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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What the Operation Black Vote poster row tells us about race in Britain

The poster aimed to draw attention to the cause of BAME voter participation - instead it stirred something deep in the British psyche.

Political advertising campaigns need to be controversial, but go too far and the fall-out can be disastrous. Critics of the new “white thug” billboard campaign, aimed at encouraging ethnic minorities to vote in the EU referendum, think that Operation Black Vote (OBV), the group behind the campaign, had made a spectacular misjudgement. “Racist and divisive” were some of the milder reactions on Twitter. Soon UKIP’s Nigel Farage jumped in calling it “disgusting”, and new London mayor Sadiq Khan claimed it “reinforced stereotypes.”

I took a long hard look at the poster after witnessing the torrent of hurt and anguish it provoked, from white and ethnic minority people alike. To me the poster depicted an angry neo-Nazi type young man fuelled with race hate, and an Asian elder stoic in the face of prejudice, like so many of her generation have been since arriving in the 1970s. It was set in a working class environment familiar to me, a place where even today Asian shopkeepers face regular racist hostility and the far right still organise on the extreme fringes of London in every respect.

The poster is reminiscent of a century-long grassroots struggle against fascism and the intersecting drive to raise the anti-fascist vote from black, Asian and minority ethnic (BAME) communities and the progressive working class. From the battle of Cable Street in 1936 to the ousting of British National Party councillors from Barking and Dagenham town hall in 2010. Raising the BAME registration rate and vote is a challenge because of disillusionment with a political system that appears not to care about the challenges of racial barriers that cause such unequal outcomes in employment, housing and health.

OBV’s billboard poster seemed to be a collision between this experience of the anti-racist struggle and a slick ad-man. I was troubled; why should so many people see ‘racism’ in the campaign where I saw none? Surely the poster would only be racist if the thug in the image represented white people in general? To me he represented only the sort of hardcore racist who hated both my African mother and my English father for being with her. The sort of racist that hated England too. I asked myself who, in their right minds, could feel any affinity with such a vile character?

True, there were only two people in the image, one white person and one person of colour, but this wasn’t black versus white, it was BAME versus hate and prejudice. There was no earthly reason why the fascist’s skin colour should be an insult to non-fascists who only share the same ‘race’.

Throughout my life I’ve heard people of colour being accused of having a chip on their shoulder, and I’ve been accused of the same. We are routinely stereotyped for seeking out imagined racism, of being overly-sensitive and failing to understand the nuances behind something negative towards black or Asian people. Yet the deluge of anger unleashed by OBV’s campaign led me to conclude that the poster’s critics were doing exactly what BAME people have long stood accused of.

Some cried ‘if the poster showed a black/Muslim thug pointing angrily at an old white granny there would be uproar’. These are clearly people oblivious to the negative portrayal of BAME people daily amid no uproar whatsoever. Occasionally a big household brand might end up in the news for peddling racial stereotypes but mostly it goes unremarked but not unnoticed by those impacted by racism.

If racism is power plus prejudice why were so many consumed by the belief that the poster was racist? Why this overwhelming feeling that white people are being treated unfairly? After all, every study of privilege shows that power rests firmly with white people.

Part of the answer can be found in the impact of changing demographics, as illustrated by the BBC documentary this week The Last Whites of the East End which explored white working class feelings that BAME families are taking over and that traditional white English culture was being erased.

The Cockneys fleeing to Essex to ‘be with their own’ fail to comprehend that it is they themselves who are accelerating Newham’s BAME proportion through their white flight. It is a flight sparked by alarm that their ideal balance between white and colour is out of kilter, so they move and thereby accelerate segregation. White British are still the largest single ethnic group in Newham but they don’t see it that way because everyone else – Somalians and Pakistanis, Turks and Nigerians – are lumped together in one homogenous ‘other’ no matter how different their culture is from one another.

The shifting plates of race, population change and migration are building fault lines of tension that manifest in tremors of fear about white people being under attack, of being strangers in their own country. This growing sensitivity can be seen in the reaction to OBV’s poster (‘look, they’re treating us unfairly’) or Britain’s Got Talent’s Alesha Dixon called a black group “sexy chocolate men” (‘if I said that it would be racist, so surely she’s racist too’).

Nigel Farage and hundreds of Twitterers who objected to the poster don’t identify with the fascist in the image but they do feel sensitive to accusations that white people are being discriminated against – despite all the evidence to the contrary – and want to stand up for white people’s feelings, integrity and rights. They felt slighted by the juxtaposition of the white thug and serene Asian granny and mistakenly see it is an attack on them when it wasn’t really about them at all.

Where once it mattered not whether white people were portrayed positively or negatively, because white was the colourless default, now the white colour is racialised simply by proximity to someone of a different colour on the other end of a children’s swing.

As commentators and academics grapple with what integration means in a changing nation where BAME-majority cities are just years away, and white families with money flee to less diverse pastures leaving behind an increasingly threatened white working class, the demand for equal treatment for white people will inevitably grow. After decades of unfair discrimination against people of colour where politicians have failed to act, they are finally standing up for the feelings of a minority. A white minority, if not in proportionality then in certainly in mentality.

OBV’s poster aimed to draw attention to the cause of BAME voter participation. Instead it stirred something deep in the British psyche, a feeling that in a multicultural society disrespect of whiteness is a sign that white privilege is under assault. Was the poster racist? No, but it did inadvertently touch a nerve.

Lester Holloway previously worked for Operation Black Vote, and was Editor of the African and Caribbean newspaper New Nation. He is writing in a personal capacity and tweets at @brolezholloway

Lester Holloway is a Liberal Democrat councillor in Sutton and an executive member of the Ethnic Minority Liberal Democrats. He tweets @brolezholloway