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The EU’s disastrous status quo

The risk is of losing on both fronts, on a national level and a European level, where elections go by without shaking off the suspicion of usurpation.

Wolfgang Schauble and Yanis Varoufakis. Demotix/Bjorn Kietzmann. All rights reserved.Many believe that by resigning and asking for new elections to be held in September, Alexis Tsipras proved wrong those who considered him defeated. It’s a hasty and rather unrealistic conclusion to draw: nothing will fundamentally change in Greece, since everything was already written into the Memorandum of Understanding agreed between the Greek government and the European institutions on 12 July 2015: further and more severe austerity measures, the sell-off of valuable public assets to mostly German companies, the breakup of a political left that imagined it could replace the existing Europeanism with a new one, a Europe no longer German-led and no longer bound to neoliberal dogma.

Even if the Greek debt is restructured – as sooner or later must be the case, since it is unsustainable – the path has been mapped out. The Greeks had no say on it, and cannot change it. The remarks of Stefano Fassina, former deputy Finance Minister of Italy and former member of the Democratic Party, are uncompromising and incontrovertible: “To promise a ‘social’ interpretation of the Memorandum is pure propaganda. When you are committed to a primary surplus target of 3.5 percent and to heavy spending cuts from this year on, you can kiss goodbye to income support”.[1]

Was (or is) a different way out possible? Outside European institutions it was maybe possible, but unfeasible: neither the EU’s stronger states nor the ECB would today allow an orderly, managed Grexit. As for the proposal made by Yanis Varoufakis (rejecting the memorandum, preparing a parallel currency to provide liquidity in order to face the closure of banks), it was voted down during a restricted cabinet meeting. This being said, Tsipras seems convinced that internal reforms are possible, in the shadow of the Memorandum: for instance, by fully and directly involving the European Parliament, “the only European institution with a direct popular mandate”, in a regular evaluation procedure for the implementation of the loan agreement between Greece and the European Stability Mechanism, as the fifth body in the so-called ‘quartet of creditors’ which replaced the Troika. It’s difficult to believe that Greek voters will be excited by the prospect of their power being hollowed out and transferred to a European Parliament firmly controlled by radically different coalitions of forces. The outgoing Prime Minister is surely aware that in the present circumstances failure awaits him: otherwise he would not have admitted to having been “blackmailed” into capitulation.

We have to start from here, if we don’t want to get stuck in illusion or in impotent rage. We have to start from a failure which is a defeat for all: for Syriza, for Popular Unity’s new left, for Yanis Varoufakis, for Tsipras himself. In the present circumstances, the future is submission. Submission to an overtly Darwinist Europe that rewards the powerful and the arrogant and expands beyond measure the reign of necessity, reducing to a minimum and indeed smashing to bits the few islands reserved for the reign of liberty.

The socialist former Prime Minister George Papandreou, who negotiated with the EU the first Adjustment Programme, already realized that Europe was a matter of selective fight for survival, of  struggle between life and death, between those who hurt and those who get hurt. He later reported what Angela Merkel told him in 2010, during the first negotiations on the bailout program: “Es muss weh tun!” – “It must hurt!”.         

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Such is the astonishing experiment that is being attempted by the European Union using every available means, and not just in their relations with Greece but in the multiple different directions: a forced return to the state of nature and to the sacrificial rites connected to it.

The war of all against all, fear, the permanent suspicion that enemies – foreign or domestic – may be waiting just around the corner, ready to get rid of us or to take advantage of our diminished prosperity: this is what the crisis boils down to, and one may well wonder if it is not knowingly nourished and prolonged. There are countries, such as Germany, that in the last five years have greatly benefited from the crisis. According to a study by the Halle Institute for Economic Research (IWH) -  since 2010 the federal government of that country saved €100 billion, thanks to the low interest rates mainly as a result of the Greek crisis. [2]

Another disaster - the increase of immigrants - remains unaddressed and left to rot, treated as if it were a natural disaster or a plague of war which must take its course, whatever the number of victims. Most of the migrants are asylum seekers fleeing wars and chaos often fuelled by the West. But the law of cause and effect is too complicated for lazy European minds. It’s easier for them to get rid of their responsibilities by putting the blame on a scapegoat, thus creating the ultimate bogey man: the freeloader, the scrounger, the possible parasite, be it foreign or domestic, Greek or migrant.

In this peculiar state of nature the free market is everything and the measures adopted in Europe in order to preserve it enjoy the status of natural laws, inviolable and irrefutable, quite as if they were divine. The dominance of markets over politics gave rise to the crisis which began in 2007-2008, and yet the depoliticization of the world-economy grows undisturbed in the dull conviction that the poison may turn into a remedy. Both in the Mediterranean Sea where asylum seekers drown and in the countries most affected by the debt crisis, the return to the state of nature and war confronts us with a mankind which recalls the one described by Hobbes: the life of individuals, dominated by reciprocal fear and incapable of cooperating in order to face difficulties, is “solitary, poor, nasty, brutish, and short”.[3] Such conditions may give rise to revolutions or pave the way to an all-powerful Leviathan, to whom the individual surrenders his freedom in exchange for the illusion of security.

Significantly, Donald Tusk, President of the European Council, has recently warned of extremist political contagion from the Greek crisis. Pointing at a “widespread impatience”, he remarked that “when impatience becomes not an individual but a social experience of feeling, this is the introduction for revolutions”, and expressed concern for the “radical leftist illusion that you can build some alternative” to the current EU economic model. He argued that far-left leaders were pushing to cast aside traditional European values like “frugality” and liberal, market-based principles that have served the EU in good stead. Any resistance to these principles must be defeated: the Greek humanitarian catastrophe is, in this framework, just another form of “frugality”.

So much became clear on the night of 12 July: a night of retribution and revenge, already scripted in the wake of the 25 January Greek legislative election by the creditors who had negotiated a new aid package with Athens, aiming more or less secretly at a “regime change”. In the 5 July referendum the majority of Greeks said no to further austerity measures, and the agreement signed by Tsipras was all the more humiliating as a result. The path is penitential: stages of suffering are followed by promises of salvation. The sacrificial offering was necessary for the high ranks of the Union to start talking again about an improvement of governance in the eurozone, an increase of community resources, and even about federation.

As part of this path, the strengthening of institutions proposed by the German Finance Minister Wolfgang Schäuble has a precise meaning, and is far from promising. The new institutions are designed to depoliticize the Union even more, to bypass once and for all the revolutionary impatience exposed by Tusk. Syriza’s impatience was won over with the consent of Tsipras, who could not or maybe would not avert the left wing’s split from the party ahead of elections.

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If we don’t get to the roots of the wound inflicted on democracy and citizens’ rights, if we do not acknowledge that this wound has fatally broken the relationship between Europe’s unification and its popular legitimacy, if we keep insisting that the eurozone’s financial rules are sacrosanct and that no expression of popular sovereignty and no constitutional article can call them into question, stronger or new European institutions won’t help us free the Union from the state of nature and rediscover our reasons for living together with a common currency as a challenge to the dollar’s hegemony, but will strengthen the very ruling elites that brought us to this pass. Europe was born to put an end to centuries of fratricidal wars, and needs today a new bond to make sense of its unification. Only justice can constitute this bond, and justice implies the struggle against inequality and exclusion. EU unification falters because this bond is missing.

Even the proposal to give the European Parliament more powers, supposedly a good idea, risks turning into a trap. What’s at stake today is sovereignty, namely who has the right to decide on right and wrong, war and peace. And we are not talking about the sovereignty of nation-states, which has long lost its absoluteness, but of the sovereignty of the peoples, of their Parliaments and Constitutions, which have survived the decline of the old sovereign states. To reduce the latter, in the absence of a supranational sovereignty, amounts to linking the destiny of nation-states indelibly to the destiny of democracies, damning both and depriving democracy of any cosmopolitan aspiration.

Instead of powers being multiplied, as happens in federations, old powers and rights are being discarded, and new ones are created only in a fake form. Article 11 of the Italian constitution is very clear about that: limitations of sovereignty are accepted just as long as they are “necessary to establish an (international or supranational) order ensuring peace and justice among Nations”, not otherwise. Also Article 23 of the German Constitution (the so-called Europa-Artikel, introduced in 1992 after reunification) admits delegations of sovereignty only to the extent that the social, democratic, and legal principles applied in Europe are not inferior, in quality and quantity, to those ensured by Germany’s basic law.

This is not the path followed by those who envisage further delegations of sovereignty without carefully taking into consideration the dangers of social impoverishment and hollowed out democracy. The new Europe sought by part of the German government and supported, at least for the time being, by a majority of governments (including those of France and Italy), seems to have something else in mind: to legitimate the usurpation of popular sovereignties and the financial rules which facilitated it. Maybe the little, misanthropic kings of Europe will succeed in creating the federation sought by many democrats for more than a half century – a narrower and tighter federation, with or without a Grexit. But those kings will be usurpers, having deconsecrated the body of the sovereign people, stripping it of its powers, of the will it expresses in elections or in referenda, and of the constitutional rights guaranteed to the minorities.

All this leads to the strengthening of an élite which bears no concrete relationship to the classic procedures of representative democracy, and has no accountability. As a matter of fact, such an élite has been in power since the European Community chose to be just a market, a free trade zone, ready to give up its political ambitions and the inclusive social model advocated in post-war years (the welfare state), and lacking an autonomous foreign policy plan, both in the Mediterranean Sea, in the Middle East and in its relationships with Eastern European countries and Russia. European defense policy, although necessary, would be doomed to failure like the euro if it was built without accountability to a common government and to a common policy chosen by voters.

Some contend, not without foundation, that in a community framework, Greek popular sovereignty cannot possibly be worth more than the popular sovereignty of other member states. But it’s a lame argument: in this particular case, a will of the people has been completely ignored, a minority of the European Council has been brutally silenced, and the principles of constitutional democracy are now in a sorry state throughout the Union.

The negotiation with the Tsipras government was conducted to show that no popular will whatsoever can renegotiate the financial terms that according to the ruling oligarchies are bound to remain the core principles of the eurozone, the sole repositories of sacredness and sovereignty. The sovereignty of the citizen-voter – no matter his nationality – must be stripped of its sacredness.

If that is how things stand, Wolfgang Schäuble’s duplicity is not surprising: the arrogant, exemplary punishment meted out to Greece is consistent, from his point of view, with the stronger and tighter European Union he demands and promises. It even becomes its essential logical prerequisite. Schäuble has been promoting since 1994 a European Union built around a core – a Kerneuropa – with a joint finance minister and a joint and larger federal budget,[4] on condition that all partners accept German monetary and economic doctrines without altering them, even though the gap between center and periphery will inevitably produce crises and social sufferings. Was it not Jean Monnet, one of the founding fathers, who said that Europe would be built through crises? Well, the Greek crisis will produce –  according to the Berlin government – the long championed “other Europe”. In Schäuble’s approach, crisis doesn’t lead to increased levels of solidarity and democracy: it’s the doloristic, chastening, inferiorizing version of Schumpeter’s creative destruction.

Greek suffering has been useful – this is the point of the German government, supported by a majority of member states and by the EU institutions – and hitting one state to educate all the others has been morally instructive. The Mephistophelean evil inflicted or suffered is “part of that power which eternally wills evil and eternally works good”. Many supporters of Europeanism hesitate. What happened in Brussels during that fateful Greek night makes them uncomfortable. But Schäuble surprises them: is he aware of the evil that has been done? Has he learned anything?

It seems unlikely. Also the Lamers-Schäuble plan of 1994 has to be revised, given the following two decades. Even then, it stressed the purely economic nature of the Union. Today the plan is being proposed again, without acknowledging the mistakes made: starting from the enlargement of the Union to include Eastern European Countries, which was carried out mindlessly, with no clear idea of any future balance between the new member states’ sovereignty and EU sovereignty, and least of all of relations with Russia. The governments of Poland, of the Czech Republic and Slovakia have declared they will only relocate Christian Syrian refugees in their countries: the Charter of Fundamental Rights and the principle of non-discrimination still seem to pose some problem for Eastern Europe.

As regards the handling of the Greek crisis, no self-criticism is in sight. The International Monetary Fund expressed some doubts, while continuing to recommend the imposition of recessive measures, but the two other members of the former Troika – the European Commission and the European Central Bank – remained quite unmoved.

No doubt seems to trouble them. At most, they envisage – as was suggested by the President of the European Parliament Martin Schulz and again by the President of the European Commission Jean-Claude Juncker at the beginning of July – humanitarian aid for Athens. This was an offer no less humiliating than the 12 July agreement on a further swathe of austerity measures and economic reforms. Once again, after being crushed by deflationary disciplines, here was Greece being treated like a country hit by war or natural calamity. The tighter European Union aired after the straitjacket deal has at the moment two main goals: to sanction the moralising dogma of recessive austerity, euphemistically renamed “frugality”, and to face down the EU democracy crisis, only worsened after the Greek bailout referendum, while ensuring that a centralized and oligarchic material constitution survives any possible (and feared) democratic breakthroughs in member states (Greece today, maybe Spain tomorrow). Their main concern seems to be that governments and voters learn one lesson: “It must hurt!”

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A federation would of course be needed, in order to make the euro efficient and the crisis of a member state not terminal. Paul Krugman explains how Puerto Rico, virtually bankrupt like Greece, hasn’t suffered a complete catastrophe because it is part of the US fiscal union. When its economy faltered, its payments to Washington dropped while its receipts from federal social insurance programs rose, so that the island is automatically receiving aid on a scale that would be inconceivable in Europe.[5] The absence of a strong federal statehood is the Aristotelian proton pseudos, the original error or false premise which led to all the logical fallacies of the common currency.

Nicholas Kaldor wrote about this as early as 1971, highlighting the serious defects of the first attempt at European economic and monetary union (the so-called Werner Plan in 1970). According to Kaldor, a full monetary and economic union was “unattainable without a political union”, and the latter presupposed “fiscal integration, and not just fiscal harmonisation” as recommended by the Plan; it required the creation of a “Community Government and Parliament” which took over “responsibility for at least the major part of the expenditure now provided by national governments” and financed it “by taxes raised at uniform rates throughout the Community”.

It sounds almost like Schäuble’s Plan, except for the goal of the federal government as envisioned by Kaldor: “With an integrated system of this kind, the prosperous areas automatically subsidise the poorer areas; and the areas whose exports are declining obtain automatic relief by paying in less, and receiving more, from the central Exchequer. The cumulative tendencies to progress and decline are thus held in check by a ‘built-in’ fiscal stabilizer which makes the ‘surplus’ areas provide automatic fiscal aid to the ‘deficit’ areas”.[6] The present German government would see each of these conditions as heresy. The failing path chosen instead is to keep lending to Greece, thus increasing a debt burden that everyone agrees is completely unsustainable.

Kaldor’s argument contains an element that, albeit not emphasized, is maybe the most decisive and topical today. All the plans drafted by member states so far (Werner Plan, Maastricht Treaty and creation of the European single currency, more recent plans of “economic governance” of the eurozone) share this fundamental flaw. They are incapable of a realistic historical vision, and the farther they are from the end of World War II, the more they suffer from a particularly insidious case of progressivist illusion. The transformation of neoliberal economic laws (and of their social effects) into “natural” laws (and effects) feeds on the same illusion.

Why has the euro been celebrated with such blind optimism for so many years, despite all the flaws of which Chancellor Kohl in particular was perfectly aware? How come no preparation was made for the worst case scenario? Only a few insisted on the Union’s shortcomings: all the others firmly believed that the original flaw would be spontaneously, necessarily, naturally corrected (like a bumpy path is flattened by walking on it) and economic-monetary union would give birth to the political union it needed.

However, there is something rotten in progressive neoliberalism: as so often, political illusions are also forms of deceptions (those who delude and are deluded do not really want the United States of Europe they pay tribute to, and right from the outset they had in mind precisely this currency without a State, with the imbalance it creates in favour of the more powerful States and classes, who not surprisingly have variously benefited from the crisis).

This is where Kaldor, although he supported the monetary union, with what seems today tragic foresight deflates all kinds of illusions and carries out a realistic assessment: “Some day the nations of Europe may be ready to merge their national identities and create a new European Union [...] This will involve the creation of a ‘full economic and monetary union’. But it is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) ‘as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without’. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it”.[7]

Defending the proponents of economic theories established as dogmas, greatly reducing the role of positive law in the relationship between Law and Nature, between Nòmos and Physis, once more deluding increasingly reluctant peoples into believing in a providential history: this is the new European utopia, that pretends to be in continuity with post-war unifying projects while degenerating into dystopia. Old and new literary inventions come to mind: from the Crystal Palace of the Great Exhibition as described by Dostoyevsky’s underground man (the place where “new economic relations will be established, all ready-made and worked out with mathematical exactitude, so that every possible question will vanish in the twinkling of an eye, simply because every possible answer to it will be provided”), to Yevgeny Zamyatin’s One State and its compulsory “We”, to Michel Houellebecq’s extension of the domain of the struggle sought and planned by neoliberal capitalism.

In today’s EU dystopia, the world is not so much the postnational one called for by Jürgen Habermas and Ulrich Beck, as the post-democracy described by Colin Crouch: “'You can always vote, but you have no choice”.

The Greek people will soon go to the polls for the third time in a year, but to no purpose. A joint finance minister will control all the economic policies of the member states, hollowing out even more national parliaments and constitutions, with a view to making supranational power immune to the dangers of national elections or referenda. More formal powers will be conferred to a European Parliament which lacks the history of national parliaments, their role, and above all the possibility of interacting with an elected government. Mr Schäuble himself reveals his own ambiguity, when he calls for a greater sharing of sovereignty between the member states while at the same time saying that the European Commission overstepped its mandate during the negotiations over Greek loans, thus infringing on the competence of the Eurogroup.

This Eurogroup sums up the many flaws of the Union, having no legitimacy. Yanis Varoufakis, the former Greek Finance Minister, has recently commented on the behavior and role of the body defended by Mr Schäuble against Juncker’s alleged intrusions. The Eurogroup acts as an intergovernmental body, and among other things is called to implement a treaty – the so-called Fiscal Compact – which is not part of the treaties which govern the EU. Having been excluded from a gathering convened by the Eurogroup, which issued a statement without Greece’s consent, Varoufakis asked for legal advice on whether a Eurogroup statement can be issued without the conventional unanimity and whether the President of the Eurogroup can convene a meeting without inviting the finance minister of a eurozone Member State. He received a singular answer: “The Eurogroup is an informal group. Thus it is not bound by Treaties or written regulations. While unanimity is conventionally adhered to, the Eurogroup President is not bound to explicit rules”. The Eurogroup is not answerable to anyone. No minutes are kept. It doesn’t exist in law.[8] It symbolizes the deconstitutionalized and deparlamentarized Europe which has prevailed in these years, using the Greek case as a guinea pig for its experiments.

The intention is to strengthen this very kind of Europe, pretending that the wind of progress will carry us all towards the United States of Europe. It’s a sham. No wonder the Five President’s report – presented on 22 June 2015 by Commission President Jean-Claude Juncker with European Council chief Donald Tusk, the Eurogroup’s head Jeroen Dijsselbloem, the President of the European Central Bank Mario Draghi, and European Parliament President Martin Schulz (whose surprising involvement weakens the monitoring role MEPs could perform from the outside, in refusing to be dragged along by the executive power) – addresses the issue of political union, but only as the crowning and late achievement of an even tighter and more economically binding Union, not as its precondition.

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Under these circumstances, better not to delegate further sovereignties blindly, without carefully planning what is to be done in the eurozone, without re-establishing the absolute primacy of law and of the rights enshrined in the various national Constitutions and in the European Charter of Fundamental Rights. Such rights are today being systematically violated, bypassed or neglected.

Better not to delegate power to bodies (the Eurogroup) that have no democratic legitimacy and could even be illegal. Better not to sacrifice the veto power of member states, although the liberum veto is bound to hinder the creation of a political union. As a matter of fact, the risk is losing on both fronts. On a national level, parliaments and constitutions are hollowed out. On a European level, a legal and democratic vacuum arises: elections go by without undermining the governance of Europe, which for all its being called ‘federal’ won’t be able to shake off the suspicion of usurpation; won’t be strong or willing enough to confront the European Central Bank and make sure that the independence of the latter does not turn into abuse; will be unchecked, immune from the surprises of democracy, and clinging to motionless economic rules: even when these rules do not work, even when increasing numbers of citizens ask for new ones.

On 26 March 2015, in a speech at the Italian Parliament, the President of the European Central Bank, Mario Draghi, said that the long-term goal must be to move from a rules-based system to one based on stronger European institutions. But in Draghi’s view there is no question today that the rules can change. On the contrary, the role of institutions is to ensure the respect and perpetuation of present rules. These are the same rules that led to the violation of fundamental rights; that strengthen and preserve the status quo just when it would be necessary to move from governance to a real federal government, to give effective answers to the disillusioned demands of the peoples.

Draghi labels as unrealistic and fanciful both sovereignist solutions (“retrenching behind national borders would not solve any of the problems we face today”) and federalist alternatives (“an unrealistic vision of European integration is not the answer either. We are not a Union where some countries permanently pay for others. And to hope for this only distracts us from taking our responsibilities and facing our national challenges”). In other words: he wants to stay put.

Monnet once said that institutions are necessary because their life is longer than that of men and governments, and therefore, if they are well-designed, they can pass on the wisdom of successive generations. He didn’t say that institutions are necessary because they ensure the perpetuation of given economic doctrines. Those who today envisage a good “governance” of the eurozone without first overcoming a nonetheless precarious status quo, should be reminded of Kaldor’s admonition. Otherwise the Aristotelian proton pseudos, the first lie which led to all sorts of mental deviations, will endlessly repeat itself.

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[1]     Stefano Fassina, interview with Il Manifesto, 21 August 2015. See also interview with L'Unità, 22 August 2015.

[2]     IWH, Halle Institute for Economic Research  (http://www.iwh-halle.de/d/publik/iwhonline/io_2015-07.pdf), quoted by  Spiegel online, 10 August 2015 (http://www.spiegel.de/wirtschaft/soziales/deutschland-hat-100-milliarden-euro-durch-minizinsen-gespart-a-1047483.html).

[3]     Thomas Hobbes, Leviathan, chapter XIII.

[4]     Wolfgang Schäuble-Karl Lamers, Überlegungen zur europäischen Politik, 1 semptember 1994.

[5]     Paul Krugman, “America’s Un-Greek Tragedies in Puerto Rico and Appalachia”, New York Times, 3 August 2015.

[6]     Nicholas Kaldor, New Statesman, 12 March 1971, in: Further Essays on Applied Economics, New York 1978, p. 205. Italics mine.

[7]     Ibid., p. 206.

[8]     Yanis Varoufakis, interview with the New Statesman, 13 July 2015. Die Zeit article, 19 July 2015.

About the author

Barbara Spinelli is an Italian writer and journalist. She has been a columnist for Corriere della Sera, La Stampa and La Repubblica on issues of international and European politics. Since June 2014, she is member of the European Parliament in the GUE/NGL group. Her latest book is: "La sovranità assente" (Absent sovereignty), Einaudi 2014. She blogs at http://barbara-spinelli.it/.

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