Connect with us

Europe

An alternative view of the destruction of the former Yugoslavia in the 1990s

Published

on

The internal and much more external destruction of the former Yugoslavia in the 1990s is celebrating in 2016 its 25th years of anniversary. The date of celebration is taken to be when Slovenia and Croatia formally announced its independence on June 25th, 1991. However, this historical and much more geopolitical event still needs a satisfactory research approach in regard to the true geopolitical reasons and political-military course of the destruction of this South Slavic and Balkan state.

During the last quarter of century, the (western) global mainstream media unanimously accused Serbia and the Serbs for the national chauvinism as the main cause of the bloody wars on the territory of ex-Yugoslavia in the 1990s. However, the role and direct impact of the other Yugoslav republics and nations in the process of killing the common state was not taken (purposely) into the consideration; especially of the Croats and Croatia as the biggest nation and republic after the Serbs and Serbia. This article is an attempt to contribute to the full-scale of understanding of the process of destruction of the former Yugoslavia taking into account a role of the Croats and Croatia. Thematically, the article is divided into two parts: Authoritarian militarization of Croatia, and Croatia’s territorial imperialism.

The Croat unltranationalists (i.e., the followers of the Ustashi movement) called in the 1990s for the full scale of Croatia’s militarization in order to achieve their chauvinistic and racist political goals of the Croat-based ethnically pure independent (a Greater) Croatia. In their opinion, a full or complete political independence of the ethnically pure Croatia within the borders of the Socialist Republic of (a Greater) Croatia could be reached only by the open war against Croatia’s Serbs and the Yugoslav authorities, but not negotiating with them. In this respect, a leader of the most ultranationalist political party in Croatia – the Croat Party of Rights (the HSP), Ante Djapic, was clear in his statements to abandon the political activity if a single part of the territory of Croatia is going to be lost by the negotiations with the Serbs. The WWII Ustashi movement followers openly advocated in the 1990s a full scale of the war against “the Serb aggressors” for the sake to gain Croatia’s independence. That was done at least for two crucial reasons:

1.They believe that a struggling for the Croat nation’s ethnopolitical goals was a legitimate framework of both a beating the Serb nationalism and fulfilling the Croat historical task of creation of the Greater Roman Catholic Croatia without the Orthodox infidels.

2.They sponsored the attitude that the Serbs cannot be trusted as a nation to negotiate with them about the peaceful agreement on the disputed issues with the Croatia’s Government and therefore the war was the only way to pacify the Serbs from Croatia according to the pattern of the pacification (i.e., the ethnic cleansing) of the Palestinians in Israel [].

Henceforth, the “Israelization” of a Greater Croatia became the ultimate goal of the Croat ultranationalists in their policy to Croatia’s Serbs. In order to achieve their “Israelization” political goals, the Ustashi followers in the HDZ’s governed Croatia followed exactly the militarization pattern of the ethnic Croat society in the WWII Independent State of Croatia (the NDH). Therefore, the most ultranationalist Ustashi political party in the 1990s Croatia – the HSP, established its own ruthless paramilitary party’s militia in 1991 under the name of the Croat Defense Forces (the HOS) with using all kinds of the WWII Ustashi regime insignia followed by several similar militia detachments by other Croat ultranationalist organizations. The Croatian state army (the HV) was, nevertheless, during the 1990s under direct influence and control by the most extremist wing of the ruling the Croat Democratic Union (the HDZ) that successfully cooperated with the HOS and the other Croat paramilitaries in the West Herzegovina and the North and Central Bosnia in the military actions of ethnic cleansing of the Orthodox Serbs and the Muslim Bosniaks.    

croatia

Administrative division of the Socialist Federal Republic of Croatia, 1945-1991

The eminent militarization of the ethnic Croat society in the 1990s was in direct coordination with the fundamental task of all Croatia’s Croat ultranationalists that all other rights and duties of the society have to be put in the service of the state interests. As all ultranationalist segments of the ethnic Croat society in Croatia fought for the independent pure ethnic Croat Croatia, the ultimate ethnopolitical goal of them was to mobilize all ethnic Croats for the execution of the “Final Solution” in regard to the “Serb Question” in a Greater Tito-Tudjman’s Croatia. Therefore, the authoritarian political system and government based on the absolute HDZ’s majority in the Parliament were necessary in order to achieve this goal. As an example, the experience of the Latin American dictatorships in the 1970s and the 1980s of a centralized political system, strong military-police forces, oppressed freedom of the mass-media, and above all a silent opposition were activated. A parliamentary multi-party democracy became just a façade of a classical Latin American dictatorship as a western parliamentary democracy was understood as a harmful experiment for the realization of the Croat ethnopolitical goals primarily against the Serbs.

The alternative to the parliamentary democracy was only a one-party’s dictatorship that could save Croat national interests from the destructive nature of the parliamentarianism. Subsequently, in the 1990s it was established in Croatia a HDZ’s one-party political system with strong cult of leadership of the President Dr. Franjo Tudjman, who was seen in the eyes of the right-wing political structures as a political reincarnation of the WWII NDH’s führer, Ante Pavelic. Tudjman, as an inviolable dictator of Croatia, was even proclaimed by some of the HDZ’s members and other right-wing followers as a “Father of the Homeland” like by Hrvoje Shoshic who was a leader of the Croat Party (the HS) and a MP. In essence, the Croat extremists only declaratively supported liberal democratic institutions while in the practice rejected them as the political framework within which the national goals are going to be reached. However, a formal support for the liberal democracy and its political institutions were of the very practical nature to present a newly independent Croatia as a western-type democratic political system in contrast to Miloshevic’s Serbia as an expression of the Balkan/Oriental autocracy. Hence, the HDZ’s Croatia pretended to present herself as a last bulwark of the European civilization and values in the South-East Europe. Nevertheless, in the practice, the HDZ functioned in all ways that undermined a real democracy even to a greater extent than Miloshevic’s regime in Serbia at the same time. The extremist wing within the HDZ, including and Tudjman himself, openly used all kind of mechanisms of political opression against the opossition that was proclaimed as the enemy of the Croat nation and Croatia and collaborators with the „Serbo-Chetnik aggressors“. As in many cases of personal dictatorship, Tudjman as well saw himself as a personalization of the state and state institutions. In the other words, he attempted to equating his own personality with the survival of Croatia. As the oposition leaders and party’s members have been constantly under the physical intimidation as the „betrayers“ of Croatia it was created very inhospitable political atmosphere for any sincere democratic talks and exchange of the views. Surely, Tudjman’s regime in Croatia was much more effective in silencing its own opossition than Miloshevic’s regime in Serbia. It is visible at least from the fact that in Tudjman’s Croatia there was no single mass-meeting of the oposition against the regime differently to Serbia under Miloshevic’s strong hands. The latter finally and lost power exactly after the mass-protests in Belgrade on October 5th, 2000 (the first „Colored Revolution“ in Europe).  

Tudjman’s authoritarian dictatorship was especially hostile towards the opposition press that was considered as a fifth column in Croatia. The opposition journalists were accused for irresponsible (miss)usage of their freedom of expression. As a metter of fighting against the opposision press, it was introduced a special (illlegal) taxation of independent weekles but primarily of the most anti-regime’s newspaper – the Feral Tribune from Split. During the election campaignes, the opposition parties were denied equal and full access to the state-controlled press and TV, likewise in Serbia, and therefore violating one of the fundamental elements and conditions of the parliamentary democracy. Hence, the electoral results theoretically were not fair what does not mean that a majority of the ethnic Croats from Croatia would not vote for the HDZ in the case of fair electoral campaign. Similarly to all totalitarian regimes, the HDZ’s controlled Parliament (Sabor) passed a special law (in the spring 1996) for „defamation“ against the state officials. However, such or similar law did not exist in Miloshevic’s Serbia. Tudjman’s personal efforts to make stronger his own political (authoritarian) position in Croatia at any cost of liberal democratic institutions are obvious and very similar to his counterpart in Serbia in the 1990s with one difference: Tudjman was more successful in destroying liberal democracy in Croatia in comparison to Miloshevic’s efforts to do the same in Serbia.

For the HDZ’s political leadership, „without Franjo Tudjman there would be no HDZ and without the HDZ there would be no Croatia“. It is clear that Tudjman’s party attempted to equating itself with the creation and survival of the post-Yugoslav Croatia while Tudjman himself attempted to personalize the institution of the presidency. Any opposition to himself or his political party were seen as the opposition to Croatia as the stare and the Croats as the nation that is probably mostly visible from the fact that Tudjman as a President of Croatia refused to ratify electoral results for the Zagreb municipality’s mayor in 1995 as the opposition leader won under the excuse that Croatia’s capital cannot be in the hands of the enemies of Croatia.

As a part of anti-liberal policy, the liberal-democratic notion of the citizenship was crucially challanged by the HDZ’s rulling authority as the voting rights for the state and the other public officials became based on the ethnic (Croat) background rather than on the residence criteria. Therefore, it was practically reserved twelve seats in Croatia’s Parliament for the ethic Croat diaspora for the very reason that the HDZ was and is traditionally supported by the Croat diaspora especially from Bosnia-Herzegovina. The citizenship law was also changed in the favor of the ethnic Croat diaspora as Croatia was proclaimed as the motherland of all ethnic Croats. However, a similar ethnocitizenship/voting law in Miloshevic’s Serbia was never introduced at least for the very political reason that the Serb diaspora in the West opposed his policy as anti-Serbian. In the other words, Miloshevic’s Serbia was seen, by the Constitution, as a homeland of all her inhabitants, rather than only of all ethic Serbs wherever they live.

Probably, the HDZ’s deny of any kind of the regional autonomy in Croatia was the expression of the policy of anti-liberal democracy concept of minority rights. Therefore, the regional parties of Istria, the Serbian Krayina and Dalmatia suffered mostly from such policy of a brutal centralization of Croatia. However, in Miloshevic’s Serbia, two regions of Vojvodina and Kosovo-Metochia enjoyed at least ethnocultural regional autonomy if not political one as it was fixed in the time of the Socialist Federal Republic of Yugoslavia according to the 1974 Constitution (up to 1989).

The fact was that all ultranationalist parties and organizations in the 1990s struggled for creation of a Greater Croatia according to the principle of the ethnographic, historical and even natural rights. In all of those concepts, Bosnia-Herzegovina was seen as an integral part of the united Croatia. There were, in principle, two concepts of the united Croatia:

1.A minimal concept of Croatia within the borders of the Banovina Hrvatska as it was in the Kingdom of Yugoslavia in 1939−1941 (when a Greater Croatia as a separate and autonomous administrative territory became a state within a state).

2.A maximal concept of Croatia within the borders of the WWII NDH in 1941−1945 that included all Bosnia-Herzegovina and parts of Serbia inhabited by 6, 663, 157 citizens of whom 1/3 were the Orthodox Serbs.

The cardinal point of the question of Croatia’s state borders involves Bosnia-Herzegovina as an indivisible part of any kind of the “natural Croatia”. All existed differences between the Croats and Bosnian-Herzegovinian Muslims were considered as artificial and created by the Yugoslav authorities. The Muslims in Bosnia-Herzegovina were considered in essence as the “purest Croats” according to the WWII Ustashi ideological pattern. In general, for the Croat politicians, academicians and public workers, the Drina River was a demarcation line between the civilization and the barbarianism, or between Europe and the Orient. The Serbs were considered as the proponents of the Byzantine-Ottoman Oriental anti-European culture, while the Croats and Slovenes were saw as the last bulwarks of the European civilization in front of the Oriental primitivism. For all Croat nationalists, the Drina River was and is the border that the Serbs must not be allowed to cross as well the border of the “natural Croatia”. In some conceptions of the ultra-territorial enlargement of Croatia, the territory of Serbia had to be restricted to the area around Belgrade only. Nevertheless, Bosnia-Herzegovina and Croatia were considered as the same land and the people from both of them as of the same blood which consist the same nation. Therefore, Croatia and Bosnia-Herzegovina have to be united into a single national state of the ethnic Croats. Croatia’s unification with Bosnia-Herzegovina was explained by ethnic, historical economic and even civilizational reasons as the historic mission of the Croat nation was seen to defend Europe from the Oriental despotism, i.e. from Serbia and the Serbs.  

It is known and proved that Tudjman had a set of secret negotiations with Miloshevic to divide Bosnia-Herzegovina between Serbia and Croatia. Hence, the Dayton Accords on November 21st, 1995 on the final division of Bosnia-Herzegovina according to the mathematical formula of 51/49 percent can be seen as a practical implementation of their secret agreement sponsored by the U.S. administration of Bill Clinton. A creation of an ethnically pure Croat portion of Bosnia-Herzegovina was a part of this Tudjman-Miloshevic’s deal and in order to achieve this goal the Croats practiced in 1993−1994 the policy of ethnic cleansing of the West Herzegovina and a part of the Central Bosnia within the territory of the Croat-proclaimed Herzeg-Bosnia with the capital in Mostar on the Neretva River. The Croat-Muslim civil war in Bosnia-Herzegovina was halted in the spring of 1994 just due to the U.S. ultimatum to Zagreb: in order to liquidate the Republic of Serbian Krayina and to reintegrate it into Croatia the Croats had to unite their military forces in Bosnia-Herzegovina against the Serbs. Therefore, it was agreed in March 1994 a creation of the Croat-Muslim federation in Bosnia-Herzegovina that was advocated by Washington (the Washington Framework Agreement). In practice, even today, the Croat controlled part of Bosnia-Herzegovina is not under a virtual administration by the central authorities of Bosnia-Herzegovina in Sarajevo similar to the case of the Republic of Srpska. Nevertheless, Tudjman’s policy of the division of Bosnia-Herzegovina with the Serbs was opposed by all kinds of the Ustashi groups either in Croatia or Bosnia-Herzegovina as for them a whole territory of Bosnia-Herzegovina was indivisible part of a Greater Croatia as a national state of all ethnic Croats including and the Bosnian-Herzegovinian Muslims who were ideologically considered as the ethnohistorical Croats as well. The Ustashi organizations and parties advocated a common Croat-Muslim combat against the Serbs in Bosnia-Herzegovina but only after the creation of ethnically pure Croat Herzeg-Bosnia. In principle, they opposed the Dayton Accords as, in their opinion, they gave to Serbia a real possibility to cross the Drina River.  

In conclusion, Tudjman’s authoritarian regime in Croatia and the territorial expansionist policy of the HDZ’s ruling party during the bloody destruction of the former Yugoslavia in the 1990s were not noticed at all by the western politicians and journalists of the global mass-media who, in contrast, accused “dictator”-President of Serbia Slobodan Miloshevic (a “Balkan butcher”) for the policy of creation of a Greater Serbia, Serbia’s aggression on Croatia and Bosnia-Herzegovina and for the practice of ethnic cleansing. However, Franjo Tudjman in Croatia introduced tougher dictatorship than Miloshevic with intention to establish ethnically pure a Greater Croatia within the ethno-historical borders of the Croat nation as proclaimed by the ultranationalist Croat ideologists in the 19th and the 20th century.    

Continue Reading
Comments

Europe

Coronavirus Reveals Cracks in European Unity

Christian Wollny

Published

on

The European unity and solidarity stand at the precipice now: how can the members trust in each other in times of a greater peril when even during a global epidemic help is forsaken? How to convince Spain to commit to Poland’s protection from Russia, or prevent Italy from deepening its ties with China via the Belt and Road Initiative? The EU appears to be a house divided; the European unity must mean more than just travelling around visa-free. Failing to get their act together, Europeans will fall under approaches of the USA, Russia, and China, all vying for a slice of the European Cake.

Europe must come together politically – now, not after the crisis has passed. Politicians from Warsaw, Berlin, Paris, Madrid to Lisbon must unite as quickly as possible, coordinate, show the European people: we stand as one, nobody gets left behind, no one in our common European home. Remember the good of the united Europe, common values, and the most powerful have to move forward together in unison: Angela Merkel and Emmanuel Macron have to do more than just emotional appeals or the war rhetoric against the enemy named Corona. Europe must fight the virus with its common strength. This rich, diverse continent with its educated, diverse people must now prove that it is more than an economic community. Political leaders have to lead by example, or else risk losing everything that generations of statesmen and the society have so painstakingly erected: peace, stability, and friendship across a historically war-torn continent. Maybe the real pandemic is friends having been breaking apart along the way?

The EU has long not stepped forward during the ongoing Corona Crisis. While the EU usually maintains supremacy on virtually every other issue, in the case of the Corona Crisis it has been shamefully silent. Surely, health is a national issue; however, one can expect more from the entity that regulates the shape of cucumbers and the lamination of light bulbs.

Yet, in the event of a global pandemic, the EU relegates responsibility to local or regional administrations. While federal states such as Germany have been just as slow to react, leaving the organizational responsibility with local governments (and only recently nationalizing the purchase of medical equipment), other more unitary states such as France have been quicker to react.

Even the Commission President Ursula von der Leyen has admitted that the coronavirus has been underestimated by politicians. Besides appeals to member states to not shut down their borders and calls for solidarity, the EU leadership has once again showed its powerlessness during a crisis.

The Emergency Response Coordination Centre (ERCC), founded in 2013 precisely for managing a situation like the ongoing pandemic, has failed to provide Italy the help and supplies it urgently requested. European member states can utilize the ERCC to request assistance from other members, but Italy’s latest call in this crisis has remained largely unanswered by its neighbours.

It’s a free-for-all out there. Yet before we conclude the loss of European unity, let’s examine some examples of cracks in the said unity.

Everyone for Themselves?

On March 17, 2020, the EU leadership finally decided to shut down borders, effectively banning entry into the EU for foreigners — a half eternity after nine individual member states had already unilaterally decided to shut down their respective national borders. Among these member states are the Visegrád States (Poland, Hungary, Czech Republic, and Slovakia), as well as Austria. These states previously had taken unilateral action during the Migrant Crisis of 2015. In reality, this directive facilitates the reintroduction of border controls with ID checks, but implications are far more severe. The free movement of people in Europe is one of the four tenets of the EU, and it has been rendered moot during the Corona Crisis, all under the pretense of fighting the viral epidemic.

The next concern has been how member states interact with each other in handling the crisis, or rather the lack of interaction thereof. France has unilaterally announced an export ban on medical equipment, such as masks and respirators, with Germany following suit. The rationale behind these decisions was to keep medical equipment in the country and prevent opportunists from selling them abroad at unethical prices. For smaller and severely impacted countries, though, this spells a death sentence. While Italy has called upon its European allies for aid in this dark hour, the response has been meager. China, on the other hand, answered the call by sending medical equipment via shipping to Rotterdam, to be transported to Italy through Germany. Germany initially blocked the export of these masks under the guise of its new emergency law, and only after the immense pressure from the European community did it relax the law and let the shipment pass. At the same time, Austria banned entry for Italian nationals unless they prove they are corona-free with a doctor’s note.

Italy is feeling left alone, but Italians have learned to get used to this already during the Migrant Crisis of 2015 and the Financial Crisis of 2009. Yet the Chinese gesture of supplying crucial equipment has left the EU stand in the rain, and it continues to compound this feeling, with ECB’s Christine Lagarde implying that it isn’t the ECB’s responsibility to help Italy. Her comment on how it was not her job to “close the spreads” between 10-year German and Italian bonds caused the largest daily increase on record. The FTSE MIB, the Milanese stock index, dropped significantly. Solidarity may be many things, but not that. In times of crisis, Europe’s bureaucratic machinery is painfully slow.

These three examples are only the latest to prove that the European Union does not stand as united as it likes to believe. Czech Prime Minister Andrej Babis said, “We didn’t need to wait for Brussels to give us any advice,” when he announced the Czech Republic would effectively shut down public life. These cracks in unity are really showing now during a global pandemic, but, truthfully, they have been there from the start and have been widening since then.

A History of Discord

A more historic example of discrepancy in unity was the preferential treatment of the United Kingdom in terms of their financial contributions to the EU budget. The so-called “UK Rebate,” active from 1985 to 2020, ensured that the UK retained the majority of its financial contributions. Many EU member states have repeatedly sought to right this wrong, but to no avail. While certainly not the first injustice to sow discord among the member states, it was a particularly significant issue, showing the duality of treatment between larger and smaller economies in the EU.

The Greek government debt crisis demonstrated that the reversal of the previous example could be true. Greece, with seemingly criminal energy, forged its financial data to gain entry to the EU and its unlimited coffers. Only the impact of the 2009 Global Financial Crisis revealed the scam. The EU with Germany and Merkel at its helm fought tooth and nail to keep Greece solvent and in the union, much to the chagrin of hard-working Northern and Eastern members. When the UK would later declare its desire to leave the EU, it at least seemed like the EU (and again, Germany) felt personally insulted and could not wait for the UK to leave, as a form of punishment or vindication. The result is, however, a higher financial burden for the net paying members as the EU would not be expected to decrease its budget after all.

In 2015, another crisis would once again show the failure of the EU to stand united. As a myriad of migrants entered Greece and Italy illegally, unequivocally claiming asylum and short-circuiting the Dublin II Treaty, the EU remained silent for too long until Germany unilaterally decided to issue an “invitation” and really kick off the crisis. While indeed most of these migrants would (illegally) continue their paths on to Germany and Sweden, Italy and Greece had to deal with the impact of their arrival on their shores. As Germany took in more and more migrants, calls for Eastern European member states to take in their “fair” shares became louder from the very same German officials claiming this Willkommenskultur.

Even in the current time, the strife is evident. The ongoing Turkey-Greece 2020 Refugee Crisis showcases this yet again. Greece is expected to uphold the European law and protect the EU-borders, whilst German commentators decry her actions as “racist” and fascist.” Instead of shaming Erdogan, who unilaterally broke the EU-Turkey refugee deal, the European public hounds Greece. Against what next? Greeks have been very tolerant and welcoming over the years, but the situation on the Greek Isles has reached a tipping point, and again a member state is left alone. The ongoing crisis has been pushed back from the spotlight.

The Breaking of the Fellowship?

These historic examples, combined with the previously mentioned failures to aid during the ongoing epidemic, paint a less than favourable picture of the European Unity. There will be a time after Corona. But what will it look like? How can the EU turn from such distrust and egoism? Surely, national governments own primary allegiance to their electorates, their own citizens, and most governments are steering through this crisis by heavily relying on virologists and immunologists, who often quarrel with differentiating viewpoints. This explanation would work for other alliances, but the EU aims to be more than just an alliance, more than just a union of states. With everyone on the lookout only for themselves, it’s easy to forget these European ideals. Nevertheless, the appeal must now be made: Don’t Forget Europe!

The European unity and solidarity stand at the precipice now: how can the members trust in each other in times of a greater peril when even during a global epidemic help is forsaken? How to convince Spain to commit to Poland’s protection from Russia, or prevent Italy from deepening its ties with China via the Belt and Road Initiative? The EU appears to be a house divided; the European unity must mean more than just travelling around visa-free. Failing to get their act together, Europeans will fall under approaches of the USA, Russia, and China, all vying for a slice of the European Cake.

Europe must come together politically – now, not after the crisis has passed. Politicians from Warsaw, Berlin, Paris, Madrid to Lisbon must unite as quickly as possible, coordinate, show the European people: we stand as one, nobody gets left behind, no one in our common European home. Remember the good of the united Europe, common values, and the most powerful have to move forward together in unison: Angela Merkel and Emmanuel Macron have to do more than just emotional appeals or the war rhetoric against the enemy named Corona. Europe must fight the virus with its common strength. This rich, diverse continent with its educated, diverse people must now prove that it is more than an economic community. Political leaders have to lead by example, or else risk losing everything that generations of statesmen and the society have so painstakingly erected: peace, stability, and friendship across a historically war-torn continent. Maybe the real pandemic is friends having been breaking apart along the way?

From our partner RIAC

Continue Reading

Europe

Russian army lends a helping hand to Italy

Published

on

For the past three days, Russian military transport planes with medical specialists and aid on board have been landing at an air base near Rome to help Italy in the fight against the coronavirus outbreak. Critics immediately started looking for some ulterior motives behind Moscow’s move, describing it as just a political PR stunt, a demonstration to Europe of the Kremlin’s capabilities and its immunity to a global pandemic, completely oblivious of the fact that this unselfish gesture of goodwill is not the first in the history of Russia’s relations with the West. Suffice it to recall how, 75 years ago, the Soviet people selflessly saved the world from the Nazi plague without asking for anything in return.

Russians like to joke about there being no such a thing as an ex-doctor, soldier or police officer, but it looks like in Russia there are no former emergency specialists either. Defense Minister Sergey Shoigu spent many years at the head of this country’s Emergency Situations Ministry, and is the one who dispatched Russian rescuers to Japan in the aftermath of the 2011 earthquake there. Russians have a predilection for saving everyone; it’s a sort of a national trait here. Are they doing this to win kudos abroad? Hardly so…The first thing Japan did after recovering from the consequences of that devastating natural disaster was to reiterate its claim to Russia’s South Kuril islands, so Moscow is hardly expecting Italy to make any decisive calls for lifting the EU’s anti-Russian sanctions.

Russia was still very quick to send out 14 planes with 100 military virologists  and professional nurses, special equipment and instruments to Italy in keeping with an earlier agreement between President Vladimir Putin and Italian Prime Minister Giuseppe Conte. Russia even sent in its most experienced medics – military doctors, who had earlier experience of tending to potential COVID-19 carriers from China, who had fought the Ebola epidemic in Africa, and who have a long history of participation in humanitarian missions. Whether these few dozen people are able to turn the tide in the fight against the pandemic is another question, but in any case, their contribution will be extremely important.

Meanwhile, as a brief interview with one of the Army nurses, staff sergeant Natalya Krivosheyeva, aired on Russia’s Channel One television showed, the Russian military doctors arrived in Italy to “help the country out of trouble,” and this is exactly what they are all set to do. In any case, 100 professional doctors with vast experience and military discipline are providing urgent vital assistance to Italy, which is struggling with a shortage of medical staff. This assistance is all the more valuable now that the NATO countries have all refused to line up similar support, the Western defense alliance’s mobile hospital has moved to Luxembourg, closer to the center of European decision-making, and there is virtually no support coming from Italy’s EU partners.

Why is Putin lending a helping hand to Italy? Does he really expect any gratitude from Rome? He is a realist. The news about dozens of professional Russian medics being sent overseas will hardly contribute to his popularity back home. Moreover, on April 22, or later Moscow will hold a referendum that would allow Vladimir Putin to remain in power until 2036. Russians are way more concerned about the situation with the coronavirus pandemic in their own country than in faraway Italy.

And still, Beijing and Moscow have so far been the only ones to provide real assistance to Rome. From the standpoint of national mentality, Russia’s actions are fairly understandable. A popular Russian joke says that “if you want to do something well, call the military.” Russian military medicine is one of the best around, and Russian doctors are going to Italy to gain experience and hone their skills. They are going because such missions are part and parcel of the algorithm of the Russian military. They do not expect anything in return, all they want is expertise. Some critics were sure to be like “Why ask for help from the Russians?” “What will the Kremlin want in exchange for helping us out?” The thing is, however, that Putin and Shoigu have created a system, which initially implies emergency assistance even for countries that are not Russia’s best friends. Moreover, if an epidemic of such magnitude flared up in Poland, which reportedly closed its airspace to Russian planes carrying aid to Italy, Putin would still offer similar help to Warsaw. This is how the Russian Defense Ministry works, for the good of the whole world.

The Russian military specialists are at work now and are sure to save lives. What is more precious than human life? Certainly not politics, and this is exactly what European leaders need to realize.

Continue Reading

Europe

The Covid-19 epidemics and the issue of Italy’s public debt

Giancarlo Elia Valori

Published

on

How will the E.U. resources be defined in the near future for the coronavirus issue? The issue is, in fact, much more complex than we may think.

 The actual European Funds that are theoretically available are manifold: the European Regional Development Fund, the European Social Fund, the Cohesion Fund and, finally, the European Maritime and Fisheries Fund.  All of them have been activated by President Von der Leyen in the initial phase of the COVID-19 spreading to Europe.

 The resources identified by President Von der Leyen for providing support against the epidemics and its economic effects are all drawn from these budget items, which are also those transferred to the States, usually as pre-financing, i.e. as advances on operating expenditure.

 The unspent part of these advances will soon be renamed without any particular bureaucratic problems and these funds will cover at least some past expenses, precisely as from February 1, 2020.

 President Von der Leyen’s proposals affect also the General Regulation of European Funds, which will also enable us to use the Regional Development Fund to finance capital and investment, particularly to improve the efficacy of regional health services.

 In principle, contributions from these Funds will only be used to cover the losses caused by health crises, climate events, environmental accidents or accidents at sea which, however, account for at least 30% of the turnover of the affected company, calculated on the average of the last three previous years.

 For severe diseases and epidemics, this new E.U. system envisages that these Funds can be activated if damage greater than three billion euros or 0.36% of the usual GDP can be proved (well, what next? No end to bad news).

 Hence a total of only 8 billion euros are expected to be made available to all the European economies affected, plus further 29 billion euros as cascading effects of investment already being made.

 Too little, as is evident to us all.

 The 2021-2027 EU budget, however, has not been approved yet. The resources are therefore already scarce and, to tell the truth, completely insufficient for all EU countries. Nevertheless, approximately 850 million euros will be transferred to the Italian regions alone to face the epidemics, in exchange for a not so formal guarantee of “enhancing the managerial approach” to health management – which is already high in Italy – and also to the relationship between spending centres and political authorities.

 However, we are back again to the usual routine of a too little too late approach in the E.U., both for the Italian health spending and for the equally high one of the other countries affected by the epidemics, such as Spain, France and Germany, in the very near future.

 In the German case, however, the public budget cosmetics – which I am surprised is not well known to the international financial markets – will make it possible to turn a plater, i.e. the German public finance, burdened with colossal debt, into a very fast Varenne.

 It will not be with this little money and these post factum bureaucratic criteria that the European Union will rebuild its image in the European productive forces and industrial systems destroyed by the epidemics.

 In the meantime, Prime Minister Conte’s government has already funded – – with 25 billion Euros, mostly as debt instruments- the whole package of measures to face the Covid-19 pandemic.

 The government bonds that can be issued are valid only as from 2020 – as a starting date – but there will be specific “aid” for Air Italy, the Sardinian airline being closed, and the Solidarity Fund for Air Transport and the airport system will anyway have additional 200 million euros available.

 All these measures can be found altogether in the Prime Minister’s Decree, so that we have the feeling that, in the end, with a view to setting again the economy into motion in the productive Northern regions after the epidemics, there will be less money than it is needed just to rebuild the industrial system of Small and Medium-sized Enterprises, which – as is well-known to all scholars and experts – have a much shorter time of permanence on the markets than large companies.

 These 25 billion euros – which are clearly too little – also include funds for the publishing sector, given the unavoidable decline in advertising revenue, as well as an anti-spread shield for insurance companies to face the tension recorded on Italy’s public debt bonds. This is a very technical issue on which I will not elaborate in this article.

 As always happens, however, if investors know it, they discount the insurance value on the amount of bonds acquired or on their price.

 It is a painful mystery how, today, we can take a measure like the spread seriously, considering it measures a difference between the ten-year Bund of an ailing country, namely Germany, with the ten-year BTP of an equally ailing country, namely Italy.

 Indeed, I have always had little faith in the average intelligence of private financiers.

 Prime Minister’s Conte government, however, is ready to implement the E.U. changes to the volatility adjustment, which has always had a very discontinuous trend and a very limited effectiveness.

 Thus, by purchasing the tools for estimating the spread parameters, the companies that hold public debt bonds should be in a position to evaluate the functioning of the mass of bonds and calibrate the mix of investment in “paper” instruments, as well as the duration of all the bonds they own. But there is no guarantee in this respect.

 With specific reference to business support, the 25 billion additional public spending will allow to apply for the ordinary wage subsidies or for access to the ordinary allowances, but only for a period of nine weeks.  

 Once again there is not a single word about the companies’ operations to recover market shares, as well as to recover the profit already forecast. All these measures would apply for just nine months, which, even if the pandemic ended immediately, would probably not be enough for the many Italian SMEs affected by the epidemics to recover their place and positioning in the E.U. and international markets which, meanwhile, the others will have already taken.

 The fact that economic intelligence exists has not yet been understood by Italian politicians.

 With specific reference to the healthcare sector, the 25 billion euros – which, as can be seen, are becoming ever less available – also include only 150 million euros for the increase in overtime for the medical and paramedical staff.

 Based on the Decree enacted, the potential of specialized military medical staff will be increased by 320 doctors and nurses, but more money will be invested in local control offices for checks on goods and people.

 Moreover, a total amount of 340 million euros will be available to use the beds in the private healthcare facilities’ intensive care units. What about the already available direct funding for private healthcare facilities?

 It should also be recalled that the Supreme Defence Council has not yet been convened, which would be the minimum in the current situation.

 Once again, too little too late. There is no reliable data on the permanence of the virus and its distribution throughout the country.

 For SMEs, however, the Central Guarantee Fund will have only one billion euros available, which is still too little.

 If we overlap the maps of the infection areas, from the province of Lodi to the Veneto region, we can also have the map of the development area of Italy’s Small and Medium-sized Enterprises in the North.

 They face the international markets “barehanded”, just as Karate or Judo men fight. Whatever happens, the COVID-19 epidemics has put an end to Italy’s particular system of development and industrial organization, precisely in the most productive regions.

 Now for Northern Italy there is a possible future either as a “guaranteed” area or as an area completely dependent on the other countries’ economic cycles. This is the real game at stake. Especially for Germany, which thinks strategically about its economy within the EU.

 The guarantee, however, will in any case be increased up to 5 million euros per company. For those who are still in difficulty, there will also be easy access to the “Gasparini Fund” for the suspension of mortgage payments. Said Fund has been increased with as many as 500 million euros for the whole 2020.

 For the usual nine months after the entry into force of the Decree, access to this Fund will be provided also to the self-employed and freelancers who self-certify – and it will be very easy – a drop in turnover higher than one third which, however, shall be connected with the COVID-19 emergency (although no clear details are provided on how this correlation shall be proved).

 For banks, as well as for the other companies’ creditors, the turning of debt into tax credits is envisaged for a maximum amount of 2 billion euros.

 Hence we are well over the 25 billion euros initially envisaged, as debt instruments, by the Prime Minister’s package of measures, well knowing the debt conditions of many and often excellent SMEs in Northern and Central Italy.

 For restaurants, cafés, gyms, entertainment and culture, as well as transport services, there is an exemption at source of withholding tax payments on income. However, real income support would be needed rather than the usual tax exemptions on income that is no longer there.

 Finally, there is income support for freelancers only to the tune of 500 euros per month. Income support is envisaged also for those who have an active VAT number, as well as for the Made in Italy sector, which has always been the key for the SMEs’ economic penetration abroad. As to the latter, this income support – the amount of which is not specified – will be managed by the Institute for Foreign Trade (ICE). What about SACE for the companies which are already active overseas? In this case, everything is too vague.

 However, there are already all the signs of the E.U. trip.

 In one day the alleged gaffe of current ECB Governor Lagarde has already destroyed the Italian Stock Exchange, which, indeed, is owned by the London Stock Exchange, but the Franco-German banking axis has been speculating for years on the difference between the interest rates paid by Germany and France and the Italian ones.

 This is a real industry. Hence Lagarde’s alleged gaffe can be easily understood.

 Obviously all this is also a prelude to a sale of Italian companies and real estate sector, while it is increasingly likely that the rating agencies will downgrade Italy to junk from the current valuation of its public debt bonds, as a result of the 25 billion euros – albeit insufficient – spent as debt instruments to face the COVID-19 emergency.

 As already mentioned above, while describing President Von der Leyen’s plan, nobody within the E.U. is still outside the old “austerity paradigm”, which works badly even when things go well. Let us not delude ourselves, in the future, about what the Popperian epistemologists called “paradigm shift”.

 Hence de facto industrial stoppage due to the epidemics and E.U. Member States’ subsequent joint speculative action on the Made in Italy companies, as well as downward operations against all listed SMEs. In this regard, we should also recall the 2019 ruling of the Strasbourg Court on insolvent Municipalities, in which it was decided that the whole amount of local debt plus interest shall be taken over directly by the central State.

 This is already a huge blow. Currently there are, in fact, 66 large insolvent Municipalities, with 54 small administrations in the Calabria region and 409 medium and small Municipalities in crisis, for various reasons, as well as 111 insolvent Municipalities in Sicily, all for amounts which are currently difficult to assess but, however, very close to the famous 25 billion euros invested as debt instruments to face the COVID-19 epidemics.

 This is an evident manoeuvre to circumvent our fiscal and economic crisis, which will be used at the right time by our E.U. and non-E.U. competitors.

 Furthermore, if – as many current leaders of the ruling parties maintain – there will be Italy’s access to the European Stability Mechanism, a European Court will judge whether private assets should play their role in the default procedure, in addition to the public ones.

 It should also be recalled that 91% of Italian Municipalities are at risk of landslides and soil crumbling.

 Hence, for all public assets and companies, there would be the classic bankruptcy procedure, which may also involve private assets. Just as happened with Greece.

 And as was the case with Germany in Versailles, at the end of the First World War, thus paving the way for Nazism and the Second World War and, above all, for the European one.

 What about temporary solutions? A double circulation of the old lira, which should be made interchangeable with the euro – something that, in fact, former Prime Minister Monti prohibited in 2012 and that Germany never dreamed of abolishing – or the circulation of forward and futures contracts, as done by Hjalmar Schacht, the Jewish and Freemason brilliant President of the German Central Bank under Hitler’s rule, who invented the MEFO bills to ward off the last blows of Weimar Republic’s hyperinflation.

 With specific reference to public debt, the Bank of Italy speaks about an increase in debt – precisely with additional 9.8 billion new liquid assets of the Treasury, which brings it to 55 billion euros – with a further central government’s debt that has increased by 7.2 billion euros and that of local governments – whose bad financial situation has already been mentioned above – by 0.5 billion euros in 2020.

 For the long-standing theory of Eurobonds, called for by many more or less experienced economists, there is still a key question.

 What if, in fact – as a result of a possible persistence of the COVID-19 epidemics – the investors, skilfully manipulated – and we can well imagine by whom – turned to other bonds, such as BTPs?

 Currently Italy’s public debt is held by 80% of private markets/operators, by 33% of European institutions and central banks and by 20% of “other entities”, namely small and medium savers or other organizations.

 According to the European Commission, with a zero economic growth, at the end of this year the Italian public debt could reach, ceteris paribus, 2,435.7 billion euros out of a total EU-27 debt of 12,814 billion euros.

 If the Italian economy is set again into motion at the end of May, as forecast by Cerved, our companies could recover a level of turnover even 1.5% higher than the one recorded at the beginning of the epidemics.

 In essence, between 2020 and 2021 the COVID-19 epidemics is expected to cost companies 275 billion euros.

Certainly too much, but nothing that cannot be spread by a public debt carefully managed in its main components, if this data is disseminated among international investors. Hence we can definitely expand the range of buyers of our public debt bonds, carefully calibrated and even renewed, to open up to the financial markets in which we have ventured little in recent years: Great Britain, which certainly has a political, strategic and financial interest in opposing the E.U. policies, now that it is no longer a E.U. Member State; the United States, a market in which we have been present with our large companies, but much less with listed SMEs and other excellent companies; obviously China, but even India, not to mention Australia and New Zealand which, thanks to the London Stock Exchange – which knows the Milan Stock Exchange very well – could buy our bonds confidently.

 Hence, we should no longer ask for charity from the E.U. financial markets, which have not shown any interest in our internal and economic situation. We should begin to make high-level propaganda and skilful promotion of Italy’s “image”, not with a tourist-oriented approach but with excellent financial expertise.

 Moreover, there are those who – not heeding danger and experience – propose to turn the European ESM into the E.U. “Economy Ministry”, which could issue the famous Eurobonds or other instruments that, hopefully, would “sell like hot cakes” on the markets.

 Does anyone know that nowadays countries compete, by all means, on their public debt bonds?

 This operation – as debt instruments of the whole EU-27 – could raise the whole E.U.  budget, so as to help the less “fortunate” countries.

 The idea is good, in principle, but it does not take for granted what now seems obvious: the E.U. project to make Italy end up just like Greece – as in slow motion, like in sport events such as football and athletics.

 Moreover, the famous one trillion euro budget for the Green Compact, equal to seven years of the E.U. whole budget, was in fact an advertising idea, but we cannot even imagine where we can get this huge amount of money.

 According to other reliable banking sources, the situation of Italian SMEs in the COVID-19 epidemics phase will have an impact on the working capital of our Small and Medium-sized Enterprises equal to over 18 billion euros, out of an already calculated total of 342 trade receivables and payables.

 Nevertheless, only for the whole 2020, the requirements for SMEs could reach 46 billion euros, including repayments of debt coming due and investment.

 50% of this amount regards companies in Lombardy, Veneto and Emilia Romagna.

 Creating debt to set again the economy into motion is of no use in the long run – if not as a stopgap measure. A direct interest-free financing from the Bank of Italy is needed but – and this is going to be tough – also from the ECB, an institution in which experts study the old microeconomics and believe that it is the whole economic theory.

 With a view to solving the COVID-19 crisis, the State Rescue Fund – the well-known ESM – could resort to its “toolbox”, albeit this is very dangerous.

 Within the ESM, there is the possibility to activate the Precautionary Conditioned Credit Line (PCCL), i.e. loans granted quickly to avoid the default, but which are NOT conditional upon a Memorandum of Understanding (MoU) of mandatory cuts in public spending and “structural reforms”.

 This would mean a significant increase in unemployment, further compression of the internal market, as well as subsequent and obvious impact, as well as knock-on effects, for Italy’s companies. For an indebted government it is enough to sign a Letter of Intent, which is similar to a MoU, but is less imperative. Hopefully so, although no one has experienced it yet.

 Furthermore, in the case of an Enhanced Conditions Credit Line of the ESM, with MoU-style reinforced guarantees which, I imagine, would be required from Italy, the effects would be directly proportional to the amount of credit granted and the average return time.

 The ESM is therefore a trap and, in the long run, it would create the same disasters it would like to solve.

 Microeconomics is not the whole economic theory. Today there is no soup, like the Marginalists’ one, having the maximum marginal value at the first spoon and the minimum value at the last one. Usually, you finish earlier.

 Another nonsense, albeit very widespread, is the wealth tax called for by the IMF and other scarcely experienced economists.

 The first house owned does not produce income, but an increase in taxation is created immediately during an economic recession and you do not need to be John Maynard Keynes to understand what would happen next.

 Meanwhile, the big financial information agencies say far and wide that “there are 40 billion U.S. dollars of reasons to avoid the Italian public debt”.

 Hence the real and future struggle will also be fought with the careful and authoritative explanation of how the Italian public debt is made, and above all by avoiding the counter-propaganda of some of our scarcely affectionate E.U. friends.

Continue Reading

Publications

Latest

Newsdesk41 mins ago

Mongolia: World Bank Mobilizes $2.2 Million to Strengthen Medical Diagnostic Services

The World Bank mobilized US$2.2 million to help strengthen Mongolia’s hospital services in the wake of the COVID-19 pandemic. The funding...

New Social Compact3 hours ago

Reasons Behind Women Inequality in Pakistan

There is much availability of literature that portrays the issues of women inequality along with explaining the suffering of women...

New Social Compact5 hours ago

Covid-19 Might not be the End

The world seems to be oblivious when it comes to the non-traditional security paradigms hence certain natural cycles repeat overtime....

Newsdesk6 hours ago

Peru Will Receive US$ 50M from the World Bank to Strengthen Key Social Protection

The World Bank Board of Directors today approved a US$ 50 million loan to strengthen key policies and strategies to...

Newsdesk8 hours ago

AIIB To Scale Up Public Health Infrastructure in Wake of COVID-19

Recognizing that countries with fragile infrastructure have less capacity to handle health crises, the Asian Infrastructure Investment Bank (AIIB) is...

South Asia10 hours ago

Pakistan is striving enthusiastically to quell the COVID-19

International cooperation has become necessary for the nations across the globe, to defeat the Coronavirus pandemic -an invisible enemy. For...

Americas12 hours ago

Coronavirus is Trump’s most important electoral rival

The Earth is intertwined with space in various group, ethnic, religious, national, and other forms. National spaces within countries are...

Trending