Growth is good, but not good enough
The Portuguese Constitutional Court's nixing of EU austerity measures could affect all of Europe.
If the European market weren't so important to Israel, the never-ending saga of European wrong-headedness would be laughable. A Martian watching the antics from space would be overcome by diabolical laughter.
The crisis of the week has shifted from Cyprus, where the EU, the ECB and the IMF decided to confiscate bank deposits --including those supposedly insured by the EU (which gives rise to the interesting speculation as to whether the depositors with less than 100,000 euros in their accounts could have applied to be reimbursed) all the way across the continent to Portugal.
Portugal is not a major economic power, but it is much larger and more important than Cyprus. In order to qualify for a European bailout the Portuguese government proposed, and the national assembly passed, a law with various austerity measures affecting a wide swath of the population of the country.
The Portuguese Constitutional Court decided that many of these measures were unconstitutional. In other words, the government had no authority to violate the constitutional rights of Portuguese citizens on the orders of outside institutions, European or international. Three resounding cheers for the court. Indeed, the overweening arrogance of the European Union and its central bank needed such a come-uppance. It is salutary, and in fact, if it should prove to be an augury of future behavior on the part of other countries, the Portuguese crisis could be a much more serious threat to the future of the euro fiasco than Cyprus would ever have been.
Keep close watch on this situation. As the religious fanatics are fond of saying, "The End May be Near".
On a completely different topic, both Hamas and Iran have serious internal problems. In the case of Hamas, the old adage "money talks" is certainly true of the re-election of Khaled Meshaal, supported by Qatar, as leader. But the Qataris have only money and are not on the ground in Gaza. Although the council met in Cairo, the Egyptian candidate lost to Meshaal and in fact lost his position on the council. This is hardly surprising, since the Egyptians continue to close the smuggling tunnels into Gaza, depriving the Hamas regime not only of the goods not coming in but the revenues from the import taxes they usually extort from the smugglers. Now that Israel has also closed the border because of the missiles that have struck Israel from Gaza in recent days, the economic situation in Gaza has become dire. Reports abound of popular discontent and even demonstrations.
In Iran, President Ahmadinejad has announced his candidate for president to succeed him in the elections in June. His choice is a direct slap in the face to the clerical class in general and to Supreme Leader Khamenei in particular. Ahmadinejad's candidate is triply unacceptable to the mullahs: he is a poet, a Persian nationalist (as opposed to a Shia cleric) and, not unimportant, is clean-shaven! Will wonders never cease? If Khamenei refuses to permit him to run, which is possible, there may be demonstrations orchestrated by Ahmadinejad and possibly even violence. More likely, the Supreme Leader will grit his teeth and fix the election for his own candidate, looking forward to the post-election period when he is likely to get the National Assembly to change the constitution to eliminate the position of president. But Ahmadinejad knows well how elections are fixed, having done it himself, and may find ways to foil such an effort.
Norman A. Bailey, Ph.D., is Adjunct Professor of Economic Statecraft at The Institute of World Politics, Washington, DC, and a researcher at the Center for National Security Studies, University of Haifa.
Published by Globes [online], Israel business news - www.globes-online.com - on April 11, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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