It’s the latest question about Iraq, debated from myriad war blogs to the pages of Friday’s Wall Street Journal: When Saddam Hussein is toppled, what kind of cellular phone system should Iraq have?
Maybe that’s not ultimately as important as such questions as whether preemptive wars are morally justifiable or if there will be a “domino democracy” chain reaction in the Mideast unleashed by regime change. But it’s a good sign of what one of the biggest postwar battles will be fought over: Who gets to rebuild Iraq, and how?
On Wednesday, Darrel Issa, a Republican congressman from Southern California, sent a letter to Defense Secretary Donald Rumsfeld asking him to make sure that the U.S. builds a CDMA cell system in Iraq — the same system that’s used in America, and one developed by Qualcomm, which happens to be one of Issa’s most generous donors. The Defense Department had apparently been thinking of setting up a GSM system in Iraq, but Issa warned Rumsfeld that such a system, which is the standard in Europe, and elsewhere in the Mideast, would benefit “French and European sources, not U.S. patent holders.” On Thursday, Issa introduced a bill that would make his policy recommendations law. There are no official co-sponsors, but under the headline “Parlez-vous frangais?” on his Web site, a statement says that many lawmakers have already expressed their support for an American cellphone system in Iraq.
It’s not clear if members of Congress — many of whom, remember, were for telecom deregulation in the U.S. — will want to mandate the cellphone standard of postwar Iraq. But even if Issa’s bill isn’t passed into law, its broad policy goal — putting American firms at the front of the line in a Saddam-free Iraq — already seems to be the Bush administration’s attitude.
Of the $75 billion in war-related money the White House has requested from Congress to cover the costs of war in Iraq, $3.5 billion is set aside for reconstruction and relief in Iraq. In the months ahead, as the specific needs of postwar Iraq become clearer, American companies are expected to get most, if not all, of the lucrative contracts provided by the new money. Already, there has been domestic and international criticism of the manner in which the money has been handed out. Before the war began, the United States Agency for International Development invited a few well-connected companies — including Kellogg, Brown & Root, a subsidiary of Halliburton, the oil-services firm that Vice President Dick Cheney used to run — to bid on a massive infrastructure-rebuilding contract for Iraq. A USAID officer told Newsweek on Friday that Halliburton was not likely to be awarded that deal. On Tuesday, the Army Corps of Engineers announced that, without soliciting bids from any other firms, it had selected KBR to manage the oil-well firefighting effort in Iraq.
Thanks to strong British lobbying, some U.K. businesses may get in on these deal as well, according to news reports. But if you have eyes on the money-prize in Iraq, it’s now a terrible time to be a businessperson based in France, Russia or Germany, the three nations that put up the highest diplomatic hurdles to the war in Iraq. Up until the war, firms in these countries enjoyed — as many conservatives are fond of mentioning — substantial dealings with Saddam Hussein’s government. But the White House’s America-first policy for reconstruction work, not to mention congressional efforts like Issa’s, may be an unwelcome sign of things to come.
How will these firms deal with American money and might in Iraq? Their initial efforts will likely be in the realm of international diplomacy. Companies in Russia and France are said to be pushing their governments to demand a powerful role for the United Nations in postwar Iraq in order to level the business playing field there. Diplomats on the U.N. Security Council spent much of the war’s first week debating the future of the oil-for-food program, which, until it was suspended before the war began, had allowed Saddam Hussein to sell billions of dollars of oil each year in return for humanitarian aid. After several closed-door meetings, the diplomats seem to have agreed to start shipping about $10 billion of food aid to Iraq, but they put off the touchy question of whether the U.S. and U.K., as the occupiers of Iraq, would have the power to invalidate existing contracts made with Saddam.
The U.S. line on the issue of who gets to decide which companies make money in “free Iraq” — to use the term already in vogue among some conservatives — is that Iraqis themselves will have the power to choose. And if the new Iraqi government is nicest to the Americans, and wants to tear up Saddam’s contracts, proponents of the war argue that it will be no surprise. “I think you can bet on it that the government of Iraq after Saddam will remember who wanted the dictator gone and who opposed it,” says Radek Sikorski, a former deputy foreign minister of Poland and now a resident fellow at the American Enterprise Institute, a conservative think tank in Washington.
But for some time before a freely elected Iraqi government is set up, the U.S. has plans to install an American military-civilian government in Iraq, and it’s in that time that the Europeans could get sidelined. As Secretary of State Colin Powell told a congressional panel on Wednesday, “We didn’t take on this huge burden with our coalition partners not to be able to have a significant, dominating control over how it unfolds.”
Part of Saddam Hussein’s strategy for survival was to be very generous to those countries that showed little interest in toppling his regime. In 2000, the Central Intelligence Agency compiled a report that concluded that Iraq handed out significantly more contracts under the oil-for-food program to countries that called for a loosening of sanctions against Iraq than to those who advocated strong sanctions. “Over the life of the program, Baghdad has awarded one-third of the contracts to France, Russia and China,” the CIA said in the secret document, according to a New York Times report at the time. After the Gulf War, the United States — which has long called for strong sanctions against Iraq and, even under President Clinton, made it clear that “regime change” is its goal — did not do much business with Iraq.
Saddam’s shrewdness paid off; whatever other calculations entered into their opposition to war, certainly some part of the French, Russian and Chinese position, just like the American position, had to do with a simple economics. In addition to contracts to provide a broad range of approved supplies under the oil-for-food program — contracts estimated at hundreds of millions of dollars — French and Russian firms had signed or negotiated many billion-dollar deals in Iraq’s oil industry.
In 1997, Lukoil, Russia’s largest oil company, signed a huge oil deal with Saddam — estimates on the size of the contract range from $3 billion to $20 billion — to develop Iraq’s West Qurna oil field. Sanctions prevented the company from working on the project, and as war drew near and it appeared that Lukoil might lose out, the company began pursuing American guarantees to keep its oil rights in Iraq after Saddam. Those moves prompted Saddam’s fury, and in December, Iraq threw Lukoil off the contract and asked Russia to choose another firm to replace it. Now, many small Russian oil firms feel a sense of entitlement to the West Qurna field — and there’s also a worry, it seems, that the entitlement will go unfulfilled.
“The Americans haven’t gone into this war intending to share with anyone. It’s a war trophy,” Nikolai Tokarev, the chief of Zarubezhneft, Russia’s state oil company, told a Russian paper recently, according to wire-service translations. “We’re clearly going to have to cut our losses on anything we have there and anything we could have had.”
Russian officials are more optimistic about their chances in Iraq. “We are currently working on the immediate return of Russian firms, which have interests in Iraq, to the country as soon as peace is restored,” Igor Yusufov, the country’s energy minister, told the Russian press on Thursday. And Igor Ivanov, Russia’s foreign minister, recently said in a speech that “We will have to defend our interests so that the contracts which were signed under Saddam Hussein are not annulled as lacking legal force and to make sure the Iraqi debt owed us is respected.” Ivanov added that “Iraq does not need democracy brought on the wings of Tomahawks.”
France has fewer existing oil contracts with Iraq, and French businesses seem less combative than the Russians about opportunities in postwar Iraq. Shortly after the war began, French President Jacques Chirac did threaten to veto any U.N. resolution that would “legitimize the military intervention” and “give the belligerents the powers to administer Iraq.” But TotalFinaElf, a French company that is one of the world’s largest oil firms, says that it is not gravely worried about who runs Iraq after the war — the company thinks it will still have a part to play.
Paul Floren, a spokesman for the firm at its headquarters in Paris, said, “I think that the feeling out there is — well, there are risks of what have you, of politics, but we’re not a political company, we’re a business. We try to stay out of politics, and we hope we’re judged on the record of our company and the skill of our engineers.” TotalFinaElf has a long history in Iraq; one of its first big oil finds, in 1927, was near Kirkuk, in the Kurdish northern region of Iraq, and it had major interests in the country until the late 1970s, Floren said. But although it’s been widely reported that TotalFinaElf has signed major contracts with Saddam and could lose a great deal if his government falls, Floren said, “you can’t believe everything you read.” He concedes that “between 1991 and 1997 we had a country representative there who negotiated contracts,” but he says that those contracts were never signed, and they’re essentially dead.
Floren sought to quash the idea that his company would face any hardship at all in postwar Iraq. He said that major oil development there would only occur in several years’ time, after a stable government had been in place — so he didn’t worry about being slighted by a short-term American regime. But more than that, Floren — who speaks English without any hint of a French accent — said there’s nothing really intrinsically French about his company, which has thousands of employees stationed all over the world. “We’re headquartered in France and historically we’re a French company, but we’re really a multinational, and you can tell from my accent that I’m hardly French myself,” he said. “We’re not any more French than Royal Dutch Shell is a company based in the Netherlands.”
He added that if his company gets any work, all the money from such a deal would definitely not flow directly to Paris. “The way the oil industry is structured, it’s rare that any major oil company works alone on any field. We always work in consortiums, we always are with our partners — ExxonMobil, Shell, B.P., ConocoPhillips, Texaco … Any field development will be spread out, and will be worth billions and billions and billions and billions.”
A key unanswered question in determining whether French and Russian firms get a piece of postwar Iraq is how receptive the Iraqis are to the countries that tried to prevent war. Many pro-war Americans assume that, once Saddam falls, Iraqis will greet American soldiers with unabashed enthusiasm, and will perhaps want to oust European interests from their country.
“The French company Total has signed a $40 billion oil deal with the Iraqis. Paris is, therefore, anxious to preserve that. But many Iraqis say the contract is unfair and one-sided. They want it to be renegotiated in favor of Iraq,” Richard Perle, one of the most passionate proponents of war in Iraq, said recently in an interview with the National Review. “But that is not an issue for us. It is the future Iraqi government that would decide what do with the country’s oil and other resources. There is no reason why France, which has a long presence in Iraq, should be excluded from normal and mutually beneficial deals.” On Thursday, amid questions of his own business interests in pushing for war, Perle suddenly announced that he was stepping down as chairman of the Defense Policy Board, an influential group of foreign-policy experts that advises the Pentagon.
At least so far in the war, though, there have been few scenes of freed Iraqis dancing in the streets. And if it does indeed turn out that Iraqis are less than pleased with their American “liberators,” will they not feel some satisfaction in making it very difficult for American business in Iraq?
“I don’t see how American executives can work when their lives will be at risk,” one French Finance Ministry official recently told Reuters. “There will be such hatred toward Americans.”
Here’s a startling news item: “The Intouchables,” a lively if largely predictable Parisian comedy about a wealthy quadriplegic and his ne’er-do-well immigrant caretaker, has become the biggest international success in the history of French cinema. Indeed, according to some sources — and these things are notoriously difficult to measure on a global and historical scale — “The Intouchables” is now the biggest non-Anglophone film of all time, with a worldwide gross approaching $300 million.
But beyond the business headlines, what’s really fascinating about “The Intouchables” is the way it exposes the gulf in racial attitudes between France and the United States, along with another gulf that’s just as wide, the one that has film critics and cinephiles on one side and popular audiences on the other. Viewers in numerous countries have eagerly devoured this feel-good fable about two men of different races and classes who forge an improbable friendship (dubbed by some wags “Driving Monsieur Daisy”). While the audience for foreign-language film is inherently limited in America, there’s no reason to believe it won’t do well here also. At the same time, heated transatlantic debate has erupted over whether “The Intouchables” traffics in offensive racial stereotypes, with Variety critic Jay Weissberg writing an uncharacteristically angry review that accused the film of “Uncle Tom racism” and compared the Senegalese caretaker character to a “performing monkey.”
When Harvey Weinstein first acquired “The Intouchables” in the wake of its smash success in France, he clearly imagined another dark-horse Oscar contender, in the wake of “The Artist.” The film has racked up audience awards at film festival after film festival, and currently stands at No. 93 on IMDb’s user-generated “Top 250″ list. Omar Sy, the charismatic Afro-French actor who plays Driss, the caretaker, won this year’s César award (the French Oscar equivalent) for best actor, beating out actual Oscar winner Jean Dujardin. But with the looming possibility that “The Intouchables” could spark a divisive, soul-searching racial debate — which was precisely what squelched the Oscar hopes of “The Help” — those expectations have been downplayed. (That isn’t why “The Intouchables” is being released this week, with Weinstein and most of the film-biz aristocracy in Cannes, but the coincidence is oddly useful.)
Let me come clean right now and tell you that I enjoyed “The Intouchables” quite a bit. If you’re looking for a lightweight summer change of pace, with just a smidgen of Continental flair, here it is. Both Sy and co-star François Cluzet (of the hit thriller “Tell No One”) are marvelous, the former playing a guy who’s constantly in motion, both physically and psychologically, and the latter playing a depressed and repressed guy who literally can’t move, but whose real imprisonment has more to do with his spirit than his spinal cord. Don’t go expecting serious French art cinema, please; those who have described this movie as something like a mid-’80s Eddie Murphy comedy dressed up with classy Parisian settings are correct. But here’s the question, and I can’t answer it for you: Is that such a bad thing, in itself?
Once is not enough for a movie that’s made this much money, of course, and Weinstein already has an American remake in the works, possibly to star Colin Firth as stick-up-butt wheelchair dude. The real Eddie Murphy has gotten too old to play the loosey-goosey, pot-smoking sidekick, but there’s no shortage of guys who could do it: Jamie Foxx is the default setting these days, but I’d go for the suddenly hot Kevin Hart from “Think Like a Man.” I’m not claiming it’s aesthetically or sociologically valid to remake a French movie that already feels like a reheated Hollywood throwback, by the way. I’m saying it’s a cruel reality, like Dutch elm disease or Adam Sandler, and there’s no way to stop it.
To get back to the case at hand, I do understand what the haters find so offensive about “The Intouchables.” (The infelicitous English title, by the way, reflects the fact that they couldn’t really get away with calling it “The Untouchables,” could they?) I was pretty taken aback by Weissberg’s vituperative review, and I tend to believe that “Uncle Tom” is one of those expressions that white people should pretty much never use. On the other hand, I can only applaud him for abandoning the balanced, analytical mode of trade-magazine criticism and saying exactly what he damn well thinks. (As for comparing a black man to a monkey — well, I understand what Weissberg was getting at, but it’s an error of rhetoric, the sort of comment that makes nuance and context disappear.) And I know for sure, from hearing friends and acquaintances in and around the movie business complain about this film, that Weissberg is not alone.
I believe that Olivier Nakache and Eric Toledano, the writing-directing duo who made “The Intouchables,” are innocent of any bad intentions. In fact, “innocent” isn’t a bad word overall, for this movie and the worldview it represents. The French may pride themselves on being the most worldly and sophisticated of all people, but the debate in France about race and immigration and multiculturalism — which ramped up sharply after the suburban riots of 2005 — can sometimes sound strikingly naive to American ears. Until very recently, mainstream French opinion has resisted thinking about the nation in anything except homogeneous terms, despite growing Arab and black minorities (both immigrant and native-born) and evident social problems with segregation and discrimination. (The French census, for instance, is prohibited from collecting data on race or religion, so no one really knows how many French people are black or Islamic.)
There can be no question that the characters in “The Intouchables” are stereotypes, in the broad sense. Cluzet’s character, Philippe, is an aristocratic zillionaire who lives in an astonishingly luxurious flat in central Paris. Since being injured in a paragliding accident, he’s lived inside a cocoon of money and privilege, surrounded by antiques and modern art and a bevy of assistants. Sy’s character, Driss, is easygoing, good-hearted, lustful and uncultured, and his passions run toward pretty girls, getting high and vintage American R&B. Philippe hires Driss specifically because Driss doesn’t particularly want the job — he only shows up to get a signature for his benefits card — and feels no pity for Philippe.
Which is actually a pretty good reason. You get where this is going, most likely: Driss is a pretty inept caretaker, at least at first, but is the only person Philippe knows who will relate to him man to man. There’s a bit of borderline-homophobic humor about their enforced intimacy; there are interludes with hookers and fast cars and late-night conversations fueled by booze and marijuana. Driss learns to like Mozart and modern art; Philippe learns to get down with Earth Wind & Fire and gets some valuable tips about chicks. It’s probably fair to summarize this movie as being the story of a paralyzed white man who needs the help of a younger, stronger, more virile black man to reconnect with his own masculinity, and if you want to say that narrative reflects an underlying latticework of racist attitudes, I won’t argue with you. Then there’s the complicating factor that in the real-life story on which “The Intouchables” is based, the caretaker was of Algerian origin, and hence Arab rather than black. (The filmmakers have said they wanted to cast Sy, and built the story around him, but it’s certainly possible to render other interpretations.)
But one can concede all of that while still agreeing with French historian and multicultural activist François Durpaire, who has responded to Weissberg by arguing that the huge success of “The Intouchables” is likely to have positive effects in Europe’s emerging discussion of race and culture, even if the movie relies on crude generalizations. (Durpaire adds that if “The Intouchables” is offensive, so were the “Beverly Hills Cop” movies.) Movies are not meant to be seminars in sociology, after all, and most viewers will receive “The Intouchables” as an upbeat story about two guys from vastly different circumstances who turn out to have a lot in common and help each other, etc., rather than a lesson in racial semiotics.
Perhaps the strongest endorsement for “The Intouchables” has come from aging French ultra-nationalist Jean-Marie Le Pen, who has described it as an allegory about how the future of his nation depends on disenfranchised young immigrants from the suburbs. He thinks that’s a “dreadful” vision, mind you — but, seriously, who knew that guy was so smart?
“The Intouchables” opens this week in New York and Los Angeles, with wider national release to follow.
BERLIN, Germany – It started with a handshake, not a kiss. When Chancellor Angela Merkel and new French President Francois Hollande finally met in person on Tuesday evening, there was little of the warmth that marked her meetings with Nicolas Sarkozy in recent years.
Aides had downplayed the rendezvous as simply aimed at getting to know one another rather than about hammering out any policy. Yet the future of Europe could hinge on whether these two leaders find a way to work well together.
Rarely have two people met for the first time with so much baggage. Merkel refused to meet with Hollande during his election campaign, and made the highly unusual step of publicly backing his rival, fellow conservative Sarkozy. Hollande for his part seemed to be campaigning as much against Merkel as the incumbent, pledging to renegotiate the fiscal pact that she had championed.
Now the two have finally met face-to-face and the encounter seemed cordial if hardly warm. Following the ceremonial reviewing of the guard of honor – during which Merkel had to gently nudge Hollande in the right direction on the red carpet – the two held an hour -long meeting. They then addressed the throng of international journalists in a joint press conference during which Merkel remained stony-faced during much of Hollande’s comments, interspersed with the odd smile.
The pair did seek to downplay their differences and strike a friendly tone with Merkel even joking that the lightning that had struck Hollande’s plane on his way to Berlin was perhaps a “good omen.”
“I’m not sure whether there is sometimes more divergence perceived in the public realm than there really is,” the chancellor told the press conference. “We are aware of our responsibility, as Germany and France, for a positive development in Europe. Carried by this spirit I believe we will of course find solutions for the different problems.”
Both tried to show a united front on Greece, which risks ejection from the euro zone if it backs anti-austerity parties in the fresh elections likely after the parties failed to form a government. “Just like Frau Merkel,” Hollande said, he wanted Greece to remain in the euro zone while insisting that Athens meet the terms of the bailout agreement.
Yet when it came to the crux of the differences between the two, on austerity versus growth, it was obvious that the only thing that had been agreed so far was that they disagree.
After all, it remains to be seen how Merkel’s strict stance on rapidly reducing budget deficits can be married with Hollande’s plea for some kind of stimulus package to boost growth.
Hollande reiterated his promise to reopen talks about the fiscal pact, the agreement on strict budget discipline which he has said France will not ratify unless a growth element is also adopted.
“I said in the campaign, and I repeat today, that I want to renegotiate what was established at a certain moment,” Hollande told reporters. “Everything that can contribute to growth must be put on the table. I don’t want growth to be just a word, but tangible measures.”
He mentioned boosting competitiveness, as well as Euro bonds – essentially pooling the debt of euro zone members – something Merkel has so far flatly rejected.
He did not, however, mention tinkering with the European Central Bank’s mandate, surely a red line if ever there was one in Berlin.
For all the inauspicious beginnings, observers predict that the two will eventually hit it off. Both play on their modest, down- to-earth style and exude an air of pragmatism rather than charisma. Hollande depicts himself as “Mr Normal” in contrast to the Bling Bling of his predecessor Sarkozy, while the unassuming Merkel is often seen doing her own grocery shopping. And both are said to have a wry sense of humor in private.
Furthermore, Hollande’s gesture of appointing Germanophile Jean-Marc Ayrault as his prime minister will have gone down well in Berlin.
Yet, it is hardly a meeting of equals. Merkel is an old hand in European politics now, in her seventh year in office, while Hollande’s previous executive experience has been confined to serving as mayor of the small town of Tulle.
Furthermore Germany is the EU’s economic powerhouse, with its export-driven economy keeping the rest of the euro zone out of recession, according to figures released on Tuesday. And Berlin has long been calling the political shots in Europe, with the fiscal compact being dreamed up by Merkel, as a way of preventing EU states from getting into deeper debt in the future.
At the same time Merkel is increasingly isolated in Europe, as there is a growing realization that austerity is choking off growth. Hollande knows that other leaders, including conservatives like Italy’s Mario Monti, also want Berlin to budge on its debt reduction fixation.
Hollande came to Berlin straight from his inauguration ceremony in Paris. After beating Sarkozy on May 6 he will feel he has a mandate from the French people to push for a change of direction in Europe. Yet he also faces a tough economic situation back home, with just 0.1 percent growth in the first quarter and growing unemployment, now at a 13-year high of 10 percent. If the economy were to contract even further, it could make it very difficult to fulfill many of his campaign pledges, such as reversing Sarkozy’s pension reforms.
Merkel has her own problems, despite the strong economy. Her party, the conservative CDU, has just suffered a bruising defeat in the state of North Rhine-Westphalia. Her coalition is increasingly fractious, with Bavaria’s CSU leader Horst Seehofer publicly slamming the CDU candidate in North Rhine-Westphalia Norbert Roettgen on TV for his campaign, while the FDP is unpredictable due to an ongoing leadership crisis.
The fact that she needs a two-thirds majority in the Bundestag to ratify the fiscal compact means she is dependent on the opposition SPD. And while the party has broadly backed her euro policy, it has been emboldened by Hollande’s victory and the strong showing in NRW. On Tuesday the party’s leaders said that they would delay the vote on the fiscal pact, originally scheduled for late May, saying it wanted to see concrete growth measures as well as austerity.
That would leave time for Merkel and Hollande to agree to some sort of compromise solution.
The pair said they will seek an agreement ahead of the next big summit of EU leaders in June. “It will be very important that Germany and France present their ideas together at this summit, and we have talked about the preparation,” Merkel said.
They will see each other before that, meeting at an informal dinner of EU leaders on May 23, as well as at the forthcoming NATO and G8 summits.
However, Hollande is unlikely to show much willingness for compromise with Berlin just yet. After all his party is facing legislative elections in mid June and he will want to make sure he is not seen to be backsliding on campaign pledges.
Hollande wants his five-year term to start with his Socialist Party securing control of the National Assembly so that he can push through his agenda. Otherwise he faces a frustrating period of “cohabitation” with a prime minister from the opposing camp, such as occurred when conservative Jacques Chirac’s presidency coincided with the premiership of Socialist Lionel Jospin from 1997 to 2002.
As such Merkel cannot expect Hollande to veer from his insistence on growth measures. And for all his unassuming manner, he could well prove to be a more difficult partner than Sarkozy in the long run.
Nevertheless Merkel is also likely to stand firm on many issues. Asked on Tuesday night if she feared Hollande’s campaign promises she replied coolly: “I am seldom afraid, as fear is not a good counselor in politics.”
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The message from France and Greece this weekend was clear. Will President Obama and Republicans listen?
By Robert Reich
Socialist Party candidate for the presidential election Francois Hollande delivers a speech during a meeting in Lorient, western France, Monday, April 23, 2012. (Credit: AP/David Vincent)
Who’s an economy for? Voters in France and Greece have made it clear it’s not for the bond traders.
Referring to his own electoral woes, Prime Minister David Cameron wrote Monday in an article in the conservative Daily Telegraph: “When people think about the economy they don’t see it through the dry numbers of the deficit figures, trade balances or inflation forecasts — but instead the things that make the difference between a life that’s worth living and a daily grind that drags them down.”
Cameron, whose own economic policies have worsened the daily grind dragging down most Brits, may be sobered by what happened over the weekend in France and Greece – as well as his own poll numbers. Britain’s conservatives have been taking a beating.
In truth, the choice isn’t simply between budget-cutting austerity, on the one hand, and growth and jobs on the other.
It’s really a question of timing. And it’s the same issue on this side of the pond. If government slices spending too early, when unemployment is high and growth is slowing, it makes the debt situation far worse.
That’s because public spending is a critical component of total demand. If demand is already lagging, spending cuts further slow the economy – and thereby increase the size of the public debt relative to the size of the overall economy.
You end up with the worst of both worlds – a growing ratio of debt to the gross domestic product, coupled with high unemployment and a public that’s furious about losing safety nets when they’re most needed.
The proper sequence is for government to keep spending until jobs and growth are restored, and only then to take out the budget axe.
If Hollande’s new government pushes Angela Merkel in this direction, he’ll end up saving the euro and, ironically, the jobs of many conservative leaders throughout Europe – including Merkel and Cameron.
But he also has an important audience in the United States, where Republicans are trying to sell a toxic blend of trickle-down supply-side economics (tax cuts on the rich and on corporations) and austerity for everyone else (government spending cuts). That’s exactly the opposite of what’s needed now.
Yes, America has a long-term budget deficit that’s scary. So does Europe. But the first priority in America and in Europe must be growth and jobs. That means rejecting austerity economics for now, while at the same time demanding that corporations and the rich pay their fair share of the cost of keeping everyone else afloat.
President Obama and the Democrats should set a clear trigger — say, 6 percent unemployment and two quarters of growth greater than 3 percent — before whacking the budget deficit.
And they should set that trigger now, during the election, so the public can give them a mandate on Election Day to delay the “sequestration” cuts (now scheduled to begin next year) until that trigger is met.
Tuesday, May 1, 2012 2:44 PM UTC
With Hollande poised to win the French election, the EU is finally moving away from destructive austerity measures
By Paul Ames, GlobalPost
Socialist Party candidate for the presidential election Francois Hollande(Credit: AP Photo/David Vincent)
BRUSSELS, Belgium — The ground is shifting in Europe’s debt crisis. The edifice of economic austerity built under the guidance of German Chancellor Angela Merkel is starting to wobble.
There’s a new buzz in Brussels about pumping hundreds of billions into a Marshall Plan-inspired fund to get Europeans back to work, devaluing the euro to boost exports or sharing out the euro-zone debt burden.
“This generalized austerity is prolonging the crisis. I can’t accept that. We need growth in Europe,” says Francois Hollande, the Socialist leader tipped to win Sunday’s French presidential election.
“With every day that goes by, I have the feeling that my initiative is more and more understood in Europe,” Hollande said in comments posted on his website Monday.
Hollande is enjoying an eight-point lead over incumbent Nicolas Sarkozy in opinion polls ahead of Sunday’s vote. His expected victory is the main catalyst behind the emerging pro-growth emphasis in Europe, but there are other factors.
Continuing grim economic news — Spain announced Monday that it had sunk into a second recession in just over two years — is fueling doubts that Europe’s three-year dedication to spending cuts and tax hikes may not be the best way to cure the continent’s economic malaise.
“Europe has misdiagnosed its problems in important respects and set the wrong strategic course,” former U.S. Treasury Secretary Lawrence Summers wrote in a column this weekend. “Only if growth is restored can the euro endure and European financial problems be resolved.”
The Spanish newspaper El Pais reported Sunday that the EU was preparing a 200 billion euro “sort of Marshall Plan” to fund infrastructure projects, green energy and advanced technology.
EU spokeswoman Pia Ahrenkilde Hansen said Monday that such figures were “highly speculative.” However, the EU is putting together a plan to boost growth for approval at what is expected to be a highly significant summit of European leaders on June 28-29.
Wary that the new focus risks further spooking markets, Ahrenkilde Hansen told reporters that going for growth did not mean a return to slack finances. “We are not talking about an alternative to fiscal consolidation,” she said. “The issue is not either fiscal correction, or growth. We need both.”
The late June EU summit is likely to be Hollande’s first if he succeeds in unseating Sarkozy.
Much has been made of the Socialist leader’s expected clash with Merkel due to his criticism of the fiscal discipline treaty that is the centerpiece of her response to the treaty.
Both Merkel and Hollande in recent days endorsed two of the key pro-growth ideas expected to be on the summit agenda: fast-tracking the use of remaining money from the EU’s budget for developing its poorest regions, which ran at 360 billion euros from 2007-2013, and boosting the firepower of the EU’s lending arm, the European Investment Bank.
EU Economics Commissioner Olli Rehn has suggested that lifting its capital by just 10 billion euros could enable the EIB to leverage lending of 180 billion euros.
Although they have continued to spar in media comments, Hollande and Merkel have been preparing the ground for non-confrontational relationship. There are signs of a softening of the Frenchman’s demand for a renegotiation of the fiscal discipline treaty.
Defeat for Sarkozy would however be a blow for Merkel, who offered unprecedented support for the incumbent in the early stages of the French campaign.
She also risks losing allies elsewhere.
The Dutch government, one of the strongest supporters of Merkel’s insistence on austerity for southern Europe, fell last week over its own budget-cutting plans and will face a stern challenge from the center left and far right in September elections.
Parties on both political extremes are seen profiting from a wave of discontent in Sunday’s parliamentary elections in Greece to find a successor to the technocratic government which has gone along with the tough conditions set by the EU in return for bailout packages.
Adding to the pressure over the past few days, several key players have joined the chorus calling for a growth initiative, including European Central Bank Governor Mario Draghi; top EU financial services official Michel Barnier; and the UN’s International Labor Organization.
“Austerity has, in fact, resulted in weaker economic growth, increased volatility and a worsening of bank’s balance sheets,” said an ILO report released Monday. “It is high time for a move toward a growth- and job-orientated strategy.
Monday, Apr 23, 2012 6:42 PM UTC
France's far-right party leader may help the embattled president win reelection
By Barry Neild, GlobalPost
Marine Le Pen reacts after the first round of French presidential elections on Sunday. (Credit: AP/Jacques Brinon)
LONDON, UK — Campaign strategists for both Nicolas Sarkozy and Francois Hollande will be scrambling on Monday to make sense of a first-round presidential vote that left neither with a clear path to victory — and showed a surprise level of support for a far-right candidate.
As many analysts expected, Socialist Hollande scored higher than incumbent Sarkozy in Sunday’s election, but thanks to a surge in the popularity of Marine Le Pen of the anti-immigration National Front party, a easy win is no longer the foregone conclusion that many predicted.
Hollande took 28.8 percent of the vote against Sarkozy’s 26.1 percent, meaning they will face each other in a run-off vote on May 6. But what was expected to be a simple referendum on differing plans to rescue France’s struggling economy has been complicated by Le Pen’s showing of 18.5 percent.
As horse-trading begins for the support of those who voted for the eight lower-polling candidates now eliminated from the race, the problem now facing both Hollande and Sarkozy is how they can capitalize on the far-right turnout.
Some analysts said center-right Sarkozy is most likely to benefit from Le Pen’s success, others argued it could derail him. Meanwhile, Jean-Marie Le Pen, who founded the party his daughter now leads, said the result put the National Front on track for big wins in June parliamentary elections.
Le Pen’s success also raises the possibility that French opinion was swayed by a series of shootings in southern France last month involving a 23-year-old terrorist who claimed allegiance to al-Qaeda. At the time, Le Pen said the incident showed that the “Islamic fundamentalist threat has been underestimated in our country.”
That said, Le Pen has doubtlessly attracted considerable support for her protectionist economic policies and for being the only conservative candidate proposing to take France out of the euro.
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A still from "The Intouchables" 
Angela Merkel and Francois Hollande in Berlin on Tuesday, (Credit: Reuters/Fabrizio Bensch) 
