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Friday, February 14, 2014 3:56 PM


German Left (Die Linke) VP Claims "Euro Divides Europe, No Benefit to EU"


In a Ziet Online interview, Sahra Wagenknecht, Die Linke vice president and economic spokesperson, says the "The euro splits Europe" and there is no benefit to the EU.

ZEIT ONLINE: Ms. Wagenknecht, what is the biggest advantage of the European Union mean to you?
Sahra Wagenknecht: After the Second World War, the united Europe has brought peace. But ever since the Maastricht Treaty and the Lisbon Treaty, the European Union has developed in a direction that primarily serves the interests of big business and banks. ... Integration reduces the welfare of the majority in Europe along with growing anti-European resentment. We have 19 million unemployed in the south of Europe and a disastrous austerity policies, for which the European Commission is responsible as part of the troika. Entire countries are incapacitated and plunged into the social abyss.

ZEIT ONLINE: Do you agree your life partner Oskar Lafontaine, that Germany should withdraw from the euro?
Wagenknecht: He has not suggested that Germany exit the euro, but that a new currency system with stable exchange rates and capital controls in place of the Euro occurs. The euro as introduced, does not work, but divides Europe.

ZEIT ONLINE: What's the alternative? Return to the D-Mark?
Wagenknecht: It is clear that a resolution of the single currency must not allow exchange rate speculation. There must be institutions that hold the currency market stable. And it needs capital controls.

ZEIT ONLINE: You argue like the AfD.
Wagenknecht: I beg to differ. AfD top candidate Hans Olaf Henkel is a neo-liberal economic lobbyist who throughout his life seeks low wages and welfare cuts. The AFD is not for a social Europe.

ZEIT ONLINE: The Left Party is the AfD for the poor?
Wagenknecht: Nonsense. Even the middle class would benefit from more welfare state and a better wages.

ZEIT ONLINE: Is end the EU the only message of the Left Party before its European Congress?
Wagenknecht: That's not our message. We want a Europe that is socially and democratically and met, for example, the tax evasion by the rich and corporations with uniform tax rates at a high level. We hope that there will soon be a much stronger active resistance from the people of Europe and that the frustration just does not discharge in the election of right-wing populist parties.

ZEIT ONLINE: Will your party will discuss how to deal with military operations?
Wagenknecht: Of course. I find the current debate on more military involvement in Germany spooky. We've seen that the military operations in which we have participated, such as in Afghanistan, the people did not benefit. On the contrary, thousands of civilian deaths were the result. Humanitarians do not need bombs. German soldiers have no place abroad.

ZEIT ONLINE: What would happen if there were a new Srebrenica [genocide in Bosnia]? Would the green helmets then stand idly by?
Wagenknecht: Wars are never out of humanitarian reasons. Take a look a look at how conflicts arise in many conflicts, including in the Congo and elsewhere, European countries have supplied weapons and fueled the civil war. Some of these were proxy wars. And then come the arsonists. That's hypocritical, it's about raw materials and geostrategic positions.

ZEIT ONLINE: Between Left Party and the Greens and the SPD prevails a Thaw. The party leaders of the Left and the Greens meet. SPD General Secretary Yasmin Fahimi was open to joint coalitions. Is a Red-Red-Green coalition in front of the door?
Wagenknecht: It's good that there is finally calls. However, significant political differences remain. When I look at the policy that makes the SPD in the grand coalition, this differs significantly from what we want politically.

Setup to Watch

Eurointelligence had some interesting comments on this development, and I generally agree with the analysis.

We know that Sahra Wagenknecht was always critical of the German government's handling of the eurozone crisis. Now the deputy leader and economics spokeswoman of the Left Party favours the dismantlement of the eurozone. It is not the party's official position yet but her statement as reported in Spiegel Online marks an important political shift for the party.

Germany would then have two parties openly against the euro - the AfD and the Left. Her argument is that the euro splits Europe politically, that it disenfranchises states and impoverishes the majority of the people. As an alternative she is proposing a new fixed-exchange rate system with capital controls.

This is one to watch.

Despite entering a Grand Coalition, the SPD has now officially opened the door for a coalition with the Left Party in 2017 - and that position will either complicate or frustrate that process, or turn into a more general position of the left - depending on the politics of the eurozone crisis in the next few years.

We believe that her arguments are to be taken seriously - Ralph Dahrendorf argued on the same lines well before the euro was introduced. The eurozone has yet to demonstrate that the arrangement will benefit the people in the long run. The real danger to the future of the euro will not come from financial markets. It could come from a broader political realization that the euro has failed to deliver. Not everybody is ready to come to the same conclusion as Wagenknecht, but we should not be surprised to hear more views like this.
Capital Controls and More Regulation Not the Answer

Her arguments regarding capital controls, more regulation, and fixed-rate exchanges are complete silliness.

Europe does not need capital controls, nannycrat dictators, or fixed rate exchanges. Fixed rate exchanges cannot possibly work in conjunction with fractional reserve lending and other competitive currency debasement mechanisms.

Her arguments should not be taken seriously, but it's likely they will.

Nonetheless, Eurointelligence did mention the key idea "The real danger to the future of the euro will not come from financial markets. It could come from a broader political realization that the euro has failed to deliver."

The euro has not delivered and it will not deliver. It is fundamentally, and fatally flawed. Political bickering over banking unions, fiscal unions, freedom of movement, and literally everything shows the euro cannot possibly be repaired.

Repeating what I said in 2011 (and numerous times since):

"Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the "bail out" debt foisted on their country to be null and void. That person will be elected."

All it will take, is for one charismatic person, timing social mood correctly, to say precisely the right thing at exactly the right time. It will happen.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

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