The Eurozone debt crisis is exacting its toll. Convoluted undemocratic taxpayer-funded bailouts of bondholders and banks designed to keep the Eurozone together can’t kick the can down the road far enough. But the price has been huge, and people have expressed their anger in massive protests. Now, these efforts are also tearing up the fabric of the 27-member European Union: the first one out may be the UK.
If offered a referendum, 56% of the British would vote for a UK exit from the EU (with 34% definitely and 22% probably). Only 30% would vote to keep the UK in the EU. It wouldn’t even be close! It would be a landslide. Thus, if it came to a referendum today, the UK, a cornerstone of the EU, would bail out.
The EU has little patience with the will of the people. In most member states, decisions such as ratification of EU treaties, scrapping one’s own currency, or bailing out holders of sovereign bonds are made by parliamentary vote. But in instances, when people were finally given a vote, they had a nasty tendency to surprise the elite—the politicians, bankers, and unelected bureaucrats that run the show.
The Lisbon Treaty, the chef d’œuvre of the EU’s political elite, was supposed to repeal existing treaties and replace them with a European Constitution that would transfer significant national sovereignty to unelected EU bureaucrats and their institutions. Negotiations started in 2001, and by 2005, a majority of member states had ratified it by parliamentary vote.
But in France, the people got an opportunity to ratify it by referendum—after parliament had passed it with 93% of the votes. What should have been a cakewalk turned into an epic battle that split the Socialist Party in two. And the people, who loved their sovereignty and wanted to hang on to it, “unexpectedly” killed the thing by a margin of 55% to 45%. In the Netherlands, a similar scenario played out. 2005 was the year that referendum became a dreadful word in the European political lexicon.
The lesson was unforgettable: don’t let the riffraff decide. Such matters should be handled by politicians, bankers, and unelected bureaucrats. And so they did damage control. Many of the measures in the failed constitution were revived as reforms in a watered-down treaty. That was in 2008. As a precaution, the uppity people in France and the Netherlands weren’t allowed to vote on it. Irish voters were, however. And they killed it. They too wanted to hang on to their sovereignty.
But then the financial crisis hit. The Irish got scared. Their banks were in trouble. The economy was going south. So the referendum was re-run after the Irish government had negotiated some concessions, and the people changed their mind (the treaty became effective December 1, 2009).
European politicians dread a referendum more than anything. It threatens their power. Early November last year, at the margin of the G-20 meeting in Cannes, Greek Prime Minister George Papandreou tried to use that fear to extort more bailout money from taxpayers elsewhere. So he lobbed a single sentence with the most powerful threat he could think of: a referendum in Greece. He wanted to let the people vote on the austerity measures that would strangle them.
The threat knocked financial markets around the globe into a tailspin. The Euro plummeted. Italian and French yields spiked. It gave birth to a new word: papandemonium.
But it was dealt with swiftly. German Chancellor Angela Merkel and French President Nicolas Sarkozy summoned Papandreou to a French dinner. Afterwards, a dour-faced Merkel and a grimacing Sarkozy set out to squash the referendum. They’d cut off bailout payments, they said. And for the first time, they verbalized Greece’s exit from the Eurozone. It was a tour de force.
Parliamentary chaos broke out in Greece. Politicians in Papandreou’s own party rebelled against him. He got kicked out of office. And by the time the caretaker government took over, the referendum had been buried. Politicians just hate the idea of giving people an opportunity to muck up their delicate plans that had been hashed out with such finesse behind closed doors and had been laced with beautiful side deals.
That hasn’t changed. Not even in the UK. In one of the innumerable EU ironies, Prime Minister David Cameron, like all reigning EU politicians, would do everything in his power to stymie the efforts to hold a referendum. And if unable to stop it, he’d campaign with all his might to keep the UK inside the EU, though it would alienate a big part of his own voter base and much of the public.
The British have their reasons for being leery of EU governance that is encroaching more and more on their turf. Yet the EU has united 27 countries whose people had been waging war on one another long before the concept of nation state had even been invented. In that respect, and in many other respects, the EU has been a phenomenal success. Then the debt crisis erupted. And now that family of nations is threatening to tear itself apart over the euro that has become a religious dictum, and no price is too high to save it. Read…. The Curse Of The “Irreversible” Euro.
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The battle between neo-liberal capitalism and democracy begins in earnest!
Neoliberalism has strong affinities with belief in the "natural hierarchies should be embraced" school of political thought, which has affinities with old defenses of aristrocracy against those radical democrats and levelers.
The EU system is merely re-enacting an old battle at the heart of Europe's political development. It represents rule by "the right sort of people" over the dangerous masses, this time with a surface veneer of meritocratic openness to those not-to-the-manner-born.
But look at the audacity of what they are doing! They are systematically stripping countries of their social safety nets — in the middle of a crisis that is economically sinking entire classes of people! Why are they doing this? To shift the costs of the banking crisis onto the non-elites, and to set up a technocratic European superstate that puts the interests of the elite above the touch of any democratic nation-state. Through increasingly tight treaties, the Eurozone nations will be smashed together into a de facto "super-market state", where their populations don't get to choose their own social-safety net "goodies" anymore (except, perhaps, in a few Teutonic areas). This superstate, forged more strongly in the crisis-level intensity of economic depression, will eventually allow some form of carefully-managed democracy to emerge, but by then Milton Friedman's glorious dream of completely subverting the nation-state to the power of international capital will be a fait accompli.
Or, more realistically, there will be a crisis of European disunion when the Euro splits, lots of banks collapse, and rightists blame that othner ethnic group for having destroyed the old-middle-class days and leftists blame "capitalist pigs". Blood will probably be shed either way.
Since the EZ must end in a superstate or be dissolved, I can't imagine much in between these scenarios. Either way, I'm betting that interesting years lay ahead of all of us. Yay us!
@Konstantin
You cannot use what you donot have (that is another problem)>
My view is still that the EU is the right idea with the wrong governance. Europe is one culture. I feel closer to the Germans than I do to the Irish. Europe should be democratised from the roots up. To think that the financial oligarchy will not retain a firm grip on individual nation states if Europe fragments is naive . That it is absolutely in the interests of the US, South Asia, and China to see a weakened fragmented Europe should give pause for thought. Otherwise most that has been said about the present governance of Europe is accurate. I must say that I see little hope for a speedy democratisation of the Union. Parties like Syriza that are pro European but radical are the key. The people need to take control. It is definitely in the interest of Power to destroy the Union if they cannot retain control of it. Why help the crooks? The problem is that from the outset Europe was set up from the top down. If the peoples had been free to decide would there have been a Union at all? Or were they successfully manipulated into it? These questions make a European democrat like me acutely uncomfortable. So, OK folk, how best can Europe be demopcratised?
@Roger
Correction: "the financial oligarchy" or alike WILL ONLY retain control over the individual states if the EU becomes more and more integrated. EU integration provides the simplest-to-use interface to acquiring and controlling EU entities and to making the EU as a whole dance according to a required political tune.
On a general note I believe this article is much ado about nothing at least to a EU citizen. Every time we switch on the TV screens or read a local paper we learn that another government action was taken that disregarded our interests as individual peoples or even as a Union. We have known it for over 10 years now. Moreover we also know there is no valid opposition in any of the member countries: german SPD votes with CDU/CSU or governs together, french socialists continue the same line as UMP (in spite of explosive language differences), english torries / lib dems trade individual and highly personalised political antagonism with the labour but nothing of substance, dutch socialists rule together with the liberals/conservatives aso. In the last 10 years most of the political parties melted into one single polical stream of politickers which insures the perenity of a unique pan-european political decision-making system whose main objective is faster and faster EU integration (euro salvaging is but one aspect of it). Those parties that have tried to avoid this "political integration" are being marginalised by the mainstream media or even through administrative measures (Die Line in Germany, FN in France and others).
The melting together of the opposition and the ruling parties leaves the peoples without protection and makes a mockery of democracy. I would find interesting an article that would explain why this is happening now, or perhaps it does not? it is just a bad dream?
@Roger
Fully agree that global warming will likely be a much bigger problem than this. At the end of the day comparing global warming with a financial crisis is comparing in the bar/restaurant industry the place burning off effectively without insurance and the thing going broke. The latter still leaves a restaurant and most of the people working there might at the end of the day keep their job under a new owner.
Even when the problem is made bigger than it is, imho you simply cannot run the risk it isnot (or it might be even bigger if eg frozen methan gets into the atmosphere). 50% chance of being shot is simply extremely risky.
Commodities both soft and hard are likely another one we use several times the stuff that max. a sustainable system could provide.
Problem will be in the East that nobody gives a shit they want a car. They are still in that stage. Might be that government interventioin can do something. But only very limited governments have effectively a credibility issue that is solved momentarily by buying support/votes by economic growth (aka a lot more CO2 and other crap).
West will use likely its resources to keep its own population sort of happy (as funding should be moved from where it is now as it is unsustainable anyway). Moving it to sources to generate (preferably non poluting) growth/R&D is a later worry for them (shouldnot be but it is). The West would need growth to have the extra money to pay for polutionprevention. The East needs polutionwise less money as it will be used to buy more stuff and polute more. However the economics look exactly the opposite hereof.
With Europe we hardly see anything even remotely close to dreaming. Only crisis mismanagement in a structure that is probably good described as 1960's. Half a century behind reality and moving into the wrong direction. Totally unfit to deal with the problems it is facing now, not even to mention to deal with the future. The solution will not come from there, they are probably more of an obstacle than a help. It will have to come from somewhere else.
"Yet the EU has united 27 countries whose people had been waging war on one another long before the concept of nation state had even been invented. In that respect, and in many other respects, the EU has been a phenomenal succes"
It has only been a success do to their mutual terror of Soviet Russia, and the cocoon of US dollars spent on weaponry.
They are now just reverting back to their natural inclinations.
@Peter Many of the 27 EU states came in after the end of the Soviet Union. Russia should have come too. How's that for European Idealism? There has always been a strong centripetal force in Europe. The UK Royals are German in origin. The crowned heads of Europe were all related a century ago. That did not stop us fighting so we have had to move further in a natural direction. For all its faults the EU is an absolute triumph of good sense and progress. It has no equal in world history. To abandon it would be a return towards darkness.
Sorry, these days you seem to be covering Europe a lot… :-)
Good news: the Financial Times Germany had to shut down. One more neo-Keynesian bullshit outlet less. Germans are Austrians by instinct. This is the proof. Soros, Krugman, Buffet and the like lost a medium. Keep going bloggers!
Some really interesting facts and figures, but i can just pray that EU don't simply get destroyed. I think in such conditions every one trying to escape and save their own . But as long as we are together we can try to stay cool and face the difficulties side by side.