From Crippling Austerity to Dirty Coal
HAVANA TIMES – As leaders of the seven wealthy democracies known as the Group of Seven hold talks in a secluded castle in Germany, thousands of protesters have been met with 20,000 police in the largest security operation in the history of Bavaria. Issues on the G7 agenda include climate change, a $10.4 billion bailout package for Greece, and more austerity measures.
We are joined by three guests: Gawain Kripke of Oxfam America, which just published the new report, “Let Them Eat Coal”; Eric LeCompte of the Jubilee USA Network; and former banker Nomi Prins, author of “All the Presidents’ Bankers.”
JUAN GONZÁLEZ: Climate change is a top agenda item as leaders of the seven wealthy democracies known as the Group of Seven, or G7, wrap up a two-day meeting in Germany today. Heads of state from Britain, Canada, France, Germany, Italy and the United States are holding talks in a secluded resort housed in a 100-year-old castle. Outside the summit, protesters have been met by a massive show of police force, with as many as 20,000 officers deployed for crowd control. Thousands of demonstrators took to the streets Saturday in the nearby town of Garmisch to oppose other issues under discussion, including the Transpacific Partnership trade deal, or TPP, and austerity measures. This is Stop G7 spokesperson, Benjamin Russ.
BENJAMIN RUSS: [translated] It’s totally over the top. And one has to see that the way we have been walking in the streets and have organized ourselves well. The camp was well organized. This massive police presence is totally over the top.
JUAN GONZÁLEZ: On Sunday, leaders and reporters had to be shuttled to the G7 talks by helicopter after protesters blocked a main road. Today, the summit host, German Chancellor Angela Merkel of Germany, is seeking endorsement of goals to limit the increase in global temperatures and to provide financing to countries dealing with the impact of climate change.
AMY GOODMAN: Talks are expanding today with the addition of several African leaders, and Iraqi prime minister, Haider al-Abadi, who is set to meet with President Obama. Meanwhile, a $10.4 billion bailout package for Greece has been a central focus among the country’s creditors attending the summit, including heads of the European Union, European Central Bank and the International Monetary Fund. Greek Prime Minister Alexis Tsipras is in attendance — is not in attendance. Neither is Russian President Vladimir Putin, as leaders agreed to continue sanctions against Russia over its aggression in Ukraine. Well for more we’re joined by three guests. Joining us from Garmisch, Germany, near the G7 Summit, is Gawain Kripke, the Director of Policy and Research at Oxfam. They’ve just published a new report called “Let Them Eat Coal” which notes the G7 countries remain major consumers of coal which is the biggest driver of climate change and world hunger. In Washington, D.C., Eric LeCompte is the Executive Director of Jubilee USA. He was recently in Dresden, Germany, for the G7 Finance Ministers gathering. And here in New York, Nomi Prins, former Managing Director at Bear Stearns and Goldman Sachs, and previously an analyst at Lehman Brothers and Chase Manhattan Bank, now a distinguished senior fellow at Demos. She is also the author of, “All the Presidents’ Bankers: The Hidden Alliances that Drive American Power.” Last week, Nomi Prins was invited to address global central bank leaders at the Federal Reserve and IMF’s annual conference. We welcome all of you to Democracy Now! Let’s first go to Garmisch, to Bavaria to Gawain Kripke. Can you talk about the massive protest that is going on outside, met by an even larger police presence, believed to be the largest police operation in Bavarian history? Why people are protesting the G-7 summit, Gawain.
GAWAIN KRIPKE: Well, it’s a very energetic protest. It started in Munich a few days ago and then has moved up here to the mountains. It’s a wide diversity of complaints that the protesters have against the G7. I would say the biggest one that I observed was a real concern about the real free trade agreement that is being negotiated between Europe and the United States with a concern among the protesters that it would be pushing lower standards for things like energy efficiency and food safety onto European markets. So a real resistance so that trade agreement from the protesters. But also, protesters concerned about climate change, about global poverty, and a range of other issues.
JUAN GONZÁLEZ: And on the issue of global poverty, what are some of the concerns that you feel from Oxfam are not being addressed by the summit?
GAWAIN KRIPKE: The G7 have always fashion themselves as the Board of Directors for global development and the global economy. So we always look to them to make new commitments and statements about ending poverty and reducing hunger. We’re hoping for something ambitious from the G7 leaders. This is a very important year for global poverty and also for climate change with very big conferences scheduled for later this year. And the G7 can really put a lot of energy into those efforts if they make some commitments here. We’re looking for them to say something about the richest and most developed countries will take actions to reduce their climate change, to provide funding for less developed countries to also develop in a clean way and also to end hunger, which is going to be one of the big goals that is going to come out of the U.N. later this year in which the world is going try to end hunger by 2030.
AMY GOODMAN: Can you describe the scene for us there? The G7 meeting in this 100-year-old castle, and the massive police presence outside along with thousands of protesters?
GAWAIN KRIPKE: Right. Well, it is very beautiful for one thing. It’s a great location that the Germans picked for the G7. The castle is quite remote and we can’t even see it from where we are. Most of the protesters and nonprofits and most media are actually located some distance from the castle. So we see it on TV, but we’re not really observing it. The protesters are in the streets. They have an encampment a few miles away that is, I’m told, very orderly. There’s been some big rainstorms, so I think it’s a bit muddy. But their protesters have been going around the streets in a very festive way and laying out their concerns. The police presence, what I’ve seen, is pretty restrained but massive and looks very highly militarized. They’re marching down the streets in columns looking like soldiers. But I haven’t seen a lot of rioting or excessive abuse myself
JUAN GONZÁLEZ: I’d like to ask Nomi Prins, one of the biggest issues is debt and what to do about Greece and in general the restructuring of the banking system of the world following the 2008 crisis. I’m wondering, you’ve spoken to the IMF recently. What is the main message you’re trying to send to those who are dealing with financial reform?
NOMI PRINS: One of the things I talked about in Washington last week, to the Fed and the IMF and the central banks, bankers around the world, is that there is a continued instability, which some of them know and some of them refuse to admit, in the financial system throughout the world. And that is had a knock-on effect on global economies everywhere. There was a decision made by central banks, by private banks and governments together at the highest levels of these countries to help the banking system at the expense of the people system, the real economy, to invoke austerity measures in order to pay bondholders. And that continues to be in place. So when you talk about the situation in Greece, what Greece is basically saying and has been saying for a long time is that, look, are the austerity measures that you pressed upon us irrational, are impossible to use relative to the fact that our economy has slowed down and our debt, the strings attached to the bailout that we received in order to pay bondholders, in order to pay the IMF and central banks and so forth, are impossible to pay. But yet, they continue to facilitate stability for the financial system and the major banks around the world. So they are getting the money, they are getting the benefit. People in the countries outside of that upper echelon are simply getting hurt.
AMY GOODMAN: You have written about Clinton cash. Can you explain what that means and what it actually has to do with what we’re talking about today? What it has to do with the G7, what it has to do with banking in the United States and multinational banking.
NOMI PRINS: Well, Clinton Cash was a book that came out recently by Peter Schweizer where he looks at some of the Clinton Foundation associations with countries and I go further into examining what their associations are with a major banks in these countries, particularly from the United States. And if you follow a two decade through line from when Bill Clinton became president through Hillary Clinton now trying to become president, you see that the relationships along the way with Bank of America, with Citigroup, with Goldman Sachs and so forth, whether through appointed positions, whether through money along the side whether through pushing their policies of deregulation and benefit to the banks at the expense of the rest of the population, they continue to go through. So in the beginning we had deregulation coming in through the Clinton administration. We had the the Glass-Steagall Act being repealed which meant these bigger banks could become bigger and consolidate people’s deposits with all of these risky derivatives and other types of transactions, which then imploded the financial system. In the wake of the financial crisis, that still exists.
Relative to the rest of the world, the biggest six banks in the United States are bigger than they were before the crisis. They’ve received more help from Obama’s government which has a lot of people in it from the administration, from a treasury perspective, and they continue to thrive at the expense of the real economy. In addition, the foundation, the Clinton Foundation has received from $250,000 to $5 million donations from these same largest institutions, among others, that continue to push their agenda throughout the United States as well as throughout the world.
JUAN GONZÁLEZ: But do you think that real structural change has occurred since — ? We still get information or news about the LIBOR exchange conspiracy, the currency manipulation. We see continued crime after crime in the financial world and doesn’t seem to be any real structural change occurring.
NOMI PRINS: No, absolutely. And that was one of the things that said in Washington. Basically, and also, the big six banks in the United States, they’re hoarding cash. So the result of these zero interest rate policies throughout the world emanating from the Fed and the United States and this quantitative easing are buying bonds back from all these banks, giving them more money, is they have 400% more cash after the crisis than they had before, not going into the real economy and they’re committing crimes. The big six banks in the United States have paid fines or settled to pay fines for $120 to $130 billion. LIBOR rigging, FX rigging, mortgage fraud, money laundering, it goes on and on.
AMY GOODMAN: So we just saw the us Attorney General Loretta Lynch with this big announcement about FIFA, the whole soccer scandal. Person after person in the leadership of FIFA have now been indicted. Right before that was the allegations about banking fraud. Now, we’re not talking person after person, in fact, we’re not talking anyone. We’re talking about institutions, banks. Can you address this as a person who worked at many of these banks from Lehman to Goldman Sachs?
NOMI PRINS: First of all, the FIFA thing is a scandal, is such a nonevent relative to the fact that we had a, just recently, that $5.6 billion fine on FX rigging. That means rigging the currencies, these five banks including J.P. Morgan, Citigroup and the United States, UBS and Barclays, they got together and rigged what people pay for goods back and forth. They engendered harm to the global economy. They got a $5.6 fine, compared to $150 million fine, nowhere in the same vicinity, for FIFA and heads rolled. No heads rolled. Jamie Dimon got a $20 million increase in his compensation, voted upon by his shareholders right before that FX rigging find came out.
AMY GOODMAN: And what would it mean? You lived within this culture. Why aren’t people indicted? Why aren’t people sent to jail? And what would it mean for what happens inside these banks if they were?
NOMI PRINS: I think it would make a big difference if the heads of these banks, and I mentioned, if some of the CEO’s would actually be sent to jail, be held accountable in any personal way whatsoever at all. Instead they’ve been able to point fingers inside their institution. That trader did it, that was sort of a bad department, that was a bad apple approach. And they continue, Jamie Dimon and Lloyd Blankfein, they continue to run these companies. And globally, again, these banks have committed more crime and been settling for more crimes than anywhere else in the world. It would make a difference. It would send a message that you can’t do that. But not only have they not been sent to jail, not only have they not had any personal indictments or convictions, they also continue to get upholded by their shareholders here, which actually isn’t something — in Europe they’ve kicked out some of the bankers and CEOs along the way, by shareholders.
JUAN GONZÁLEZ: I’d like to bring in Eric LeCompte of Jubilee USA Network. The issue of coal. We have heard over the weekend of Norway’s Sovereign Wealth Fund deciding to divest in coal investments. Could you talk about the G7 nations’ role in the issue of coal?
ERIC LECOMPTE: Well, I think the entire role of the G7, as they describe it themselves, is to focus on global economic growth. When we’re looking at these particular issues around divestment, I think we also see a lot of connections between what Nomi was just describing in terms of how the global banking system is operating as well as what Gawain described as some of chief concerns from protesters on the ground being TTP, these trade agreements, as well as an overall negligence to really addressing global poverty issues. Right now when we look at Greece and we look at the developing world, when we look at the International Monetary Fund, the European Central Bank and others, wanting to promote a higher degree of austerity in Greece in order for them to receive more bailout funds, we have to understand that fundamentally, we’re dealing with a problem of global instability. And In fact, when the G7 financial ministers met last week in Dresden, when I was in Dresden, the chief focus, how the table was actually set for this G7 summit, the financial ministers focused on the issues of high debt, and being able to achieve growth in what is now considered by the G7, and International Monetary Fund to be unsustainable debt, unsustainable debt that will prevent economic growth.
I think, as we’re looking at the Greek situation, we’re looking at these broader issues of divestment, I think we need to see some real shifts in terms of how the global financial system operates. And I think one of the issues that was very interesting that’s now been at the table at the United Nations with three general assembly votes in favor of global bankruptcy process, they’re working on a process, the International Monetary Fund for the last two years has been working on a process. Last week in Dresden, we saw all of the major religious leaders, the Catholic bishops, the Protestant bishops call on the G7 to end poverty by bringing stability, by erecting a global bankruptcy process to end poverty. And in fact, at the prayer service last week in Dresden, we saw German Finance Minister Schäuble attend because we know these issues are so key right now, we do need to see some solutions if we’re going to have greater stability in the markets, in the global financial system.
JUAN GONZÁLEZ: But in terms of this whole issue of a global bankruptcy regime, what about the issue of the ability of so many corporations to hide their wealth and profits in tax sheltering countries?
ERIC LECOMPTE: And this is an incredible concern. We have to understand that debt and tax are flip sides of the same coin. Two years ago at the Lough Erne Summit, we saw the G7 take some historic action. They called on broad ways to curb corporate tax avoidance, to be able to stop these anonymous shell corporations, which around the world are hiding these funds. And although we’ve seen some action, much of it has just been talk so far, I think at this particular summit, we’ve also heard that they’re reviewing these issues. This last summer here in Washington, President Obama and the White House hosted a very important Africa summit and one of the main drives that came out of that summit is the curbing of corporate tax avoidance evasion and corruption because right now, the developing world is losing $1 trillion a year to these illicit financial flows, to tax evasion, to corruption. And we’re looking at the question of Greece right now. We have to say that these issues are very much connected. Certainly, more austerity plans for Greece are not going to work. They can’t be part of the recipe. And there needs to be some real debt relief like we saw in 1953, ironically, with Germany when Germany had, what Germans call the Wirtschaftswunder, the economic miracle. That was a direct result of the 1953 London accord where all of the lenders, all of the creditors were brought together to London, not only was Germany given debt relief, but more important, Germany was given what the Greeks are asking for right now. And that is not even necessarily debt relief. It is to be able to extend those payments further in the future so that money can be invested in the people now. And that also deals with this tax issue, Juan, that you’re bringing up, because have to understand that in Greece, there are issues in terms of corruption and tax evasion that although the government has done a better job of collecting these monies, they need to also improve this in the future so that they can get out of the debt trap.
AMY GOODMAN: We’re going to take a break in a minute and we’re going to stick with Eric LeCompte and Gawain Kripke who’s in Bavaria right now. But Nomi, your final comment, as you leave, for what is most important for people to assess what comes out of this G7 summit?
NOMI PRINS: I totally was nodding to everything Eric was saying. That there has to be a moving over, of supporting the global financial system at the bank level, to supporting the global real economy at the foundation level, at the people up level. And whether that’s debt relief, bringing in taxes so they are not off shelter, de-leveraging the banking system, making it more transparent, cutting up the banks, making them responsible, because they’ve gotten all of this help, to the real economies. All of that has to be part of the play, otherwise, this continues and it just continues to hurt the economies least able and least getting all of the help from the top.
AMY GOODMAN: Nomi Prins, thanks for being with us. Former banker, author of, “All the Presidents’ Bankers: The Hidden Alliances that Drive American Power.” We’ll go back to Bavaria to speak with our guests. We’ll be speaking with Gawain Kripke of Oxfam America, about the issue of coal and Eric LeCompte with us in Washington, D.C. Stay with us.