Guest post. Translated from the French by Tim Gupwell
A united front of German banks has opened up, refusing any kind of interference from a supervisory body – in this case the ECB – due to their little idiosyncrasies and their little hidden frailties, but also the risk of being made to contribute via a European fund to the saving of other countries’ establishments. The savings banks, mutuals and regional banks (Landesbanken) which comprise it represent 70% of the deposits held in Germany.
Talking of deposits, the prospect of a separation of deposit activities from speculative activities has also caused a general outcry, this time from the ranks of the all-purpose (universal) banks. All of them would like to see the deadline for the reinforcement of their capital base, required by the Basel III agreement, put back. It would be impossible to list – with all the open files, including some only just opened, or even quickly closed again – the extent to which the financial establishments are successfully digging in their heels at the rather half-hearted attempts to rein them in, regulate and reinforce them. They want to remain the masters of their own destiny.
But this issue has been put back on the back burner by the pursuit of the public debt crisis. The danger of a collapse of the Eurozone is good to hide behind, as well as the highlighting of further advances – but not just any old advances – in the European project. Still, while one claims to understand all the ins of the strategy being pursued through thick and thin, all the outs have proved elusive.
Spain is one good example of this. Confronted by the danger represented by a regional debt spiraling out of control, Mariano Rajoy is attempting to apply to the regions the very same formula which prevails at the heart of the Eurozone. It is one of give and take: giving on the one hand financial aid to remove them from the markets, the taking on the other hand is the financial austerity that goes along with it. Thus Spain has created a support fund for the regions, the equivalent of the EFSF/ESM, and wants a commitment to a reduction in their expenses, notably in the domain of social services, public health and education.
But it doesn’t work at that level either! Because there are limits to what can be accepted, because local politicians aren’t too keen on experiencing much more, and because it is tantamount to undermining the autonomy of regions which was instrumental in the aggiornamento (‘updating’) of the country. At the forefront of the challenge is Catalonia, the richest region in the country, whose GDP is equivalent to Portugal’s.
For the leaders of this region, there is no question of caving in to Madrid’s demands, by virtue of the principle uttered in former times by Margaret Thatcher ( “I want my money back!”), as they point out all the taxes they pay to Madrid. This attitude is indeed reminiscent of Mariano Rajoy’s himself, who does not want to appear too quick to give in to Brussels’ demands either. Clearly, everyone wants to remain master of their own destiny, or failing that, to pretend at least!
But in this matching game – already played when one compares the USA to Europe – things don’t stop there! Catalonia closely resembles Padania, that autonomous ‘concept’ in rich Northern Italy, as does the attempt by the Northern League (Lega Nord) to claim it is part of Europe so as to exclude the Mezziogiorno, the poor South which it no longer wants to help. Or another type of resemblance, the recent project of the Greek Government to create special economic zones in order to attract private investment with tax and administrative concessions. Or indeed the Irish tax system, advantageous for great transnational enterprises (contested in his time without success by Nicolas Sarkozy). In all these examples, in order to attract the rich, all sorts of privileges are conjured out of nothing and put in secured enclosures.
We are not just witnessing a collapse of the Eurozone – as illustrated by the massive capital outflows from countries like Spain and Greece. (A third of bank deposits have disappeared into thin air in this latter country since 2009, which represents 80 billion Euros) – we are also witnessing a collective move from those best endowed with a protective instinct, which threatens the principles of solidarity and financial transfers between regions. The disintegration is not just financial; it even affects the way states are organized, how they unite, or even their very essence when the richest regions cut themselves off from the others.
In the emerging countries, this has taken on yet another dimension. It has manifested itself in a geographical separation of the habitat of the rich from that of the others, which has been taken to extremes in Brazil for example (except in Rio where it is one of its problems). Following on the heels of the Brazilian condominios fechados (secure residences), another concept is all the rage: secure towns – like the medieval fortresses of old, but with the difference that it won’t be so easy to take refuge there when the invader comes. In Brazil, the first of them which served as a pilot is called “Alphaville”. You couldn’t make it up!
Clearly, there are no shortage of examples of this powerful logic of shutting oneself in, which is symbolized by the walls being put up all over the world to protect oneself from others – and above all from the poor….