Can Europe Make It?

The idea you can skip the nation-state is dangerous

DiEM25, the movement to democratize the European Union, is urged to rethink its approach, taking events of the last two years properly into account. Interview.

Lotta Elsted Thomas Fazi
11 April 2016
French Labour Minister El Khomri, PM Valls, Economy Minister Macron, talk to MEDEF and CGT, March 2016.

French Labour Minister El Khomri, PM Valls, Economy Minister Macron, talk to MEDEF and CGT, March 2016. Thibault Camus /Press Association. All rights reserved.

Thomas Fazi (TF): Regarding Varoufakis’ movement, I don’t deny that totally rewriting the international system in a radical way would be great, and I think that is what we should aim for in the long run. But this idea that some people in the European left have, that you can somehow skip the nation-state and change things directly at the regional or even global level, without, for example, being bothered with winning elections at home – not only do I think this is wrong, I think it is dangerous. What are the chances of this happening? Or better, what are the chances of this happening peacefully?

It could be the last nail in the left’s coffin. We have already lost terrain to the extreme right all over Europe. The reasons for this are of course various, but it is partly because these movements and parties are the only ones who are willing to use the ‘n-word’: to speak of the ‘nation’. So unless we develop a progressive, well, a progressive nationalism sounds quite bad, so we definitely need to find a better word, but we have to develop a progressive agenda that understands that change – especially in the eurozone – must first happen at the national level. If not, we are doomed.

Lotta Elstad (LE): In what way?

TF: I believe that today we are facing two scenarios. The first one is increased disillusionment, the increased feeling of detachment from politics caused by the technocratisation and centralisation of power at the European level, which will eventually obliterate what is left of even formal democratic processes. In many ways, this is the situation we are already in today.

The second scenario is that the system simply breaks up: that the EU collapses under the weight of its own contradictions, inconsistencies and injustices. This collapse can come from outside, through a new financial crisis that the eurozone is unable to handle. Or it can come from below. Imagine that a truly right-wing, nationalistic party took power in one of the bigger European states. France is the most obvious example, with a Le Pen victory and a subsequent exit from the eurozone. If this happens, it could certainly bring the whole system down, and in that scenario the left would find itself totally unprepared.

Therefore I think the following: it is not so much about what we want any more. About what would be the ideal solution. In many ways I agree with Yanis Varoufakis. What he suggests is the best solution: a federal system with a central fiscal authority that would support productive investment in each country and a policy of full employment while guaranteeing currency stability, and so on. Of course, a progressive, Keynesian eurozone would be fantastic. But we also need to be pragmatic. What are the chances of this happening? Or better, what are the chances of this happening peacefully? If anything, this is something that may come about after a crisis, after the eurozone, as it is constructed today, has collapsed.

LE: In your book, The Battle for Europe, you held a different position. Tell us about that. 

TF: Yes, in my book I took what we could call a classic progressive federalist position. I argued that a unilateral exit by any single country would have disastrous consequences, and that this alternative should be avoided almost at all costs – unless the right conditions were first created at the national level. In that book, I said ‘Look, let’s give it a chance, let’s try to change Europe’, and this is still what I hope for in the long term. What has changed, though, is, well – these last two years. 

LA: The defeat in Greece, you mean?

TF: The SYRIZA experience was very educational for me. Many on the left, including me, believed that a SYRIZA government would somehow lead to a continental wave of change. That just the thought of one country leaving the eurozone would be enough to put pressure on the European powers to come to an agreement. Instead we saw the opposite happening. Never before did we see the European leaders reacting in such an aggressive way as they did towards SYRIZA. We saw the European Central Bank (ECB) playing with fire, singlehandedly creating a bank run in Greece – creating conditions that could have easily led to an ‘accidental exit’. Then Germany’s Minister of Finance Wolfgang Schäuble came along and said he was for a Greek exit, and that changed the cards on the table completely.

We witnessed how uncompromising the current German political establishment has become. They no longer believe in a ‘European Germany’. Clearly they want a ‘German Europe’, and during the negotiations Schäuble actually gained popularity in Germany for his tough stance towards Greece.

With this I am trying to say that, given the current political context, even if we somehow managed to forge some kind of magical alliance between, let’s say, the Mediterranean and periphery countries against austerity, which agrees upon a platform for change, and those countries were to go to Germany and say ‘Listen, you either accept these reforms or the eurozone will collapse’, well… then I think Germany would choose the latter. And this leaves the European left in a paradoxical situation. Basically it means that even if we obtain the conditions for a reform of the eurozone, it is precisely these conditions that will lead to the union collapsing.

LA: Unless there is a political shift in Germany…

TF: Of course, but no country can tie its destiny to what the voters in another country, in this case Germany, decide. That is unsustainable. Even when I advocated a federalist solution, I meant that what we needed first was to gain power in our own countries, and then create an alliance of states: whether you want to leave the euro or to reform the eurozone, the battleground for me was always primarily the national level. A radical economic policy, for full employment, for workers... I think only individual, national governments at this time can implement.

Of course you need transnational alliances between people and movements and workers and so on, but none of these groups can in the end implement any type of change unless it is translated into an alliance between nation-states. I don’t see how else the reforms we want could come about, given that the decisions in Europe are taken at an intergovernmental level.

Varoufakis’ stance on this is quite unclear. It is not obvious how he thinks that we can obtain these changes, though he clearly rejects the national level as the place to focus on. But if not there, where? In the European Parliament? Do we seriously think that it is through this institution that we can change Europe? We could have a 100 per cent socialist European parliament, but to be honest I don’t even think that would be enough, given the current institutional arrangements (such as the radical independence of the ECB, etc.).

LA: If I have understood you correctly, you question the DiEM25 strategy on two levels. One is what you have spoken of so far, which is the approach of having a pan-European strategy. But you are also critical towards the goal in itself: that the solution they suggest can lead to a supranational democracy. What do you mean by this?  

TF: Many of those who define themselves as progressive federalists, who say they want a ‘United States of Europe’, always have a hard time giving concrete examples of what this would look like. Ideally I share the federalist vision. But would I be comfortable delegating the decision-making process on all big economic, financial and monetary questions to Brussels or Frankfurt? One can to a certain extent argue that it is already like this, but formally countries still have some power.

And even if we were able to create something that is more democratic than what we have today… You know, federalists usually argue that the European Parliament should have more power, and that this institution should be the main organ for decision-making in the union, but if we look at today’s composition of the European Parliament ­– with a conservative majority in some kind of grand coalition with the Social Democrats who largely share much of their ideological convictions, even on issues like austerity – I would ask: do we really believe that this parliament would have treated Greece any better? To be honest, no, I don’t think it would have.

The first thing that we now need is for European citizens to be put into a position where they can once again imagine a better future. And maybe in the long run be able to imagine a future where decisions are made at the European, and not national, level. But to do this people must first stop having to worry about feeding their family. This requires a radical economic policy, for full employment, for workers, which I think only individual, national governments at this time can implement.

LA: But the precondition for this is to go back to one’s own national currency?

TF: Look, technically speaking it is of course possible to achieve all this at the European level. The ECB could easily finance a coordinated reflation of all member states. It could support a policy for full employment across Europe. Just think if the ECB spent the money that it is currently printing through the quantitative easing program on this instead of channelling it into the financial system. We are talking about an enormous amount of money – 80 billion euros per month – that the ECB is creating out of thin air. This is how central banks operate nowadays. With Germany out of the picture, the leading country in Europe would be France, and the French socialists are perhaps even more neo-liberal than the German Christian Democrats.

We could juxtapose this amount with media reports on the ‘100 million that the EU has finally agreed to give Greece’ to deal with the refugee crisis… I mean, this idea that we have no other choice than to impose austerity because we are running out of money is the most absurd concept ever.

But to get back to your question: technically we could implement a radical economic policy at the European level tomorrow. The question is: is it politically achievable? I am sad to say but I have concluded that it is not. I don’t see Germany supporting a massive fiscal stimulus all over Europe. A third alternative is of course for Germany to leave the Eurozone. This could be interesting. But if we look at the situation in other countries, there is little reason to hope that this would lead to an ideal eurozone. With Germany out of the picture, the leading country in Europe would be France, and the French socialists are perhaps even more neo-liberal than the German Christian Democrats. In other words, we have few reasons to believe that anything progressive could come out of a France-driven eurozone.

LA: Okay. So, to get this clear: technically it would be possible to implement a progressive Keynesian policy at the pan-European level for the entire eurozone, but politically it is not. But would it be possible for any single country within the eurozone to autonomously pursue a progressive strategy?

TF: The question is interesting because it is a gamble. Let us imagine this: Italy could announce that next year it is going to implement a big debt-financed fiscal stimulus. The question is then: how would the ECB react? Italy would need the support of the ECB from here onwards, to avoid paying an excessive interest rate on its newly issued debt. But supporting Italy’s move would mean for the ECB to go against everything that the eurozone represents, such as fiscal responsibility, and so on and so forth.

On the other hand, the ECB could easily crush Italy’s plans by bringing its banking system to a halt, just as it did in Greece. But this would mean really risking a potential disaster. A Greek exit might have been possible to handle, but an Italian exit? What are we… the eighth biggest economy in the world? It would be a massive global event. And it would be a hard choice to make for Mario Draghi. I would love to see how he would react. But to answer your question: yes, technically a member state of the eurozone could announce a fiscal stimulus – but whether the ECB would support it or not, that remains to be seen.

But any government willing to try this must of course be prepared to leave the eurozone. Which the Greek government was not. You don’t need to have exit as your first choice, but anyone reaching this point must be prepared to make that choice, psychologically and technically. And potentially it could be catastrophic; there is no reason to deny this. It is all a matter of how it is handled. So when Varoufakis claims that a collapse of the EU will inevitably lead to a new crisis like in the 1930s, I think he is playing dirty. He simplifies the arguments and uses the same scaremongering tactics that the eurocrats use every time someone tries to suggest an alternative way of doing things.

LA: But as you said: all this requires that the right national conditions are present first. Are they now? Or do we risk playing the ball into the court of the extreme right?

TF: For most countries I would say: no, the conditions are not there. I wouldn’t advocate for any country to leave tomorrow. I believe that a neo-liberal or a neo-fascist exit would be just as, if not more, disastrous than what the peripheral countries are experiencing in the eurozone today. Not even in the countries with strong left movements, like Spain or Portugal, do we see the necessary conditions.

Here there is a political obstacle: the progressive parties are biased against an exit from the eurozone. But it is not only an institutional question. To break with the eurozone – if the idea is for this to be the first step towards implementing some kind of socialist program – it will demand a lot more then just having a left-wing government in power. It would require well-organised grassroots movements, powerful unions, a high level of consciousness in the masses, and a serious political education, for example regarding the short-term problems that probably would emerge. If all you care about is buying the latest iPhone as cheaply as possible, then you would immediately start protesting against a government that took you out of the eurozone, since import prices will likely rise quite considerably at first.

Neither are the cultural conditions there. We would, for example, have to deal with the xenophobic backlash that could arise in the wake of a generalised sense of insecurity about the future. So this is not only about technicalities, like the exchange rate or the inflation level. It is easy to be swept away by the idea that all that is needed is to leave the euro and then everything will be fine. In the current context, this is just a new utopia. But having said that: the situation now is so serious that I think we should consider this possibility, however dangerous it might be. This is the conclusion I have come to.

The English version of this interview with Thomas Fazi by Lotta Elstad first published in the Norwegian political magazine Manifest Tidsskrift, was originally posted on Social Europe, on April 5, 2016.

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