From Greece to Egypt, bad news travels fast
June 20, 2012
It was a week of more than typically bad news. The weekend’s international headline grabbers were the Greek election and what it means for the Eurozone, the European Union, and the larger world economy; the overturning of the recent Egyptian elections by the Egyptian constitutional court; and the continuing saga of Syria, including its impact on U.S.-Russian relations.
Domestically, headlines are dominated by all sorts of economic news, the presidential campaign, national security leaks, and the Sandusky child sex abuse trial. The weekend news featured the administration’s decision not to enforce the immigration laws to deport young illegals.
I’m a news junkie. Thanks to the Internet and devices like camera-equipped smartphones and social media, we are inundated by more news than ever. Everyone wants to be a reporter and/or commentator. Call it Marshall McLuhan’s revenge.
Sunday, I was particularly interested in elections in Greece and Egypt.
Going into the Greek election, we were told of the dire consequences of the anti-Euro party winning. Not only would this shake the foundations of the Eurozone, but the foundations of the EU itself. The ripple effect would reach the shores of the United States.
An underlying problem is that there has not been full economic and political integration in Western Europe. This makes for a very shaky foundation.
The Eurozone has an opt-in currency; EU members are not required to adopt the Euro. Many, notably the United Kingdom, have not. One of the problems with the nascent United States was the multiplicity of currencies, which was rectified with the adoption of the Constitution and our federal form of government, which created a sovereign entity above the individual states. The EU has not gotten to that stage yet. (Could you imagine the French giving up their sovereignty?)
Additionally, there has not been complete harmonization of the social welfare laws of the individual EU members. This is a significant factor in the current crisis.
For example, each member has its own policy on retirement age and the level and funding of pensions. The typical Greek retirement age is between 58 and 65. The retirement age in Germany is 65. (In Greece, hairdressing is considered a dangerous occupation due to the chemicals involved, so a hairdresser can retire at the age of 50.) In France, it was just lowered by the new Hollande government from 62 to 60.
It is the state’s responsibility to fund these generous retirement policies. What happens when the government doesn’t have the money to meet its commitments? Greece looks to the EU and the EU looks to the only country with significant financial reserves: Germany. Germany asks, meanwhile, why its people, with lesser benefits, should fund the more spendthrift habits of other EU members? This would be like California, with a $16 billion deficit, looking to Texas to bail it out of the results of its internal spending policies.
To make things worse, other EU members, particularly Italy and Spain, are at the threshold of problems similar to Greece’s.
On Sunday, the EU and countries financially linked to the EU — including the United States — dodged a bullet. The pro-bailout party won in Greece and is now trying to form a coalition government. However, underlying problems of government spending, national debt, and banking remain.
The other story I was watching was across the Mediterranean. For months, people have been wondering where the Egyptian version of the Arab Spring would lead. The Islamists — the Muslim Brotherhood and the Salafists — had won control of the new Egyptian parliament and hence control over the writing of the new Egyptian constitution. But the Egyptian constitutional court undid that last week by declaring the parliamentary elections invalid. Hence, Reuters reported on Sunday, “the generals who have run the country since the overthrow of Hosni Mubarak issued new rules that made clear real power remains with the army.”
On Monday, the Muslim Brotherhood declared its presidential candidate the winner of the recent election, but what that means is uncertain. The ruling military council issued constitutional amendments that gave it sweeping authority to maintain its grip on power and strip away presidential power. Look for a possible three-way confrontation inside Egypt among the military, the Islamists, and the general populace, which could spill over the border into Israel.
Speaking of Israel, on Monday, an Israeli civilian and three terrorists, who crossed from Egypt’s Sinai Peninsula, were killed during an attack near the southern border with Egypt where a security fence is being constructed. In response, the IDF moved tanks closer to the fence. No group claimed responsibility. AP reported, “Israeli security officials have grown increasingly anxious about the security situation in the Sinai since Mubarak’s ouster. Continued political turmoil in Egypt, weak policing in the Sinai and tough terrain have all encouraged Islamic militant activity in the area.”
These are but a few news stories. Edward R. Morrow used to close his broadcasts with, “Good night, and good luck.” It looks like we’re going to need it.