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Economy

European Unemployment Hits A Record High, Again

Each and every month recently has brought more miserable economic news from Europe. Today was no exception, as the latest data from Eurostat, Europe’s official statistics agency, shows that the continent broke yet another record for unemployment, as joblessness hit 11.9 percent. That translates to 19 million people out of work in the Eurozone alone (and 26 million across all of the European Union):

Unemployment in the 17-nation euro zone stood at 11.9 percent in January, up from 11.8 percent in December, and from 10.8 percent in January 2012, Eurostat, the statistical office of the European Union, reported from Luxembourg. [...]

European unemployment bottomed in early 2008, just as the financial crisis was getting in motion, and has been on a rising trend ever since. The January numbers were the highest since the creation of the euro.

In absolute terms, Eurostat estimated Friday, 19 million people in the euro zone and more than 26 million people in the overall European Union. were unemployed.

Here’s a chart from Lily Kuo showing the rise in European unemployment:

These numbers should show that Europe’s adherence to austerity is not working. But European Union officials have said that they will not abandon their push to slash spending as a way to turn their economy around.

Security

Right Wing Journalist Wants ‘Final Solution’ To Roma In Hungary

Zsolt Bayer (right) at a 2011 rally

A Hungarian journalist with ties to the right-wing government has advocated for a “final solution” to the Roma living in Hungary, reflecting a rise of ultra-conservative nationalism in Eastern and Central Europe.

In an article published last week in the far-right wing newspaper Magyar Hirlap, commentator Zsolt Bayer unleashed a tirade against the Roma — the preferred term for “gypsies” — for their suspected involvement in a bar fight. The rant borders on the genocidal given the language used, made all the more horrific due to the connection Bayer shares with the Prime Minister of Hungary:

A significant part of the Roma are unfit for coexistence. They are not fit to live among people. These Roma are animals, and they behave like animals. When they meet with resistance, they commit murder. They are incapable of human communication. Inarticulate sounds pour out of their bestial skulls. At the same time, these Gypsies understand how to exploit the ‘achievements’ of the idiotic Western world. But one must retaliate rather than tolerate. These animals shouldn’t be allowed to exist. In no way. That needs to be solved — immediately and regardless of the method.

The Roma, who were among the many targets of the Holocaust in 1940s Germany, make up approximately seven percent of Hungary’s total population and are the frequent target of attacks by vigilantes enforcing “public order.” While right-wing parties have made a stir for xenophobic and anti-Semitic language recently, including a politician in the third-strongest party calling for a “list of Jews,” the proximity of Bayer to power makes his comments all the more stunning.

Bayer was one of the founding members of the ruling Fidesz Party, which has over the last year consolidated power in the hands of Prime Minister Viktor Orbán. While some members of the party have condemned Bayer’s statements, including Justice Minister Tibor Navracsics, the odds that Bayer will be prosecuted for incitement or expelled from the party for his statements are slim. Though he holds no official role in the government, Bayer was one of the organizers of the “Peace March” in Jan. 2012 that showed support for Orbán’s government amid European Union protestations that Hungary’s new Constitution violated E.U. treaties.

The unwillingness of Fidesz to officially criticize Bayer reflects the growing prominence of far-right wing parties in European politics during a time of economic downturn. The Golden Dawn party in Greece has made a name for itself — and increased its standing in the polls to enter Parliament for the first time — by railing against foreigners amid Greece’s lengthy depression.

Economy

International Monetary Fund Admits It Severely Underestimated Cost Of Austerity

The International Monetary Fund (IMF) released research today suggesting that it had significantly underestimated the damage European austerity would do to EU growth rates. The paper, by top researcher Olivier Blanchard and staff economist Daniel Leigh, surveyed IMF forecasts released in 2010, when many European nations implemented significant austerity measures.

Most estimates assumed, roughly, that every 1 percent of GDP in spending cuts or tax hikes would lower a country’s GDP growth rate by .5 percent. But it turns out that the costs were closer to 1.5 percent — three times the IMF prediction:

Our forecast data come from the spring 2010 IMF World Economic Outlook (IMF, 2010c), which includes forecasts of growth and fiscal consolidation—measured by the change in the structural fiscal balance—for 26 European economies. We find that a 1 percentage point of GDP rise in the fiscal consolidation forecast for 2010-11 was associated with a real GDP loss during 2010-11 of about 1 percent, relative to forecast. Figure 1 illustrates this result using a scatter plot. A natural interpretation of this finding is that multipliers implicit in the forecasts were, on average, too low by about 1.

As the Wall Street Journal noted, the IMF wasn’t alone in this estimate: “The European Commission, the Organization for Economic Cooperation and Development and the Economist Intelligence Unit also appear to have made roughly the same blunder.” This comports with the Blanchard and Leigh’s finding that the cost really was closer to .5 percent in the past, with the exception of the 1930s, when it was roughly 1.6. Economists, as the Journal suggests, may simply have failed to differentiate between data from financial crises and other data.

This isn’t the first time high-level IMF officials have raised red flags about the effect of austerity on growth. Fund director Christine Lagarde has, in response to the eminent failure of European austerity as compared to American stimulus, suggested that European countries need to deprioritize debt reduction in favor of measures that actually boost economic growth.

The United States is poised to enact a significant austerity package in 2013, even by European standards, due to an increase in the payroll tax and the still-looming spending cuts that were part of the “fiscal cliff.”

Economy

Britain Doubles Down On Failed Austerity Policies

Though the United Kingdom’s decision to slash government spending and temporarily hike taxes in response to the Great Recession sent the country tumbling into a double-dip recession, the Conservative government announced on Wednesday that it would extend austerity measures for an extra year. Chancellor of the Exchequer George Osborne informed Parliament that the government planned to end austerity in 2018 rather than 2017, claiming that “it’s taking time but the economy is heading in the right direction” amidst what the New York Times described as “heckling and laughter from some members of Parliament.”

Their derision might be because austerity has failed the United Kingdom, much as it has failed the broader Eurozone and, on the state level, severely held back the American recovery. An apples-to-apples comparison between the U.K. approach and American stimulus suggests that stimulus caused the U.S. to beat growth expectations and Britain to lag behind them.

Broader European austerity caused its GDP to shrink over the past five years while the U.S.’ grew by 2.9 percent. And had state governments not implemented their own austerity plans in the form of slashing government jobs, American growth would have been even more robust.

Moreover, austerity doesn’t even accomplish its stated goal of reducing a government’s debt. The European experience proves that austerity hurts growth more than it reduces government spending, meaning it actually increases debt-to-GDP ratio. Indeed, as a chart by the conservative UK Spectator shows, Britain now has the highest deficit of any Western country despite its sever budget cutting:

If Republican insistence on lower tax rates for the rich sends the U.S. tumbling over the fiscal cliff, our austerity measures will be more severe than Europe’s.

NEWS FLASH

116 Million Europeans ‘At Risk Of Poverty,’ With More Austerity On The Horizon | According to the European Commission, “roughly 40 million Europeans are suffering ‘severe material deprivation’”, while “116 million EU citizens are judged ‘at risk of poverty.’” Yet, the continent is doubling down on the same austerity policies that have killed growth from Greece to the UK. Spain’s unemployment rate just hit 25 percent, while “austerity measures, worth over 60 billion euros by 2014, are likely to crimp growth further, and cast more workers out of a job.”

Election

Four Huge Global Issues The Candidates Didn’t Debate Last Night

Monday night’s Middle East-heavy question lineup angered a number of observers of international politics concerned that significant issues in the rest of the world won’t get the attention it deserves. ThinkProgress has previously highlighted five international issues — the India/Pakistan conflict, global disease and malnutrition, overfishing, America’s shadow war on terrorism, and the civil war in the Democratic Republic of the Congo — that were getting short shrift in the campaign debate. Given that last night’s debate failed to expand menu of topics beyond expectations, we’re picking out four more issues outside of the Middle East that the Presidential candidates should have discussed, but didn’t.

GENOCIDE PREVENTION

The Atrocities Prevention Board is one of the Obama Administration’s least well known, yet potentially most far reaching, policy initiatives. The Board’s goal is exceedingly ambitious – developing an effective system for predicting when an episode of mass killing might be about to escalate and then head it off, ideally without using American military force. This idea has come under fire from hawks who argue it’s a bureaucratic roadblock to effective preventative action. Whether Romney agrees with this critique, and whether Obama was willing to and capable defend his policy, would have been valuable topics of conversation given the legion of 20th and 21st century victims of mass murder.

THE END OF THE DRUG WAR IN LATIN AMERICA

A cornerstone of America’s Latin America policy for the past forty years has been drug eradication, partnering with and supporting local governments willing to use harsh tactics in an attempt to limit the spread of drugs in the United States. While President Obama laughs off the idea of changing American policy, Latin American countries are increasingly taking the issue into their own hands. Colombia and Peru are taking the lead on relaxing drug enforcement. A recent Summit of the Americas historically declared the War on Drugs a failure and pledged to look for alternatives, while new Mexican President Enrique Pena Nieto has called for a debate about legalization.

CLIMATE CHANGE

While it’s commonly lamented that this issue has been missing from the Presidential campaign, its absence is especially acute in a foreign policy debate, as the nature of the problem is intrinsically global and its victims will disproportionately be the world’s poor. A recent study found that the climate change could kill 100 million people, mostly residents of the developing world, by 2030. This is in part a consequence of geography and topography, but also the fact that the massive wealth of the First World gives it many more resources to prepare for the changing climate than poorer nations, despite the fact that the wealthy were responsible for most of the emissions causing the problem in the first place. Any effective solution to this nightmare will require international cooperation, so the question of how best to get that agreement would, in an alternative world, have been an important topic in Monday’s debate.

THE RISE OF THE EUROPEAN FAR RIGHT

Reactionary racists in France. Neo-Nazis in Greece. Around Europe, the economic crisis appears to be fueling a resurgence of right-wing populism. Many of these groups have harsh anti-European Union views which could potentially complicate Europe’s attempt to put its economic house in order down the line, to say nothing of the consequences for the immigrant and minority groups against which they direct their anger. Moreover, the right-wing surge in Europe isn’t necessarily temporary: according to Matt Goodwin, an expert at the London thinktank Chatham House, “the big challenge that we’re going to see over the next 10 years is the rise of far-right groups and networks in Central and Eastern Europe.”

Security

EU Report Says ‘Concerns Are Growing’ About Lack Of Civil Rights And Press Freedom In Turkey

The European Commission published its annual report on the performance of newly minted and aspiring members of the European Union on Wednesday. Notable among the findings — often seen as a road map for prospective members to follow — was the view that Turkey has not yet met the civil rights requirements to join, particularly regarding press freedom issues.

The report chided Turkey for a “lack of substantial progress” in ensuring the “right to liberty and security and a fair trial, as well as of the freedom of expression, assembly and association.” The unwritten threat: if Turkey does not secure these bare minimum social freedoms, it will have little hope of joining the EU. But perhaps that is what Turkish Prime Minister Recep Tayyip Erdogan has in mind. While Erdogan said it was his goal to midwife Turkey’s ascension to the EU when he came to power in 2002, he has since turned away from the West amid the European financial crisis and European skepticism about a majority Muslim nation joining the bloc.

Turkey’s minister of EU relations, Egemen Bagis, responded to the news, claiming the EC’s report placed “too much emphasis was placed on isolated incidents.” Yet history indicates that such rights violations, especially in the realm of press freedoms, are far from isolated. It is estimated that around 100 journalists are currently imprisoned, held on suspicions ranging from conspiring against the government to being aligned with the Kurdish separatist and terrorist group PKK.

One of the most highly-publicized cases was that of Ahmet Şık and Nedim Şener, who were held for more than a year until their release in March. They were accused with being affiliated with the so-called Ergenekon plot — a shadowy group allegedly aimed at overthrowing the government — but lack of evidence, and severe domestic and internal pressure led to their release. But the Turkish government’s war on journalists didn’t start and end with the Şık and Şener cases, as past arrests of journalists in Turkey have been just as suspicious.

But other reporters rounded up in the Ergenekon case have been left to languish in prison. Forty Kurdish-affiliated reporters were put on trial Monday in the biggest case of its kind.

A recent report from the Carnegie Endowment for International Peace notes that the “overall diagnosis” on press freedom in Turkey is “rather bleak” with “more negative than positive developments.”

Nate Niemann

Security

Senate Draft Letter Presses Administration To Offer Few Concessions For Confidence-Building Deal With Iran

Sens. Blunt (L) and Menendez (R)

With negotiations over Iran’s nuclear program moving to Moscow next week, a draft letter to be circulated among Senators for signature calls on the Obama administration to not offer Iran major concessions without a comprehensive deal on its nuclear program. The draft letter, obtained by ThinkProgress, says that, should the Iranians not take certain steps demanded by the Senators, the U.S. should “reevaluate the utility of further talks.”

Authored by Sens. Robert Menendez (D-NJ) and Roy Blunt (R-MO), the draft letter outlines the “absolute minimum steps” Iran must take in Moscow: shutting down its Fordow enrichment facility, ending enrichment of uranium to high levels, and shipping out its stockpile of high-enriched uranium. The letter says that Iran’s agreement to these steps would “justify continued discussions,” but doesn’t outline any other possible concessions.

While that leaves the door open for other possible lesser concessions, the Senators rule out acceding to a key Iranian goal until Iran agrees to the full spectrum of Western and U.N. demands. The New York Times reported that, in Baghdad, Iran asked for “an easing of the onerous economic sanctions imposed by the West,” something the Iranians have “relentlessly” pursued. But the Senators refuse to consider such steps without a comprehensive deal. In the draft letter, they write:

Barring full, verifiable Iranian compliance with all Security Council resolutions and full cooperation with the IAEA [International Atomic Energy Agency], including a new, far more intrusive inspections regime under the additional protocol, we see no circumstances under which Iran should be relieved from the current sanctions or those scheduled to come into effect at the end of this month.

That restriction could, in effect, stymie moves toward a “confidence-building” deal. A deal identical to the one mentioned by the Senators — demanding the “absolute minimum steps” but offering little sanctions relief — was on the table in Baghdad. After it failed to advance, an Iranian diplomat told the Christian Science Monitor that Iran would not “accept these things this way.”

Read more

NEWS FLASH

Iran Nuclear Talks To Resume Next Month In Moscow | Talks between Iran and the P5+1 ended today at a diplomatic impasse as Western negotiators pushed for a freeze on Iran’s production of 20 percent enriched uranium while Iran sought relief from sanctions, including a European Union (EU) oil embargo set to go into effect on July 1. “Having held in-depth discussions with our Iranian counterparts over two days…it’s clear that we both want to make progress, and that there is some common ground,” said Catherine Ashton [PDF], the EU’s foreign-policy chief, who led the P5+1 side. “However, significant differences remain.” Iran’s state controlled IRNA news service reported that the package, and limited sanctions relief, offered by the P5+1 was “outdated, not comprehensive and unbalanced.” The next round of talks are scheduled to be held in Moscow on June 17-19.

NEWS FLASH

Austerity Pushes Eurozone Unemployment To 15-Year High; Republicans Continue To Ignore Its Failure | Austerity policies pushed countries across the Europe back into recession during the first quarter of 2012, and the Eurozone’s unemployment rate hit 10.9 percent — its highest level in 15 years — in March. Deep budget cuts in countries like Spain, Greece, and Ireland crippled economic growth and exacerbated unemployment numbers. Austerity’s failure is starkest in the United Kingdom, where the economy is performing even worse than the rest of the Eurozone. And yet, Republicans in the United States have failed to grasp austerity’s failures, continuing their push for radical budget cuts that would jeopardize already-modest growth in the American economy and send the U.S. on a path not dissimilar from Europe’s.

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