The Suicide of Postwar Europe, Part Three: More Money Than God
In January 2008 international finance and currency markets were thrown into chaos when a series of apparently unconnected entities began vast and quick sell-offs of French government bonds. £629,000,000,000 worth of bonds were dumped in that month, resulting in an immediate spike in French borrowing costs and a tidy profit for the entities that had begun the sell-off. This was accompanied by a smaller move to dump Soviet bonds. Ahead of their third-quarterly all-parties meeting in June 2008, the board of the SWF confirmed that several subsidiary entities had engaged in a targeted “slimming down” of their total portfolio of foreign government bonds and currency.
Even before it was known who was behind the dumping, the sudden shorting of the Franc caused immediate problems for the Sixth Republic, which was not only having to deal with its vast military commitments in Yugoslavia but which had also managed to hold down domestic discontent through a mixture of an expensive internal security apparatus and extremely low levels of taxation. Combined with a general economic slow-down caused by the ongoing crisis in Yugoslavia, the French economy tipped into recession in the first and second quarters of 2008. With borrowing costs rising, the government was forced to turn to the World Bank as its main supplier of credit but the board, chaired by the American Timothy Geithner, was unwilling to extend loans unless they came with stringent conditions attached. This, in turn, only made matters worse if France sought further credit on international markets.
In October 2008, matters were exacerbated by, firstly, a series of seemingly-coordinated denial of service attacks that crippled the French banking system and, secondly, the discovery of a malicious computer worm inside the French military SCADA systems that is believed to have caused substantial damage to the communication and coordination of the armed forces and internal security service. The hand of the Commonwealth behind this was suspected, of course, but never proven. In a joint meeting of the French cabinet, senior generals and financial regulators, Le Pen ordered the carpet bombing of London in retaliation for the SWF’s actions. However, Chief of Staff Jean-Louis Georgelin refused to obey the order and instead ordered Le Pen’s immediate arrest. With Le Pen’s daughter Marine siding against her father, he was removed and she proclaimed president in his stead the same day. (Georgelin’s role in this has come under scrutiny in the years since, with unreconstructed National Front hardliners throwing conspiratorial glances at his previous associations with more moderate Republican figures.)
Marine Le Pen’s first action as president was forced on her: ordering the Bank of France to impose a partial deposit freeze. While this was necessary to prevent the flight of hard currency, this unfortunately meant that France was now no longer meeting its obligations under its World Bank loan, and Geithner took great pleasure in putting the pressure on. At the end of October, in a climate of severe political and social unrest, France defaulted on its World Bank obligations, followed by a general default on its debt and the formal abandonment of the convertibility of the Franc two weeks later.
The ensuing economic and political crisis was arguably worse than the ill-fated period of the Fifth Republic only a decade previously. By the end of 2008, the economy had contracted by 20% since 2003. Since the Monuments Bombing in June 2005, French output had fallen by more than 15%, the Franc had lost three-quarters of its value and unemployment exceeded 25%. Income poverty had grown to 55% of the population at the time of the default. This was simply not a sustainable level in a democracy (even though the Sixth Republic could only very generally be described as democratic) and widespread social unrest erupted across the country. The riots soon escalated to include property destruction, often directed at banks. Confrontations between the police and rioters were common, with Marine Le Pen claiming that they were all wreckers paid by British and Jewish interests (which wasn’t totally untrue, in fact, as the British government had provided sanctuary for French dissidents since 1996 and the Five Eyes Agency began to arrange for their return to France in the winter of 2008/09). A particularly violent incident occurred in the Place de la Republique on 20 and 21 January 2009, in which 39 people (including 6 children) were killed by police and 227 injured.
The following day, 22 January 2009, an estimated 40,000 people, calling themselves ‘La France Insoumise’ and led by the dissident politician Jean-Luc Melenchon, marched on the Élysée Palace. At the sight of the mob, the guards surrendered without firing a shot and, when the mob entered the palace, they found that it had been abandoned by the government. Le Pen and her circle emerged three days later in Petrograd but by that point things were too late. Melenchon propagated a new constitution on 23 January and the following day his skeleton government received a delegation of Commonwealth diplomats. In response, the internal security and police forces effectively went on strike in order to drown the new government in civil unrest.
However, they had miscalculated. Whatever conservative support might have existed for the overthrow of socialism in 1995 and 1996 had now withered under the harsh conditions imposed by the Sixth Republic. The business community were repulsed by Le Pen’s rhetorical attacks on ethnic minorities, not to mention the support he gave to the semi-regular pogroms organised by ‘off-duty’ policemen. Many fled to the Department of the Maghreb, which - with the safety of the Mediterranean between it and mainland France - had become something of a haven for certain tolerated dissidents. The small-town ‘France profonde’ which had been so crucial in bringing Le Pen to power now also abandoned him due to a combination of economic chaos and a disastrous foreign policy that had done the exact opposite of fulfilling Le Pen’s promise to restore French international prestige. Instead of collapsing into chaos, French public life became dominated by peaceful sit-ins around the country, which grew from simple protest movements to become informal communities in public spaces. Critics of the new French regime were furious when the press revealed that two members of the Commonwealth delegation were Sir Crispin Odey and Sir Mark Carney, the chairman and deputy chairman, respectively, of the SWF. In short order, the SWF had arranged for a fresh line of credit to be extended to the new French government, the fund having made a significant profit on its shorting of the French sovereign debt only a year previously.
A referendum on 2 February returned a 96.4% vote in favour of the new constitution (critics noted that this was almost exactly the same percentage as Napoleon III had won in 1852) and the Seventh French Republic was declared the following day. With all assembly members from the Sixth Republic proscribed from election, the Seventh Republic was an immediate and radical repudiation of the majority of France’s economics and politics since 1945. Among its most notable moves was Melenchon’s order to immediately withdraw French troops, weapons and money from Yugoslavia, calling for peace talks. Oskar Lafontaine also returned to government as the Foreign Minister and immediately set out to fix where he had failed in 1996: declaring the French Union at an end and urging democratic elections in the other members. Unlike in 1996, on this occasion the other members of the French Union chose not to intervene militarily, perhaps put off by the sight of senior Commonwealth diplomats standing on the steps of the Élysée shaking hands with the new regime.
The political response in the Soviet Union was scarcely as dramatic but was by no means less important. The lower level of financialisation of the Soviet economy meant that the economic problems caused by the shorting of its bonds did not create as serious an issue for the country. However, borrowing costs did rise and this put pressure on its ability to keep up its military commitments in Yugoslavia. In March 2009, Gennady Yanayev was gently eased out of his position as Premier (he spent the remaining year of his life as Chairman of the Soviet Tourist Board) and was replaced by Vladimir Putin. Putin used his room to maneuver to agree an armistice with NATO which came into force on 1 June 2009.
Following the armistice, secret negotiations were held in Stockholm, hosted by the Nordic Union and chaired by the UN. This was followed by a public peace conference the following month in Kirkuk. This resulted in the United Nations Agreement on the Former Yugoslavia (commonly known as the “Kirkuk Accords”), which appeared in November 2009. A lengthy and complicated document, the main point of the Accords was to effectively abolish Yugoslavia as a country, order the withdrawal of all foreign troops from its territory and place it under the governance of a UN board (made up of a representative of every permanent member of the Security Council and 15 members selected from the other members of the General Assembly) which would manage the territory in advance of a series of referendums to determine its future direction.
The whole Yugoslav War was a sorry affair: conceived in the tragic murder of innocents by terrorists, it had turned into a bloodbath where, by the end of it, few people were left sure of what they were fighting for. What could be said for NATO was that, under the Kirkuk Accords, it did secure the extradition of the Yugoslavian masterminds of the Monuments Bombings (along with Lyndon LaRouche, who was implicated as an influence in the attacks but who would later be acquitted at trial). When the extradited individuals were later put on trial for murder in a Philadelphia courtroom, many praised it as a victory for the decency and the process of American justice. But over 16,000 American soldiers, sailors and pilots had died in the killing fields of Yugoslavia, as well as nearly 3,000 from other NATO countries. Was that a fair trade? It seemed at least debatable.
Similarly, the white supremacist neoliberal regime in France had wandered decisively into its own suicide, killing over 4,000 of its sons and giving birth to an explicitly socialist regime that repudiated everything it stood for. In the Soviet Union, things hadn’t gone as badly as it had for France, and many (including Putin) could congratulate themselves on finessing a reasonably elegant exit from Yugoslavia, considering where they had been in the middle of 2008. But few could deny that it was another embarrassing bloody nose for the regime. Even the governing classes of Brazil and China, who attracted praise for their skilful diplomatic containment of the war, were now looking closely at their bond spreads to try and gauge precisely how much was owned by the Commonwealth or the SWF.
And it was the Commonwealth and the SWF that were about the only entities who came out of this fiasco well, with their true power now laid bare for the world to see. A Nordic academic paper, published in 2010, suggested that the SWF now owned 10% of all issued shares in the world. This was probably an exaggeration but, after all, who would know?
In January 2008 international finance and currency markets were thrown into chaos when a series of apparently unconnected entities began vast and quick sell-offs of French government bonds. £629,000,000,000 worth of bonds were dumped in that month, resulting in an immediate spike in French borrowing costs and a tidy profit for the entities that had begun the sell-off. This was accompanied by a smaller move to dump Soviet bonds. Ahead of their third-quarterly all-parties meeting in June 2008, the board of the SWF confirmed that several subsidiary entities had engaged in a targeted “slimming down” of their total portfolio of foreign government bonds and currency.
Even before it was known who was behind the dumping, the sudden shorting of the Franc caused immediate problems for the Sixth Republic, which was not only having to deal with its vast military commitments in Yugoslavia but which had also managed to hold down domestic discontent through a mixture of an expensive internal security apparatus and extremely low levels of taxation. Combined with a general economic slow-down caused by the ongoing crisis in Yugoslavia, the French economy tipped into recession in the first and second quarters of 2008. With borrowing costs rising, the government was forced to turn to the World Bank as its main supplier of credit but the board, chaired by the American Timothy Geithner, was unwilling to extend loans unless they came with stringent conditions attached. This, in turn, only made matters worse if France sought further credit on international markets.
In October 2008, matters were exacerbated by, firstly, a series of seemingly-coordinated denial of service attacks that crippled the French banking system and, secondly, the discovery of a malicious computer worm inside the French military SCADA systems that is believed to have caused substantial damage to the communication and coordination of the armed forces and internal security service. The hand of the Commonwealth behind this was suspected, of course, but never proven. In a joint meeting of the French cabinet, senior generals and financial regulators, Le Pen ordered the carpet bombing of London in retaliation for the SWF’s actions. However, Chief of Staff Jean-Louis Georgelin refused to obey the order and instead ordered Le Pen’s immediate arrest. With Le Pen’s daughter Marine siding against her father, he was removed and she proclaimed president in his stead the same day. (Georgelin’s role in this has come under scrutiny in the years since, with unreconstructed National Front hardliners throwing conspiratorial glances at his previous associations with more moderate Republican figures.)
Marine Le Pen’s first action as president was forced on her: ordering the Bank of France to impose a partial deposit freeze. While this was necessary to prevent the flight of hard currency, this unfortunately meant that France was now no longer meeting its obligations under its World Bank loan, and Geithner took great pleasure in putting the pressure on. At the end of October, in a climate of severe political and social unrest, France defaulted on its World Bank obligations, followed by a general default on its debt and the formal abandonment of the convertibility of the Franc two weeks later.
The ensuing economic and political crisis was arguably worse than the ill-fated period of the Fifth Republic only a decade previously. By the end of 2008, the economy had contracted by 20% since 2003. Since the Monuments Bombing in June 2005, French output had fallen by more than 15%, the Franc had lost three-quarters of its value and unemployment exceeded 25%. Income poverty had grown to 55% of the population at the time of the default. This was simply not a sustainable level in a democracy (even though the Sixth Republic could only very generally be described as democratic) and widespread social unrest erupted across the country. The riots soon escalated to include property destruction, often directed at banks. Confrontations between the police and rioters were common, with Marine Le Pen claiming that they were all wreckers paid by British and Jewish interests (which wasn’t totally untrue, in fact, as the British government had provided sanctuary for French dissidents since 1996 and the Five Eyes Agency began to arrange for their return to France in the winter of 2008/09). A particularly violent incident occurred in the Place de la Republique on 20 and 21 January 2009, in which 39 people (including 6 children) were killed by police and 227 injured.
The following day, 22 January 2009, an estimated 40,000 people, calling themselves ‘La France Insoumise’ and led by the dissident politician Jean-Luc Melenchon, marched on the Élysée Palace. At the sight of the mob, the guards surrendered without firing a shot and, when the mob entered the palace, they found that it had been abandoned by the government. Le Pen and her circle emerged three days later in Petrograd but by that point things were too late. Melenchon propagated a new constitution on 23 January and the following day his skeleton government received a delegation of Commonwealth diplomats. In response, the internal security and police forces effectively went on strike in order to drown the new government in civil unrest.
However, they had miscalculated. Whatever conservative support might have existed for the overthrow of socialism in 1995 and 1996 had now withered under the harsh conditions imposed by the Sixth Republic. The business community were repulsed by Le Pen’s rhetorical attacks on ethnic minorities, not to mention the support he gave to the semi-regular pogroms organised by ‘off-duty’ policemen. Many fled to the Department of the Maghreb, which - with the safety of the Mediterranean between it and mainland France - had become something of a haven for certain tolerated dissidents. The small-town ‘France profonde’ which had been so crucial in bringing Le Pen to power now also abandoned him due to a combination of economic chaos and a disastrous foreign policy that had done the exact opposite of fulfilling Le Pen’s promise to restore French international prestige. Instead of collapsing into chaos, French public life became dominated by peaceful sit-ins around the country, which grew from simple protest movements to become informal communities in public spaces. Critics of the new French regime were furious when the press revealed that two members of the Commonwealth delegation were Sir Crispin Odey and Sir Mark Carney, the chairman and deputy chairman, respectively, of the SWF. In short order, the SWF had arranged for a fresh line of credit to be extended to the new French government, the fund having made a significant profit on its shorting of the French sovereign debt only a year previously.
A referendum on 2 February returned a 96.4% vote in favour of the new constitution (critics noted that this was almost exactly the same percentage as Napoleon III had won in 1852) and the Seventh French Republic was declared the following day. With all assembly members from the Sixth Republic proscribed from election, the Seventh Republic was an immediate and radical repudiation of the majority of France’s economics and politics since 1945. Among its most notable moves was Melenchon’s order to immediately withdraw French troops, weapons and money from Yugoslavia, calling for peace talks. Oskar Lafontaine also returned to government as the Foreign Minister and immediately set out to fix where he had failed in 1996: declaring the French Union at an end and urging democratic elections in the other members. Unlike in 1996, on this occasion the other members of the French Union chose not to intervene militarily, perhaps put off by the sight of senior Commonwealth diplomats standing on the steps of the Élysée shaking hands with the new regime.
The political response in the Soviet Union was scarcely as dramatic but was by no means less important. The lower level of financialisation of the Soviet economy meant that the economic problems caused by the shorting of its bonds did not create as serious an issue for the country. However, borrowing costs did rise and this put pressure on its ability to keep up its military commitments in Yugoslavia. In March 2009, Gennady Yanayev was gently eased out of his position as Premier (he spent the remaining year of his life as Chairman of the Soviet Tourist Board) and was replaced by Vladimir Putin. Putin used his room to maneuver to agree an armistice with NATO which came into force on 1 June 2009.
Following the armistice, secret negotiations were held in Stockholm, hosted by the Nordic Union and chaired by the UN. This was followed by a public peace conference the following month in Kirkuk. This resulted in the United Nations Agreement on the Former Yugoslavia (commonly known as the “Kirkuk Accords”), which appeared in November 2009. A lengthy and complicated document, the main point of the Accords was to effectively abolish Yugoslavia as a country, order the withdrawal of all foreign troops from its territory and place it under the governance of a UN board (made up of a representative of every permanent member of the Security Council and 15 members selected from the other members of the General Assembly) which would manage the territory in advance of a series of referendums to determine its future direction.
The whole Yugoslav War was a sorry affair: conceived in the tragic murder of innocents by terrorists, it had turned into a bloodbath where, by the end of it, few people were left sure of what they were fighting for. What could be said for NATO was that, under the Kirkuk Accords, it did secure the extradition of the Yugoslavian masterminds of the Monuments Bombings (along with Lyndon LaRouche, who was implicated as an influence in the attacks but who would later be acquitted at trial). When the extradited individuals were later put on trial for murder in a Philadelphia courtroom, many praised it as a victory for the decency and the process of American justice. But over 16,000 American soldiers, sailors and pilots had died in the killing fields of Yugoslavia, as well as nearly 3,000 from other NATO countries. Was that a fair trade? It seemed at least debatable.
Similarly, the white supremacist neoliberal regime in France had wandered decisively into its own suicide, killing over 4,000 of its sons and giving birth to an explicitly socialist regime that repudiated everything it stood for. In the Soviet Union, things hadn’t gone as badly as it had for France, and many (including Putin) could congratulate themselves on finessing a reasonably elegant exit from Yugoslavia, considering where they had been in the middle of 2008. But few could deny that it was another embarrassing bloody nose for the regime. Even the governing classes of Brazil and China, who attracted praise for their skilful diplomatic containment of the war, were now looking closely at their bond spreads to try and gauge precisely how much was owned by the Commonwealth or the SWF.
And it was the Commonwealth and the SWF that were about the only entities who came out of this fiasco well, with their true power now laid bare for the world to see. A Nordic academic paper, published in 2010, suggested that the SWF now owned 10% of all issued shares in the world. This was probably an exaggeration but, after all, who would know?