionary monetary and fiscal policies suggest that Merkel’s and Berlin’s domination of policymaking may be challenged more coherently. “It’s a new phase beginning,” said a second senior EU official. Merkel will face greater and more effective resistance across the eurozone “if they all play their parts cleverly “.

This leaves the German leader looking more isolated in Europe, though not necessarily weaker. “Her influence is still strong and resistance is growing,” said the official.

Arguments over austerity and growth have the makings of a battle or a bargain. An early sign of who has the upper hand will emerge over the next fortnight from the shape of the new European commission under its new chief and Britain’s bête noire, Jean-Claude Juncker.

The key post here is the economic and monetary affairs commissioner who polices the budgets of the member states and is the guardian of the German-prescribed rigour laid down in the euro rulebook, the stability and growth pact. Pierre Moscovici, Hollande’s former campaign manager and finance minister, is the French candidate and is laying claim to the portfolio.

Of all the top jobs being traded in Brussels over the next fortnight, however, this is the one exercising Merkel the most. She is determined to prevent it going to the French – and to stop it going to a socialist. She will compromise generously on some of the other plum posts to win this fight, say senior German government officials. This turns up the heat on Juncker, who enjoys substantial powers in deciding who gets what. In the formation of a new commission, national governments put forward their nominees. The commission chief then distributes the portfolios.

Juncker, like Merkel, is a Christian democrat, but on the leftish side of that broad church. He has said he is inclined to award the powerful economy portfolio to a social democrat. “It’s just not the case that you can divide the world into good and evil,” he told the Observer in May, “that Christian democrats are responsible for austerity and socialists for generous social policies. There’s good and bad on both sides.”

Whether a French or German-backed contender wins that post will show who has the upper hand in the fight between cutters and spenders, although both sides will look to cut a deal. “Who says Merkel favours a decade of no growth? We may see change coming with her tacit support. She’s not dogmatic,” said one of the senior officials.

If bargain prevails over battle, the deal would be to trade guarantees of changes to labour markets, pension systems and other structural reforms in return for a relaxation of austerity.

But it may be too little too late to make much difference.

Why Italy’s stagnation could be the future for the entire eurozone | Riccardo Bellofiore | Comment is free | theguardian.com

Why Italy’s stagnation could be the future for the entire eurozone | Riccardo Bellofiore | Comment is free | theguardian.com.

 

This summer Italy fell into a triple-dip recession. After the 2008/09 collapse, the economy stagnated, heading back into recession during 2011 and never really recovering. The philosophy of Giulio Tremonti, who was the economic minister at the time, was to wait and see, until speculation killed Berlusconi’s government. Prime ministers Mario Monti and Enrico Letta followed Brussels’ self-defeating diktat for fiscal rigour, but even with moderate deficits the public debt/GDP ratio soared.

The situation remained under control only thanks to the zero rate of interest and rhetoric by the European central bank president, Mario Draghi. Then came along Matteo Renzi, and Italian economic policy was all talk, talk, talk. While turning the screw of authoritarian parliamentary and electoral reforms, future lower taxes and liberalisations are promised to compensate for public cuts and to attract foreign investments. The €80 monthly tax break to lower-paid workers did not raise household consumption, and was instead spent on tariffs and local taxes.

Yet in the past few weeks the outlook has changed, with 2014 second-quarter data showing France flat and Germany experiencing negative growth. Greece, Spain and Portugal registered rosier figures only because they were recovering from severe austerity. The eurozone cannot but be driven by the three biggest economies alone. This is a continental crisis within an anaemic global economy. However, an old Gramscian truth about Italy must be remembered: the “backwardness” of its capitalism is paradigmatic. Europe’s exit from the crisis needs the same policies that Italy needs, and without them Italy’s stagnation is the future for the entire continent.

Many now think austerity has gone too far: upward elasticity on monetary or fiscal policy is essential. The suggestions go from quantitative easing (hopefully driving down the euro), and/or the ECB funding for lending, and/or a relieving of public finance constraints. Even Draghi’s speech at the US Federal Reserve conference in Jackson Hole, Wyoming, recognised this. This often goes together with a plea for supply-side structural reforms, such as labour flexibility and liberalisation. Others argue that trade imbalances are the main problem. Higher German internal demand, through fiscal stimulus and/or higher wages, would boost the GIIPS countries (Greece, Italy, Ireland, Portugal and Spain). A radical view is exiting the single currency to restore national economic sovereignty.

There is something sensible in all these propositions. Austerity is choking Europe. If the ECB buys assets it may improve state and firms’ balances. Higher liquidity could find its way to expenditure, and also revert the credit crunch plaguing small and medium firms. Trade imbalances, without counteracting policies, create regional disparities and social imbalances, leading to an explosive fragmentation. These policy outlooks, however, are wishful thinking, because in them the state is subsidiary to the private sector and the changes in the European landscape are ignored.

But monetary reform alone can’t kickstart the economy. Individual government deficits should be targeted by the ECB, providing the “big push” that private investment cannot give the biggest economies. Only in this atmosphere will the balance-sheet recession and the squeeze of private demand be overturned. If internal demand and production increase more than productivity, the consequent higher employment could ground consumption on income rather than on debt.

In the past 15-20 years, the European economy has gone through a deep financial and industrial transformation. Let us look at the financial side. Eurozone countries share the same payment system. There is nothing unusual per se in internal imbalances: they are absorbed by the banking system and do not lead to problems for the single currency. Balance sheets of banks and intermediaries are more integrated, and the public debt is managed on the bond market. On the industrial side, Germany spread its industrial and trade network so that increases in demand would be transmitted to a transnational value chain located in eastern and central Europe.

Demand reflation or wage increases do not guarantee enough exports for the periphery anymore, which may still need price-inelastic products from the centre. The exchange rate is a toothless weapon. From the financial side, exit countries need a stronger currency. A devaluation jeopardises the banking system and the management of public debt, and may not be so magical as hoped on the trade balance.

The European economy as a whole needs expansionary policies together with credit, industrial and regional policies. None of this is on the horizon. Changes must appear in continuity with the dominant consensus, as President François Hollande’s firing of the French economic minister this week shows all to well.

Draghi’s design to build Europe through a sort of “revolution from above” requires an ongoing crisis to weaken internal resistance within the capitalist class. An alternative social and democratic Europe “from below” meets the problem of the absence of a subject fighting for it. Though this is not good news, the euro may then actually end: not with a bang, but a whimper. But as the saying goes, “it ain’t over ‘til it’s over”.

An austerity revolt has broken the French government. Will the EU follow? | John Palmer | Comment is free | theguardian.com

An austerity revolt has broken the French government. Will the EU follow? | John Palmer | Comment is free | theguardian.com.

If there were any lingering doubts about the seriousness of the crisis hanging over the future of the euro – and potentially of the European Union itself – the shock announcement of the dissolution of the French government should remove them.

The tensions within the French socialist government have been building up for months as the economy has threatened to “double dip”. But it has been public criticism by the French economy minister, Arnaud Montebourg, of Paris’s compliance with eurozone austerity which has led President Hollande to call for the formation of a new government.

The irony is that some of the fears expressed by Montebourg about the French economy drifting into deflation have also been expressed by the president of the European Central Bank (ECB), Mario Draghi, in an important but little-noticed speech in the United States on Friday evening. Draghi did not disguise his growing concern at the stagnation of the eurozone economy and the failure to stimulate demand by countries in a position to do so. This is fairly obvious code for Germany.

It must be assumed that – under President Hollande’s instructions – the French prime minister, Manuel Valls, will duly produce a new administration without any troubling dissenters. But it would be very surprising if the same debate triggered by Montebourg does not return to haunt French policymakers before too long. What is new and potentially very alarming, however, is the prospect of time rapidly running out for the French government – and, indeed, the eurozone as a whole – to avert disaster.

Draghi and the ECB clearly want to take rapid action to further ease monetary policy, possibly including large-scale purchases of public and private debt. But the timetable for delivering this is not entirely in the ECB’s hands, and it is still possible that the Berlin government – under pressure from the Bundesbank – will drag its feet. Nor is there much enthusiasm in Berlin to take fiscal measures to stimulate demand across the eurozone.

The danger is that if the eurozone slides further into outright deflation it will become even more difficult to reverse the economic tide. Beneath the surface, however, realisation may be dawning about the scale of action which must now be taken, lest the choice become one of saving the euro or saving the EU itself. Within the Merkel coalition, pressure is building up for a change of economic direction to avert not just an economic but a political catastrophe for European integration.

This putative “new direction” should not only include emergency monetary easing by the ECB but also demand stimulus by governments, if necessary accompanied by the temporary part-suspension of some of the eurozone rules on inflation and government deficits. But the maximum deployment of the collective EU capacity to fund a kind of New Deal, spearheaded by a massive increase in investment in economic, energy, transport, environment and social infrastructure, is also essential.

It is a direction which President Hollande himself would be happy to support providing he can maintain a facade of unchallenged government authority and continuity of strategy in Paris. It will be a difficult trick for him to carry off. The Italian government led by Matteo Renzi is also aware that its own political honeymoon is drawing to a close, and it is conducting a barely disguised campaign for a change of eurozone strategy.

When push comes to shove inside the conclaves of eurozone ministerial meetings, there may well be a clear majority for new policies and urgent delivery of them. Even in Finland, traditionally a hardline austerity ally of Germany, new voices are being heard warning of the economic rocks looming ahead.

Will Merkel bow to this pressure for a new eurozone initiative? It would be surprising if she does not. More than any other EU government, Germany has an all-too-vivid sense of what could follow the disintegration of the euro. The very survival of European integration could be at stake. Events in Ukraine and elsewhere provide a sobering reminder of the price which a weakened and disunited Europe could pay for an economic miscalculation now.

 

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