25 June, 2022


Europe smoulders, the Middle East burns and lesson for us

By Kumar David –

The governments of Greece, Italy and Spain have fallen; in the first two non-political economic technocrats have taken over as Prime Ministers, in the third a Centre-Right party has won the elections. None of the three can successfully address the systemic crisis of the Eurozone economies. They will run to the ground in a matter of months.

Dr. Kumar David

The roots of the crisis lie in capitalism and manifested as huge government and private sector debts, decline of growth below 1% (negative in Greece), massive unemployment, the nightmare of being unable to pay pensions, and the prospect of defaulting on debt. Banks and global investors, the so called market, has lost confidence and is demanding very high interest rates on loans, but these countries will be forced to default if this goes on. They don’t have the earnings to pay obligations. The only way the new governments can try to deal with the problem is by imposing biting and hateful austerity measures on the common people. When they try to do this they already face uprisings on the streets. There is no way out on a capitalist road.


The contagion will spread to America and the rest of the world. In the case of America it is re-infection even before it has recovered from the 2008 financial crisis. What is now new is the implication for China and India. China is suffering from loss of export

The contagion from the New Depression which is now in swing in the West has spread to Asia’s big powers. It will soon arrive at Lanka’s doorstep.

markets and a threat to its foreign reserves in Eurobond holdings if the Eurozone collapses. China tried to stimulate the domestic market as a substitute for export reliance. In theory this is good for the Chinese people, but what happened is that Provincial Governments mismanaged the billions of Yuan they were given for development projects, and party and government bureaucrats stole the rest. Now there is inadequate output from the Yuan printing exercise and inflation and the housing market are going out of control. There is mounting anger among the people.

The situation in India has been declining fast in the last few weeks. The Indian stock market was at its lowest in two years and the rupee at its lowest since 1973 if we look at the statistics on November 24. The contagion from the New Depression which is now in swing in the West has spread to Asia’s big powers. It will soon arrive at Lanka’s doorstep.


Egypt is going through its second February Revolution; Syria is in the throes of an uprising to make its first February Revolution. What we mean by a February Revolution is the overthrow of a dictator or a military regime to establish a democratic state, in contrast to an October Revolution which has socialism as its objective. The first Egyptian Revolution chased out Mubarak, but instead of democracy what the country got was an equally, if not more oppressive, military regime. There are more killings, political prisoners and human rights violations by the military regime in the last nine months than in any prior period of similar duration. There is a reason why the military is determined not to give way to a democratically elected civilian government. Top army generals control business empires; the army runs industries, benefits from local and foreign trade and pays no taxes. The generals will fight tooth and nails before they give up the privileges of Egyptian military-capitalism.

The most important lesson for us in Lanka to learn from Egypt is: Never let the army into economic or civilian affairs, never let it run businesses, never let it meddle in urban development or city affairs.

The Supreme Military Council’s has now proposed a Supra Law, above the constitution which is still to be drafted, vesting power over the civilian government in the military. Obviously a second revolution started! Without a determined Marxist leadership with a clear programme, the outcome is uncertain, but the balance of power is favourable for the people because these are extraordinary times all over the world.

The most important lesson for us in Lanka to learn from Egypt is: Never let the army into economic or civilian affairs, never let it run businesses, never let it meddle in urban development or city affairs.

The overthrow of the Bashir al-Assad dictatorship in Syria is a complex matter because of international factors. Syria is located in a strategically important region; there is Israel on one side and any foreign intervention will spark a new type of Arab anxiety; there is Iran on the other side which wants to protect the Alawite regime in Damascus for reasons of Sunni-Shia sectarian animosity. Nevertheless Turkey has taken the lead in calling for the removal of Assad and the Arab League is also applying pressure. The Syrian people with international help, mainly Arab and Turkish, can overthrow this blood soaked killer. The most significant new development is the split in the Syrian Army and the formation of the Free Syrian Army which is already said to be 15,000 strong and has both light and heavy weapons.

This article is provided by “Anik Pituwa” team

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Latest comments

  • 0

    Sir, you are more liable to charged by GOSL as Tissanaiyagama was for a similar publication?

    Pray the White-van is “kotta uda”.

  • 0

    your reporting is ok and your solution is not.I think the first casualty of this global tide started with the collapse of soviet union and marxism.Do not forget that the west
    europe is still absorbing a huge chunk of the east which was left high and dry as a
    consequence of towing the line of socialism.Marxism can beautifully wrap up ugly contents.

  • 0

    The problem here is not captalism. The problem here is greed and cheat on rules and regulations. The simple explanation is as follows; When a loan is given, the lending party should make sure that the party receiving the loan has the capability to pay in reasonable risk situations. It was not followed in housing loans in USA. Now it has not been followed in government loans to GREECE, ITALY, SPAIN. Why does this happen;

    First thing is that a loan broker is there. He does not care whether the receiving party pays the loan or does have the ability to pay. This broker or back door dealer needs only his commission. He cocks the books, make fake numbers, tap at right doors get the loan to you. He gets his commission he is out of the picture. Now the bank or financial institution who gave the money also does not care whether the party took the loan is going to pay or not on the loan run. What the bank does is that they dress up these loans in to one bundle and sell it out to another institution or in a bond market. Every ones makes quick greedy money and keep passing on the ball to another.

    But there is a reality. Person who took the loan without capability to pay is going to default. At this time no one wants to lend more money or renew those loans for the party who has taken the loan. Look funny terms used to lend money;

    a) In USA people who couldnot actually own a house were given loans with terms that they have to pay only the interest for many years to come. Nothing on the capital. The theory was that pay only the interest; enjoy the house; when house price go up you can sell the house and make a profit too. What will happen if everyone does this and soon house prices started to go down.

    b) In Europe the big players GERMAN, FRANCE wanted to sell their products to less industrized countries in the euro such as SPAIN and GREECE. So the GERMAN banks (mainly) gave soverign debt loans to government and big companies in SPAIN and GREECE to buy and enjoy their products. Government of GERMAN and FRANCE thought we are making double profit here. Our industries selling products to GREECE, SPAIN, etc and our banks our going to make interest income on the loans given to them to buy these products. Will last how long;

    Time to face reality!!!

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