MASS TRICKED:

What has four letters, begins with E and is slowly killing half of Europe? (Anatole Kaletsky, 10/26/06, Times of London)

What we see in Eastern and Southern Europe today are the consequences of the EU’s transformation from a union of democratic countries into a sort of supra-national financial empire in which the most important decisions affecting EU citizens are no longer subject to democratic control.

In Italy the Government is on the brink of collapse because of Signor Prodi’s insistence on implementing tax increases and budget cuts demanded by Joaquín Almunia, the EU Economic Commissioner, under the terms of the Maastricht Treaty. In Hungary, the riots began a month ago because the Prime Minister showed his contempt for democracy by publicly admitting that he had “lied, morning, noon and night” about the tax increases and public spending cuts that he had promised Señor Almunia before a recent election — and after the election was over, he naturally felt that his promises to Brussels were far more important than the ones he had made to Hungarian voters.

The resulting budget cuts of 7 per cent of GDP over two years would be roughly equivalent in Britain to closing down the entire NHS. And Hungary, remember, is being forced to do this to comply with the Maastricht treaty, without even being admitted to the eurozone.

There is now almost no chance of Hungary, or any other new European country, being admitted to the euro-zone in the foreseeable future. [...]

The Maastricht treaty has turned the Eastern Europeans into second-class citizens. The belated recognition of this fact is starting to have the predictably ugly impact on the politics of Europe’s eastern periphery. But before getting too indignant about the injustices to Eastern Europe, let us spare a thought for the citizens of old Europe who are privileged to “enjoy” full membership of the eurozone. The latest budgetary crisis in Italy may well be averted and the Prodi Government will probably survive for a few more months. But as Signor Prodi’s huge tax increases begin to bite, the Italian economy is almost certain to sink back into recession. Moreover, there will be no chance of Italy tackling any of its real economic problems once unemployment starts rising next year.

What Italy needs today is competition, privatisation of grossly inefficient state-sponsored utilities, deregulation of the financial system and changes in labour laws. Such reforms can be hard to implement even in a booming economy. In a stagnant or declining one, they will become impossible.