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Helga Zepp-LaRouche Blasts the EU Fiscal Compact:
"The Worst Idea since Bruening"

In a statement issued on Jan. 28, Schiller Institute chairwoman Helga Zepp-LaRouche blasted the new EU "Fiscal Compact" as "the worst idea since Bruening" (Chancellor of Weimar Germany from 1930-32, whose budget-cutting policy paved the way for Hitler's regime.) "The combination of fiscal compact, debt brake, and sanctions will massively shrink the real economy in the member countries, brutally lower living standards, and lead to social chaos; in short, it is guaranteed to fail, in the tradition of Chancellor Brüning."

The EU organizers, Zepp-LaRouche wrote, "seem to have a sense for black humor, since they chose Jan. 30, the anniversary of Hitler's seizure of power, as the deadline for the EU summit to adopt the EU's new Fiscal Compact, including the draconian 'debt brake' and automatic sanctions on governments that sin against the allowed budget limits."

Helga Zepp-LaRouche pointed to the fact that former Italian Economy Minister Giulio Tremonti has characterized the new EU pact as "a declaration of war against Italy", adding that it is "against the peoples of all members of the euro and of the EU."

A paper by the German government, leaked by the Jan. 28 Financial Times, underscored her words. Indeed, Mrs. Merkel's government is proposing that Greece completely relinquish sovereignty over tax and spending decisions to a Eurozone "Budget Commissioner" in exchange for the second tranche of bailout money (cf. below).

One cannot help but wonder whether officials at the Chancellor's office are willfully pushing the situation over the brink. Greece's debt is already traded at 30% of its face value, so that the costs of a Greek exit from the euro are at par with costs of staying in.

At the same time, the Merkel government has reactivated the SoFFin II bailout fund, with a credit volume of 480 billion euros, clearly in view of a Greek default which would badly hit German banks. This is playing with fire. A Greek exit could create a shock wave using up all the "firepower" of the bailout funds. And even if the German SoFFin succeeds in limiting damages to the German banking system, the 480 billion guarantee would become a debt burden on the taxpayers.

All evidence shows that EU commissaries and government leaders are moving towards political dictatorship to deal with the inevitable social explosion. A foretaste is given in Italy, where the "pitchfork" revolt spread from Sicily to the mainland, with a truckers, fishermen and farmers strike that almost paralyzed the country last week. The government has reacted by calling the protesters mafiosi and terrorists, threatening the use of force should the strike continue.

Under the new Euro Pact (or "Fiscal Compact" in the words of its author, ECB chairman Mario Draghi), such a repressive system would be institutionalized through a supranational political dictatorship. The pact "subtracts from national sovereignty part of the fiscal policy discretion," he said in Davos, admitting: "It is a first step towards a fiscal union."

Thus, Helga Zepp-LaRouche said: "we have the worst of all worlds: On the one hand, the real economy is strangled by the austerity straitjacket of the Fiscal Compact and debt brake – with no prospect for economic growth or investment in a development program, so all of Europe is plunged into a depression; and on the other hand, the banking sector is supplied with virtually unlimited liquidity. Weimar 1923, anyone?"

Helga Zepp-LaRouche denounces not only the "oligarchical system" ruling Europe, but also the slave-like behavior of citizens who have accepted the "worship of monetarism". This in turn has led to indifference towards human catastrophes such as the current hunger threatening over ten million people in the Sahel region in Africa.

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