After Portugal, what next?

The EU’s bailout fund should not make billions from member states’ misery.

EU leaders have just agreed a treaty change to create a permanent European Stability Mechanism to protect the eurozone – a European Monetary Fund in all but name.

The details about the fund, its lending capacity and the way it will work in practice are hazy, though leaked documents from the European Council indicate that it will have a range of financial instruments at its disposal. Given that the banks of just three EU countries – Britain, France and Germany – are exposed to over €1trn of government debt, were a country like Italy or Spain to face a Greek- or Irish-style crisis, it is questionable whether the fund would be sufficient.

The new mechanism will not help Portugal if, following the collapse of the Socialist government orchestrated by the opposition Conservatives, the country has to seek an EU bailout. But we can safely assume that should Portugal or other countries face the economic abyss, as Greece and Ireland did in 2010 (and still face), they will not be charged such punitive interest rates.

At last week's summit the Greek government was given a 1 per cent cut in the interest it will have to pay back. It will pay back its €130bn loan at just over 4 per cent, and be given seven years to pay back its debts.

Ireland was not treated so kindly. After being forced to take a €80bn loan at 6 per cent last December, the new Fine Gael/Labour government, which was elected with a mandate to renegotiate the terms of the loan, was offered a 1 per cent cut. Quite rightly, the new Taoiseach, Enda Kenny, told the summit, dominated by Germany and France, where to stick their offer.

Sub-prime cuts

What the likes of Germany and France have not grasped is that the crises in Greece and Ireland are fundamentally different. Greece faced economic meltdown when the incoming Socialist government found that its predecessors had cooked the books on an impressive scale.

The country's budget deficit was over 12 per cent – not the 3.7 per cent announced by the previous government. Market speculation, combined with the fact that Greek productivity had declined by 50 per cent compared to Germany in a decade, and a system which allowed massive tax evasion, brought the country to its knees.

Ireland's case is different. Like Britain and the US, its housing market boomed and then suddenly burst when the sub-prime crisis hit, and its banks needed huge taxpayer bailouts to stay afloat. Unlike Britain and the US, the biggest Irish banks – Anglo-Irish and Ulster Bank – were still too broke to function. A second vast taxpayer bailout and a disastrous austerity budget (George Osborne, take note) pushed Ireland's deficit to a whopping 32 per cent of GDP.

However, unlike Greece, Ireland never asked for a bailout. It was strong-armed into accepting one. The truth is that it would be economically logical for Ireland to have allowed its banks to default. Many banks would have lost billions – RBS would have lost £40bn, and Deutsche Bank a similar sum – but Irish taxpayers would not have been saddled with paying back €80bn at a 6 per cent interest rate. As it stands, it may well take a generation for the Irish to recover.

There's profit to be made . . .

It is outrageous that, in their dealings with the Irish, EU countries have behaved like the investment banks for which they blamed the financial crisis. For example, the UK Treasury stands to rake in £475m from its £7bn loan to the Irish, and it is far from the worst offender.

If the euro is to survive, this "beggar thy neighbour" approach will have to stop. If not, the stark reality is that the gap between rich and poor nations in the eurozone will get wider and the single currency will collapse. European economic and monetary union cannot survive if its member states seek to make huge profits from another's misery.

The reality is that, while the Fianna Fail government allowed an unsustainable housing boom and reckless investments by its financial sector, Ireland is not solely to blame for the mess it finds itself in. A right-wing "Franco-German" alliance may be dictating austerity cuts and claiming that the crisis must lead to radical pension and wage reform, but it needs to learn a few home truths.

For example, were Spain to go bust, the French and German governments would have to make huge bailouts of their banks. Besides, by keeping wage levels artificially low to stifle domestic consumption, Germany has helped preserve its already vast trade surplus while also preventing other EU countries from exporting their way out of difficulty.

So Ireland, embattled as it may be, has a stronger hand than you might think. So might Portugal and others. If its demand for a loan at reasonable rates is rejected, Ireland could turn around and allow Anglo-Irish, which the new government intends to liquidate anyway, to default.

That would be the move of last resort, but it would at last challenge the arrogance and complacency of the "Franco-German" alliance, which ignores the debt exposure of its own financial sector, and has the temerity to try to impose its will on the rest of Europe.

Ben Fox is political adviser to the Socialist and Democrat group in the European Parliament.

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Turkey's terrifying post-coup crackdown is nearing the point of no return

Horrific stories of rape and torture are emerging from Turkey's jails.

Recently, we have seen Turkey plunge into a full-blown crisis, with its terrifying post-coup crackdown. More than 10,000 people are currently in detention, including soldiers, police, judges and teachers. 

Amnesty International’s team in Turkey has gathered horrific evidence of torture, rape, sexual abuse and beatings of detainees in official and unofficial places of detention. Two lawyers in Ankara told us that detainees had witnessed detained senior military officers being raped with a truncheon by police officers. 

Our researchers on the ground also heard numerous reports of detainees being held in stress positions for over 48 hours, denied food and water and being denied access to their family or lawyers. 

One lawyer working at the Caglayan Courthouse in Istanbul told Amnesty that some of the detainees were extremely emotionally distressed. One detainee attempted to throw himself out of a sixth story window and another repeatedly slammed his head against a wall.  

President Erdoğan has remained conspicuously silent over these abuses. Is he condoning this torture and ill-treatment through his silence?

To be sure, public security is an understandable priority in Turkey, but no circumstances can ever justify the level of human rights abuses we are now witnessing. 

This crackdown is of a scale not witnessed in Turkey since the dark days of martial law imposed after the military coup in 1980. 

The Turkish government must now show the political resolve to stamp out these abuses and to follow the rule of law in its investigations and maintenance of public security. Independent monitors, as well as lawyers, should be granted immediate access to the detention centres and family members should be informed of the whereabouts of their loved ones. Transparency and openness are urgently needed. Blocking such requests only fuels suspicions that terrible abuses are indeed happening inside the detention facilities. 

The arbitrary arrests we have seen, in most cases with no charges given, are grave violations of the right to a fair trial, which is enshrined in both Turkey’s national and international law.

There now prevails an extreme climate of fear and instability across Turkey, where to criticise the government’s actions or speak out against violations now carries with it the risk of being labelled "pro-coup". 

Arrest warrants issued for dozens of journalists are part of a brazen purge based on political affiliation. Six of these journalists are currently detained. Rather than stifling press freedom and intimidating journalists into silence, the Turkish authorities must allow the media to do their work and end this oppressive clampdown on free expression.

The government has set itself on a perilous course since declaring a state of emergency on 20 July, including extending the amount of time detainees can be held without charge from four to 30 days. And shutting down schools, NGOs and media centres.

It’s absolutely vital that the authorities take some time for calm reflection and ensure they can discern between criminal acts and legitimate criticism, no matter how uncomfortable it may make President Erdoğan.

These are truly dangerous times for human rights in Turkey. And to make matters worse, President Erdoğan has threatened a return of the death penalty. The death penalty was abolished in 2004 as part of a move for Turkey to gain entry into the European Union. If it is reinstated, Turkey will disqualify itself from membership or future membership of the EU. 

Amnesty welcomes the fact that the UK Government has stressed the importance of the Turkish authorities maintaining the rule of law and called for the Turkish authorities to reject a return to the death penalty. 

In a recent phone call, Theresa May underlined the UK’s full support for Turkey’s democratically-elected government and institutions and said there was no place for military intervention in politics. Amnesty hopes that she will also publicly demand that the authorities immediately halt the human rights crackdown and allow immediate access to independent monitors and lawyers into places of detention. 

Kristyan Benedict is Amnesty International UK’s Crisis Response Manager