Austerity in the EU Sometimes known as, ‘Olli’s Rehn of Terror’.
Ollie Rhen was active in Finnish politics as a student achieving election in 1987 to the post of President of the Finnish Centre Youth a precursor to being fast tracked to a major post in government. He was subsequently elected to the Finnish Parliament in 1991. He soon excelled and headed the Finnish delegation to the, “Council of Europe”. In that capacity, from 1992 to 1993, he was appointed to the role of, “special adviser” to the Finnish Prime Minister, Esko Aho.
The Finnish Banking Crisis of 1990s was a deep systemic crisis of the entire Finnish financial sector that took place mainly in the years 1991–1993, after several years of debt-based economic boom in the late 1980s. Its total taxpayer cost was roughly 8% of the Finnish GNP, making it the most severe of the contemporary Nordic banking crises. The crisis has been attributed to a combination of macro-economic turbulence, weak regulation, and bank-specific problems. Governmental intervention included nationalizing banks, direct monetary assistance and temporary blanket guarantees to the banks. Unemployment reached 20%. The value of capital assets halved and real GDP dropped by 15%. The area of education was exempt the harsh cutbacks, indeed investment in the nations children equated to 1% of GDP. Benefits gained from this policy did much to assist Finland’s emergence from the period of austerity and on-going success.
He resigned from the Finnish Parliament in 1995 and became an MEP, aligned to the, “Liberal Party Group”. He was, however, not re-elected in the 1996 European election. Not out of politics for very long he was appointed by the Finnish government to serve with the European Commission, (1998-2000) managing the offices of, Erkki Liikanen, representative on the Prodi Commission. In 2002 he left European politics for the University of Helsinki, where he led the Centre for European Studies. In 2003 he again became an adviser on economic policy to the Finnish, Prime Minister, a position he held until his appointment to the European Commission the following year.
Olli Rehn was nominated to the European Commission, representing Finland and was appointed to the post of, “European Commissioner for Enterprise and Information” in July 2004, taking over the role from the previous Finnish Commissioner, Erkki Liikanen, who left his post the same day to become Governor of the Bank of Finland.
The Finnish government re-nominated Rehn for membership of the incoming, “Barroso Commission”, which took office on November 2004. Rehn was appointed to the post of, “Minister of Enlargement”. At the time a central issue for the EU in the run-up to the landmark accession of ten countries in May 2004, the role diminished in importance since that time. But he still presided over the accession of Bulgaria and Romania in 2007, as well as maintaining membership negotiations with Croatia and establishing a contentious membership dialogue with Turkey.
In 2008 his role was extended when he was appointed, ” Vice-president of the European Commission and Commissioner for Economic and Monetary Affairs and the Euro”, (for all 27 member states of the EU). In this role, perhaps mindful of the, “Finnish austerity period” he had presided over in the 1990’s he was entirely at peace with himself dispensing tough love and hard facts whilst protected from the pressures of democratic accountability, useful for politicians wishing to maintain distance from their directives. It was a role Rehn proved to be well suited.
His appointment coincided with the financial crash of Europe’s banking system’ brought about by the excesses and greed of financial marketeers who had been operating unregulated, “Casino Banking” committing non-existent finance, funding ever increasing housing mortgage lending, and other credit lending against questionable assets.
Rehn, who, in his new role, “carried a big sword” decided that the, “Finnish model of recovery” focusing on fiscal discipline, dismantling social safety nets and reducing the size of government, was entirely suited to finding a way out of the crisis and despite opposing voices he instructed that a, “programme of fiscal austerity” would be implemented across the EU. ‘The Rehn of Terror’ had begun. Any criticism of the policy was met with the statement that the, “European Commission” was simply being pragmatic, balancing austerity measures with pro-growth policies. Financial support would only be provided to government’s that fully complied with measures issued through the offices of Rehn.
Rehn’s management decided whether cuts made by governments, including, (but not exclusively) Italy, Greece, Spain, Portugal, Cyprus and Ireland met the criteria so that money could be released allowing payment of interest against the many and varied loans incurred across the Union. The thinking driving the policy was evident – public finance must honour any debt obligations before any other commitments, (even to its citizens) were even given thought. The thinking was that there was danger that, any inconsistency applying financial systems might result in another major crash due to, “systemic contagion”. and this needed to be avoided at any cost. It was this, “fear of failure” that drove governments forward implementing savage financial cuts. In time however people began to realise that austerity was directed solely against members of the public and not at those determined to keep their profitable stake in the financial system. The regime of privatization and cutbacks meant that those dependent on the public sector went to the wall in ever increasing numbers, while those with significant market power thrived and gained significantly.
For nearly 4 years, Rehn insisted that the, “light at the end of the economic tunnel was in sight”. Success awaited those countries who focused on the future. Yet the gap between the have’s and the have not’s continued to expand. Societies became ever more unequal and troubled. Economic growth remains to be poor to non existent and youth unemployment is stuck around 50% in countries like Greece and Spain. Yet the dinner party circuit continues to be well attended by politicians and their wealthy backers across the corridors of power. It now appears France is in deep trouble, (because of it’s ill advised determination to achieve fiscal discipline through tax increases).
Summary
After nearly 4 year’s of austerity measures millions of people across Europe have been driven into poverty. A recent UN report further revealed that nearly seven million more, including over 800,000 children, have fallen into poverty due to EU economic policies. The disastrous effects of the EU drive to cut budgets and slash public spending are detailed in a 357-page, “World Social Protection” report by the UN agency, “The International Labour Organization”. “The achievements of the European social model, which dramatically reduced poverty and promoted prosperity in the period following the Second World War, have been eroded by short-term adjustment reforms,” noted the report.
Disregarding the effects of his push for austerity Rehn went on to investigate the finances of 13 member states with the purpose of identifying causes of recurring, “macroeconomic imbalances” within their financial profile. At the launch of his report many of those present admitted to a lack of knowledge as to just what, “macroeconomic imbalances” were. But all was well since, “Wee Olli” knew. Addressing the UK Olli said, ” I am presenting this analysis as, “raw material” to the British government for when they draw up their next economic plan. The British, like the rest of the 27, must draw up a plan which will meet the approval in the economic policy coordination of this year’s European Semester, (Otherwise known as the economic government of the EU).
Yes indeed, the Cameron – Clegg government have colluded in the establishment of an unelected EU economic government. Rehn and his successors now have increased powers to direct the decisions of George Osborne. This particular bit of new legislation stems from the, “Alert Mechanism Report”, of November 2012, which led to Olli’s, “In-Depth Review” under the, “Macroeconomic Imbalances Procedure”. It may be sleep inducing but all I can say of the, “new” legislation is, “blink and you’ll miss it”. More powers have been transferred away from the UK to Brussels.
So here are some of what is wrong in Britain: They will need to be corrected meeting the instructions of the – Commissioner for Economic and Monetary Affairs and the Euro.
a. Consumer debt is very high and is likely to remain so.
b. External competitiveness, is deteriorating, with negative trade balances mainly as the result of a chronic deficit in goods trade.
c. Government deficit, although decreasing, remains elevated.
d. Government debt is very high and increasing.
d. UK corporate debt is high and less-than-viable companies being kept in business through low interest rates and bank forbearance.
e. Structural weaknesses. Shortages in airport and seaport capacity.
Olli Rehn is no longer employed with the European Commission having stood for and been elected to the EU parliament. He has since been appointed 1 of 14 Vice Presidents of the EU. But his legacy lives on.
How,s this for a bit of mischief?
Danny Alexander, Liberal Party MP and ultra hard line, “No” to independence campaigner, (mischief maker) wrote recently, (in a personal capacity) to Finnish Liberal MEP, Olli Rehn seeking to involve him in Scottish affairs asking that he give vent to personal held opinions regarding the upcoming referendum. Olli, dear fellow has a track record of saying the wrong thing at the wrong time and true to type in a long, fussy and over detailed reply he first expressed strong support of Danny Alexander’s views regarding independence. He went on to say that he CONSIDERED IT HIS DUTY to draw on his wide experience of EU business providing full and detailed responses to each of the matters raised by Alexander. All this is fair enough, if the correspondence was to remain , “private” since there was no written permission included in Olli’s letter allowing Alexander to pass copies of the letter to the UK press for publication. The press faithfully reproduced it in their early and later editions, to the delight of Alexander. But, as yet Alexander’s letter to Olii has not been published so we only have one side of the story. Naughty Naughty Mr Alexander. But, hang on a mo’, Olli has a track record of foxy behavior. A, “Freedom of Information” request,(submitted by the Corporate Europe Observatory) revealed that throughout the almost 4 year’s of the, “Financial Crisis” Rehn’s office had been met regularly with MAJOR BANKS and FINANCIAL STAKEHOLDERS, (such as the investment banker Goldman Sachs. Minutes of these important meetings were not drafted or recorded since they were held under, “Chatham House Rules”. There were no meetings with NGO’s or trades unions, which is questionable. The main points of his letter are covered below:
Rehn. An independent Scotland would not be able to keep the pound and join the European Union.
Answer. An independent Scotland, wishing to join the EU can in no way be “forced” into joining the Euro, as one of the key conditions is that a member state must have been part part of the European Exchange Rate Mechanism (ERM II) for a minimum of two years. Joining ERM II is entirely optional giving Sweden a de-facto opt out and is why Sweden has never joined the Euro despite being obligated to in it’s accession treaty. Indeed the EU has accepted that Sweden is staying outside the eurozone for the foreseeable on its own decision. Olli Rehn, one of 14 vice presidents of the European Parliament has said that it is up to Swedish people to decide.
Rehn. EU membership requires countries to have access to an independent central bank.
Answer. Scotland will adopt the Scottish pound from day Independence day 1, pegging it 1:1 with rUK Sterling.(as did Ireland for many a year) In the 2 year’s before formal separation Scotland will set up it’s own Central Bank, as in the case of Sweden.
Rehn. Mr Alexander asked Mr Rehn to clarify if “a country that had recently reneged on its debt would be welcome in the EU”. Mr Rehn responded that the EU treaty “requires that all member states and candidate countries respect their commitments in public finances, including the debt and deficit targets.
Answer. The UK formally confirmed all debt held by the Bank of England to be the sole debt of the bank. As such, in the event Scotland was to be denied a formal monetary union, (effectively cut loose to fend for itself) it would do so clear of any obligation to accept any of the Bank of England’s debt. This would be in full compliance with international law, (rUK could not have it’s cake and eat it). The question of reneging on debt is a spurious red herring.
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