Thursday, 15 September 2011
Instead of bringing Europe closer together, the euro is driving us apart -
Date: Wed, 14 Sep 2011
ging-europe-closer-together-the-euro-is-driving-us-apart-167370.html
Instead of bringing Europe closer together, the euro is driving us apart
By Steven King
Wednesday, September 14, 2011
WHEN does life end?
The euro is now in a persistent vegetative state but the leaders of Europe,
like distraught relatives, refuse to accept the depressing reality.
Serial crisis meetings between French President Nicolas Sarkozy and German
Chancellor Angela Merkel issue little more than vague hopes of a resolution
and whispers of stronger economic governance.
The perils of utopianism have been exposed.
The common market had established freedom of movement for people, capital,
goods and services. It had created the biggest single market on the planet,
and the increased choice and competition had been a blessing.
But as Voltaire warned, the perfect is the enemy of the good. The lovers of
grand designs had deemed the EU incomplete for lack of a common currency.
The pursuit of perfection, however, has had the effect of destroying
everything that was once good about Europe. The idea had a certain naïve
appeal, of course. By using the same coins and banknotes, former enemies
would become natural business partners, old rivalries would disappear and
hasten acceptance of a new pan-European identity.
Looking back, the introduction of the euro was the moment when the good
magic of European integration turned evil. Its forces could no longer be
controlled by Europe's political class; their old spells no longer worked
against the spirits they had called.
Today, instead of bringing Europe's peoples closer together, the struggling
euro is pitting one country against another and driving them further apart.
Where Europe's elite had hoped for harmony, they received confrontation.
Where they had banked on economic benefits, they had to establish rescue
mechanisms.
Where they had finally wanted to bury old nationalisms, they had raised them
from their graves. And in doing all of this, they lost touch with the people
they were supposed to represent.
Einstein once defined insanity as, "doing the same thing over and over again
and expecting different results". He must have had the EU in mind. Bailing
out one country after the other, Europe's leaders never tire to claim that
this last bailout, this last emergency summit, this last rescue mechanism
will finally solve the crisis once and for all.
And then, two weeks later, they are meeting again to proclaim exactly the
same after another emergency round. The motto of Europe's crisis management
is always "This time is different".
Clearly, in the Einsteinian sense, European politicians are insane.
They are unwilling to learn the lessons of their dilettantism because that
would require admitting previous failures. There is a general European
unwillingness to accept criticism.
Nothing that deviates from the EU's own narrative about the inevitability of
ever-closer union is allowed to spoil the party.
The truth is, after two years of ineffective crisis management, the euro is
terminally damaged. Europe's common currency is dying a death of a thousand
cuts.
In this climate, the resignation of a mere "official", as the Government
here was anxious to portray him, takes on enormous significance when that
official is the European Central Bank's chief economist. Jurgen Stark's
warning that sentiment could suddenly turn against Ireland all over again
deserves to be taken seriously.
Slowing growth across the continent, increasing opposition to bailout
packages, and rising resistance to austerity measures, not least here in
Ireland, show the euro is in its endgame.
The next shock could be fatal to monetary union. It wasn't supposed to be
like this.
From its inception, the EU was an elitist managerial project that was able
to construct and promote its agenda without having to respond directly to
popular pressure. Decisions are never arrived at through public debate, and
the majority of EU laws are formulated by the hundreds of secret working
groups set up by the Council of the EU. Most of the sessions of the Council
of Ministers are held in private, and the EU's unelected European Commission
has the sole right to put forward legislation.
The most distinctive feature of the EU's governance is that it is
systematically pursued through insulated decision-making. For decades the EU
political establishment has self-consciously constructed institutions that
could insulate it from the necessity of having to respond to the type of
public pressure faced by a democratic parliament.
This invisible decision-making allowed a variety of political actors in
Brussels, and in Europe's national capitals, to avoid taking responsibility
for unpopular decisions. In effect, policymakers were insulated from having
to account for the consequences of their decisions.
This ongoing assault on the basic rules of liberal democracy has been the
defining feature of the euro crisis. The measures taken to salvage the wreck
of monetary union are so inexplicable and unaffordable that the political
class introduces them by stealth.
In effect, politicians could continually hide behind the EU's invisible
decision-making process and claim that such and such a policy 'wasn't my
idea', before adding that 'unfortunately we have no choice but to go along
with this Europe-wide directive'.
Insulated decision-making may work as an administrative convenience, but it
also inevitably diminishes the capacity of European politicians to motivate
and inspire their electorate.
THE treaty to establish the new European Stability Mechanism is the best
example of this fundamentally undemocratic approach. Article 27 of the ESM
Treaty grants the institution "immunity from every form of judicial
process". It also notes that the "property, funding and assets of the ESM
shall, wherever located and by whomsoever held, be immune from search,
requisition, confiscation, expropriation or any other form of seizure,
taking or foreclosure by executive, judicial, administrative or legislative
action". ESM archives, documents and premises are deemed "inviolable".
The institution will be exempt from any rules that normally govern financial
institutions, including taxes. On top of that, all ESM governors and staff
will enjoy full legal immunity and its employees will be freed from national
income taxes. !!!!!!!! Finally, Article 42 gives member states a deadline until
December 31, 2011 to ratify it.
For a new legal framework with enormous financial and fiscal consequences
this leaves little time for detailed national debates. But that is precisely
the point. European governments do not have the slightest interest in a
thorough debate about the introduction of the ESM. With the planned
extension of the European Financial Stability Facility and the introduction
of its European Stability Mechanism successor, the German government had
planned to sideline parliament in future euro rescue efforts. Now, the
remaining options to buy it more time have been blocked by the German
constitutional court.
That the euro survived until today was mainly due to the Germans providing
life-support to the sick currency. Everybody knows that the current period
of muddling through the euro's blatant contradictions cannot go on for much
longer. Once the Germans withdraw their seemingly open-ended commitment -
and that is a matter of when, not if - the euro in its current form, and
with its current membership, the euro will be history.
And for the European Union, the end of the euro would be synonymous with the
failure of its project of ever-closer union.
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