WHAT SHOULD WE LEARN FROM EURO TRAGEDY?

If you (we) want to blame all this catastrophes that been formed after the Euro crisis around Europe zone lately, I personally believe that we should look up at Maastricht Treaty or what famously called as ‘The treaty on European Union’. Signed on February 7, 1992 and entered into force on November 1, 1993, this treaty was created by Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and United Kingdom.

As the main gate for entering European Union itself (the treaty) and as the necessity to use Euro as their country’s currency, these countries must comply with some criterias (requirements) which known as ‘Maastricht Criteria’.

MAASTRICHT CRITERIA

-The inflation rate should be no more than 1,5% above the rate for the three EU member states with the lowest inflation over the previous year;

-Budget deficit must generally be below 3% of Gross Domestic Product (GDP);

-The national debt should not exceed 60% of GDP (exception: A country with a higher level of debt can still adopt the Euro provided it’s debt level is steadily decreasing);

-The long term rate should be no more than 2% of the rate in the three EU countries with the lowest inflation over the previous year;

-The applicant country must be a member of The Exchange-Rate Mechanism (ERM II) under The European Monetary System (EMS) for 2 consecutive years (The national’s currency exchange rate should not have devaluated it’s currency during the period).

As the time flew, Britain and Denmark opted out of these Maastricht treaty plans, and Euro finally replaces the old national currency of EU’s countries on January 1st, 2002. After 18 years, how all of these ‘perfect’ criterias mentioned at Maastricht Criteria could not produced strong, constant, and unwavering currency named Euro, like we’ve seen these last months over the region and to be compared with other currencies? How could Euro eventually punched by Dollar or even the stability of China’s Yuan at the stock market?

For information, the print edition of The Economist present the article titled “Chips off the block; Currencies around Asia are more flexible than you think”, under their ‘Asian Currencies’ section’. In this article, said “AMID all the diplomatic ding-dong over China’s yuan, it is easy to lose sight of emerging Asia’s other currencies. There is not much din over the dong, for example. While China has kept the yuan pegged to the dollar since July 2008, ignoring complaints that it is artificially cheap, Vietnam’s currency, the dong, has depreciated by 13% against the greenback over the same period, unremarked and unprotested. South Korea and Taiwan, the only countries besides China ever to be labelled currency manipulators by America’s Treasury, have seen their currencies cheapen by 17% and 6% respectively.”

And the ‘trouble maker’ behind these Asia’s stability called ‘Yuan Block’ by some experts. It stated also inside the article: “China’s neighbours and rivals are reluctant to allow their currencies to rise too far against the yuan, for fear of losing China as a customer, or losing out to it as a competitor. Thus although China accounts for only 19% of America’s imports, its peg, it is argued, frustrates a broader realignment of currencies in the region.”

Leave the Yuan and other Asia’s currency on behold, Euro as the main (single) currency within European Union’s countries (UK Pounds as an exemption), in fact was terribly failed down under the shadows of debts and disintegration of the EU’s leaders itself, like we saw at the Greece bail out case where France, Italy, and Germany seems vague and uncertain whether the Papandreou’s country should get assistance of EU or straightly go to International Monetary Fund (IMF). At very last, France and Italy agree with the bail out proposal, while leaving German chancellor, Angela Merkel alone at this ambiguity. It shows to the world that European leaders seems divided at their economical policies making during this horrible crisis.

In other hand, European Central Bank which was built under Maastrich Treaty to be functioned to set the interest rates, was joined Merkel in opposition to straight-up Greek bail out.

“There shouldn’t be any subsidy element, no concessionary element”
European Central Banking chief Jean-Claude Trichet

Finally, Euro-region governments are betting 110 billion euros ($146 billion) in economic medicine for Greece will be enough to vaccinate the rest of their region from contagion. EU’s Finance ministers approved the unprecedented bailout for Greece after a week that saw the country’s fiscal crisis spread to Portugal and Spain.

The EU and the International Monetary Fund, which is (finally) co- financing the bailout, also agreed to set up a bank stabilization fund. And is that all? No more problems? NO. BIG NO-NO.

“The euro will remain weak and there’ll be more bailouts, for Greece, it means terrific austerity and terrific recession.” Marc Faber, publisher of the Gloom, Boom & Doom, said in a Bloomberg Television interview, in Hong Kong.

Seems that the Europe is on highly demand of another bail out, since another countries go through another high amount of debts. Spain’s budget deficit was the third-highest in the euro region last year, at 11.2 percent of GDP. Portugal’s budget deficit was the fourth-biggest at 9.4 percent of output. Ireland had the highest at 14.3 percent and Greece’s was 13.6 percent (Source : Business Week). The speculation among leaders and economist going strong lately.

“Unless Portugal and Spain proactively take additional measures to bolster their fiscal and growth outlook, markets will be tempted to test whether the EU has appetite for any further rescues after the breathtakingly large commitment made to Greece,” Marco Annunziata, chief economist at UniCredit Group in London.

These all madness creates different solutions from many experts. One of them is Barry Eichengreen, Professor of Economics at the University of California, Berkeley. He wrote his opinion on Project Syndicate’s website titled “Europe’s Historic Gamble”. He mentioned Greece bail out as “Europe’s fortnight mirabilis”. Furthermore, Eichengreen mentioned what he called “Other elements of a proper monetary union”, I will quoting his ideas here:

1.Europe needs a Stability Pact with teeth. This will now happen, because Germany will insist on it. As the European Commission has proposed, the strengthened pact will have tighter deficit limits for heavily indebted countries. Exceptions and exemptions will be removed. Governments will be required to let the Commission vet their budgetary plans in advance.

2.Europe needs more flexible labor markets. Adjustment in the United States’ monetary union occurs partly through labor mobility. This will never apply to Europe to a similar degree, given cultural and linguistic barriers.

3.The euro area needs fiscal co-insurance. It needs a mechanism for temporary transfers to countries that have put their public finances in order but are hit by adverse shocks.

4.The eurozone needs a proper emergency financing mechanism. Emergencies should not be dealt with on an ad hoc basis by 27 finance ministers frantic to reach a solution before the Asian markets open. And European leaders, in their desperation, should not coerce the European Central Bank into helping. There should be clear rules governing disbursement, who is in charge, and how much money is available. It should not be necessary to obtain the agreement of 27 national parliaments each time action is needed.

5.Europe needs coherent bank regulation. One reason the Greek crisis is so difficult is that European banks are undercapitalized, overleveraged, and stuffed full of Greek bonds, thereby ruling out the possibility of restructuring – and thus lightening – Greece’s debt load.

I’m not an economist (yet) and I think I’m not going to be, but what I’m doing here is sharing what I’ve observed lately from the Euro’s crisis. It shows to us all around the world, single currencies can bring you two things : First, it brings you to the equality, egalitarianism. But in other side, it can also brings you to the similarity, in Euro case it’s the resemblance of debts, debts, and debts.

Jakarta, June 8, 2010.

The Ban of Minarets in Switzerland

Apparently, I remember the influence of Christopher Hitchens’s controversial yet cynical book famously named “God is Not Great: How Religion Poisons Everything”, published at 2007.

Hitchens stating some disapproval quotes regarding to the choice of beliefs in general way and also questioning the power of God itself, like pictured in this statement: Why if God was the creator of all things, were we supposed to “praise” him for what came naturally? By delivering this book to the world, Hitchens tried to influence mass society and invite them all to criticize the compatibility of modern beliefs with scientific knowledges and technology’s improvement nowadays. Figuratively this author have been generally spread out a shambles of religion or in the other word what we also known as religion haters.

We can call Hitchens as a nuisance, but on the other hand I personally grant him an award for his effort to nudging the world’s debate on how the religions possibly containing people’s mind with fundamentalism and fanaticism, not to forget to mention the 9/11 tragedy which we all informed that it was Al Qaeda’s responsibility (Islamic Fundamentalist Organization based on Afghanistan). Now, the debate’s still going strong or even much stronger in Switzerland, but in other form.

This time, the subject is not the religion as a whole, but the construction of Minarets (generally tall spires with onion-shaped usually either free standing or taller than any associated support structure), which in this Schengen state got turbulenced by some political wings of the country. Seems like there will be only 4 minarets inside Switzerland’s territory (Geneva, Zurich, Winthertur, and Wangen bei Olten) until the end of the world, since the voting agreed to the ban of minarets controversial construction after this issue got raised by the right wings politicians mainly from the Swiss’s People’s Party and the Federal Democratic Union, the Egerkingen Committee (Egerkinger Kommittee). Officially, only 4 of 26 Swiss Cantoons (Swiss Cantons are the member states of the federal states of Switzerland) which mostly in the French-speaking part of the country disagree or opposed the initiatives.

It was all started at 1997, when Recep Tayyip Erdogan who later become Turkish Prime Minister, giving his speech by saying "Mosques are our barracks, domes our helmets, minarets our bayonets, believers our soldiers. This holy army guards my religion."

This statement gloriously debatable in many ways, including for the Egerkinger Commmittee’s exponent, Ulrich Schluer, who later defends on his own arguments that “A Minaret has nothing to do with religion, it just symbolises a place where Islamic law is established.” The Egerkingen Committee which also include Swiss People’s Party and Federal Democratic Union subsequently initiate the idea of banning the contruction of minarets in Switzerland, after there’s conflicts between local residents in Wangen bei Olten with Turkish Cultural Association regarding to the application for a construction permit to erect a 6-metre-high minaret on the roof of its Islamic Community Centre, in 2005.

The Committee strongly exude that the Minaret should not have nothing to do with disturbing local communities lives, so from 2006 until 2008, they launch several cantonal initiatives against the erection of minarets. In a referendum on 29 November 2009, the amendment was approved by 57.5% of participating voters.

In writer’s personal argumentation, the minaret has nothing to do with the prayer activity itself, because the function so far is only about to calling for prayer time (adhan), which in Islam it has 5 times a day (at sunrise, noon, sundown, and evening). Later on, Adhan is called not from the minaret but from Musallah (small size of mosque, oftenly built on small areas) or prayer hall by using microphone. But still, traditionally the minarets is a part of Islamic long-remarkable struggled-history for many times. It first establishment was 80 years after the death of Prophet Muhammad, and in Arabic language Minaret means “Gate from Heaven and Earth”, that’s why the ban of the construction of Minarets (which is constructedly built on the top of the mosque or independently on two sides of the mosque itself) felt extranous for many Moslems.

On their official website, The Swiss government represented by the Federal Council (The Ministry of Foreign Affairs) and a clear majority of Parliament came out against the initiative, like we can see from the statement of The Head of the Federal Department of Justice and Police (FDJP), Federal Councillor Eveline Widmer-Schlumpf, “"These concerns have to be taken seriously. The Federal Council has always done so and will continue to do so in future. However, the Federal Council takes the view that a ban on the construction of new minarets is not a feasible means of countering extremist tendencies."

At this time, I believe that what this country needs is the dialogue between religious and social groups and also the representatives of the ban initiator as a pre-emptive action that could be taken soon, since this religion issue is a very essential yet sensitive ones in every country, especially in Europe where many immigrants from Middle East and also other Moslems live. If it’s not seeking the possible solution, it’s not impposible there will be another kind of cold war, where this world divided into many groups basically formed by their beliefs, and aggresively discriminate other religion who lives in their territory.

Religion is not something that we can use to opposing the others in a terms of self security and also state security. The terrorist is the exclusion of the religion beliefs, because there’s no religion who teach their believer to attack among them.

So the discrimination to some religion is something that needs to be solved immediately, before it raise into what Hitchens said in his book reveal: Violent, irrational, intolerant, allied to racism and tribalism and bigotry, invested in ignorance and hostile to free inquiry, contemptuous of women and coercive toward children: organized religion ought to have a great deal on its conscience.