June 25, 2015/Analize Greece
Gustave Doré, " Little Red Riding Hood"
Jürgen Habermas
The latest judgment of the European Court of Justice (ECJ) casts a harsh light on the flawed construction of a currency union without a political union. In the summer of 2012 all citizens owed Mario Draghi a debt of gratitude for uttering a single sentence that saved them from the disastrous consequences of the threat of an immediate collapse of their currency.
By announcing the purchase if need be of unlimited
amounts of government bonds, he pulled the chestnuts out of the fire for the Eurogroup.
He had to press ahead alone because the heads of government were incapable of
acting in the common European interest; they remained locked into their
respective national interests and frozen in a state of shock. Financial
markets reacted then with relief over a single sentence with which the head of
the European Central Bank simulated a fiscal sovereignty he did not possess. It
is still the central banks of the member states, as before, which act as the
lender of last resort.
The ECJ has not ruled out this competence as
contrary to the letter of the European Treaties; but as a
consequence of its judgment the ECB can in fact, subject to a few restrictions,
occupy the room for manoeuvre of just such a lender of last resort. The
court signed off on a rescue action that was not entirely constitutional and
the German federal constitutional court will probably follow that judgment with
some additional precisions. One is tempted to say that the law of the European
Treaties must not be directly bent by its protectors but it can be tweaked even
so in order to iron out, on a case by case basis, the unfortunate consequences
of that flawed construction of the European Monetary Union (EMU). That flaw –
as lawyers, political scientists and economists have proven again and again
over the years – can only be rectified by a reform of the institutions.
The case that is passed to and from between
Karlsruhe and Luxembourg shines a light on a gap in the construction of the
currency union which the ECB has filled by means of emergency relief. But the
lack of fiscal sovereignty is just one of the many weak spots. This currency
union will remain unstable as long as it is not enhanced by a banking, fiscal
and economic union. But that means expanding the EMU into a Political Union if
we want to avoid even strengthening the present technocratic character of the
EU and overtly writing off democracy as merely decorative.
Those dramatic events of 2012 explain why Mario
Draghi is swimming against the sluggish tide of a short-sighted, nay
panic-stricken policy mix. With the change of government in Greece he
immediately piped up: “We need a quantum leap in institutional convergence…. We
must put to one side a rules-based system for national economic policy and
instead hand over more sovereignty to common institutions.” Even if it’s not
what one expects a former Goldman Sachs banker to say, he even wanted to couple
these overdue reforms with “more democratic accountability” (Süddeutsche
Zeitung, March 17, 2015).
These were the words of someone who had learned
that the wrangling behind closed doors among heads of government only thinking
of their national voter base is simply not good enough if one wants to achieve
the necessary fiscal, economic and social policy decisions. Today, three months
later, the ECB is yet again at work buying time for incapable governments with
emergency lending.
The Greek election result is a vote against humiliating misery
Because the federal German Chancellor opted as early as May 2010 to treat investor interests as more important than a haircut in restoring the Greek economy to health, we’re stuck in a crisis once more. This time it’s the hole left by another institutional deficit that emerges.
The Greek election result is the vote of a nation
that, with a significant majority, is standing up against the humiliating as
well as oppressive misery of an austerity policy imposed upon their country.
There can be no argument about the vote itself: The population rejects the
continuation of a policy whose drastic failure is something they have
experienced at first hand. Equipped with this democratic legitimacy, the Greek
government is trying to bring about a change of policy in the Eurozone.
This brings them in Brussels right up against the representatives of 18 other governments which justify their rejection by coolly pointing to their own democratic mandate. You’ll recall those first meetings when the arrogantly swaggering novices basking in the upbeat mood of their triumph joined in grotesque battle with the incumbent rulers acting partly like paternalistic uncles and partly like sneering old hands: Both sides insisted parrot-like that they enjoyed the authority given by their respective “people.”
This brings them in Brussels right up against the representatives of 18 other governments which justify their rejection by coolly pointing to their own democratic mandate. You’ll recall those first meetings when the arrogantly swaggering novices basking in the upbeat mood of their triumph joined in grotesque battle with the incumbent rulers acting partly like paternalistic uncles and partly like sneering old hands: Both sides insisted parrot-like that they enjoyed the authority given by their respective “people.”
The unintentionally comic nature of their uniformly
nation-state way of thinking brought what is lacking unmistakably to the
attention of European public opinion: a focus for a common decision-making
process among citizens across national borders about weighty courses of
political action in the core of Europe.
But the veil cast over this institutional deficit
of an empowered European Parliament based on a European-wide system of
political parties has not yet been really shredded. The Greek election has
thrown a spanner in the works of Brussels because here the citizens have
themselves chosen a European political alternative for which they are geared
up. Elsewhere, government representatives make such decisions as technocrats
among themselves and spare public opinion in their countries from upsetting
issues. The compromise negotiations in Brussels really get bogged down because
both sides don’t ascribe blame for the barren nature of their discussions on
the flawed construction of the proceedings and institutions of the EMU but on
the bad behavior of their partner.
It’s certainly the case that we’re dealing here
with the stubborn sticking to a policy of an austerity programme that not only
runs into overwhelming criticism from international experts but has caused
barbaric costs in Greece and has demonstrably failed here. But, in the basic
conflict opposing one side looking for a change of policy to the other
obstinately refusing to engage at all in political negotiations, a
deeper asymmetry is exposed.
Let’s be quite clear about the disgusting, nay
scandalous aspect of this rejection: A compromise collapses not because of a
few billion here or there, not even because of this or that condition, but
solely because of the Greek demand to allow a new start for the economy and a
population exploited by a corrupt elite by agreeing debt forgiveness – or an
equivalent regulation, e.g. a debt moratorium tied to growth.
Instead, the creditors insist upon the
acknowledgment of a debt mountain that the Greek economy will never be able to
overcome. Mind you, it goes without saying that a haircut is unavoidable sooner
or later. So the creditors insist with bad faith on the formal recognition of a
debt burden they know is intolerable. Until recently, they even persisted with
the literally fantastic demand for a primary surplus of more than 4%. This has
been cut to a still unrealistic demand for 1%; but, so far, an agreement upon
which the fate of the European Union depends has failed because of the demand from
the creditors to stick to a fiction.
The weak performance of the Greek government
Of course, the ‘donor countries’ can see political reasons for holding onto this fiction which allow an unpleasant decision to be put off in the short term. They fear, for instance, a domino effect in other ‘recipient countries'; and Angela Merkel cannot be sure of her own majority in the Bundestag. But any wrong policy must one way or the other be revised in the light of its counterproductive consequences. On the other hand, you can’t pin the blame for the impasse on just one side.
Of course, the ‘donor countries’ can see political reasons for holding onto this fiction which allow an unpleasant decision to be put off in the short term. They fear, for instance, a domino effect in other ‘recipient countries'; and Angela Merkel cannot be sure of her own majority in the Bundestag. But any wrong policy must one way or the other be revised in the light of its counterproductive consequences. On the other hand, you can’t pin the blame for the impasse on just one side.
I cannot judge if there’s a well-thought-out
strategy behind the tactical steps taken by the Greek government and what is
down to political necessities, to inexperience or the incompetence of the main
players. I don’t have enough knowledge about the widespread practices and
societal structures standing in the way of potential reforms either. But it’s
obvious that the House of Wittelsbach has failed to construct a functioning
state.
However that may be, such difficult circumstances
don’t explain why the Greek government itself is making it hard for its
supporters to make out any consistent line behind its erratic behaviour.
There’s no sensible effort evident for building coalitions; one doesn’t know
whether the leftist nationalists are not clinging to a somewhat ethno-centric
sense of solidarity and are only pursuing continued membership of the Eurozone
for narrow prudential reasons – or if their views do go beyond the nation
state.
The demand for a haircut as the basso
continuo of their negotiations is, either way, insufficient to arouse
confidence on the opposite side that the new government is different – that it
will act more energetically and responsibly than the clientilist governments that
it replaced. Tsipras and Syriza might have drawn up the reform programme of a
left-wing government and thus ‘showcase’ it to their negotiating partners in
Brussels and Berlin. Amartya Sen last month in Firle, East Sussex, compared the
austerity policy pushed through by the federal German government with a
medicine that contains a toxic mixture of antibiotics and rat poison.
In complete accordance with the Nobel Prize-winner
for economics, the left-wing government might have taken on a Keynesian
segregation of the Merkel medicine and consequentially thrown out all
neoliberal impositions; but, at the same time, they would have had to give
credibility to their intentions of carrying through the overdue modernisation
of state and economy, execute a fairer form of cross subsidies, combat
corruption and tax evasion etc. Instead, it resorted to moralising – to a blame
game that worked to the advantage of the German government in the given
circumstances, enabling it to dismiss with neo-German robustness the wholly
justified complaint of Greece about the clever way a line was drawn (under
debts) in the two-plus-four negotiations (of 1990 over German unification).
The weak performance of the Greek government
doesn’t alter the fact of a scandal that consists in politicians in Brussels
and Berlin refusing to meet their colleagues from Athens as politicians. They
indeed do look like politicians but (until last Monday) only spoke in their
economic role as creditors. This transformation into zombies is intended to
give the protracted insolvency of a state the appearance of a non-political,
civil court proceeding.
That makes it all the easier to deny any political
co-responsibility. Our press is making fun about the act of renaming the
Troika; it is indeed like a magic trick. But, with it, there comes the
legitimate wish to see emerge the true face of the politician behind the mask
of the creditor. For only as politicians can these people be held responsible
for a fiasco that has played out in massively ruined life-chances, in
joblessness, sickness, social misery and hopelessness.
The scandal within the scandal is constipation
Angela Merkel brought in the IMF from the outset for her dubious rescue moves. This body is responsible for dysfunctions in the international financial system; as therapist it takes care of its stability and thus acts in the common interest of investors, especially of institutional investors. As Troika members, European institutions also coalesce with this player so that politicians, in so far as acting in this function, can retreat into the role of untouchable agents acting strictly according to the rules of the IMF. This dissipation of politics into market conformity helps to explain the chutzpah with which representatives of the federal German government, all of them highly moral people, can deny their political co-responsibility for the disastrous social consequences that they nevertheless took on board as opinion leaders of the European Council through the implementation of the neoliberal austerity programmes.
The scandal within the scandal is the constipated
manner in which the German government perceives its leadership role. Germany is
indebted for the stimulus behind the economic recovery from which it still
benefits today to the wisdom of the creditor nations which, in the London
Agreement of 1953, wrote off around half of its debts.
But this is not about moral embarrassment but about
the political core of the matter: The political elites in Europe should no
longer hide from their voters and themselves dodge the alternatives posed to us
by an politically incomplete currency union. It’s the citizens, not the banks,
which must retain the final say in existential questions for Europe.
As regards the post-democratic lulling to sleep of
public opinion, the switching of the press into a therapeutic type of
journalism is a contributory factor – as it marches arm in arm with the
political class in caring for the wellbeing of customers, not citizens.
