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Published on November 14th, 2011 | by Ben Phillips
Image © [caption id="" align="alignleft" width="288" caption="Paul Krugman: talks economic sense, gets ignored."][/caption] Angela Merkel's speech to her party's annual conference in Leipzig this morning contained a stark admission. 'If the Euro fails', she observed, 'then Europe will fail.' Her words will confirm what many had already recognised: specifically, that the Franco-German orchestration of the technocratic responses to both the Greek and Italian sovereign debt crises reflects a belief that the single currency must be saved as the very essence of the European project. Merkel's speech comes less than a week after her French counterpart, Nicolas Sarkozy, speaking to students at the University of Strasbourg, speculated on the possibility of a two-tier Europe emerging after the present fiscal chaos: he envisaged a tight-knit federalist core comprised of the seventeen Eurozone member states, surrounded by a more confederal grouping of the ten non-Eurozone states. Since membership of the single currency is far from the only basis for an abstract stratification of European community, I'm not sure that Sarkozy's vision is all that operable. Still, he and Merkel obviously have a federalist game-plan, and, in concert with others, are acting on it. It was always assumed, from the beginnings of the single currency in 2000, that the latter ten countries would adopt the Euro too at a later date. Over a decade later, with the Eurozone in crisis, that is clearly no longer on the cards. The consequent political rethink explains, to a point, Sarkozy's open disdain for David Cameron's involvement in the debt deal negotiations: from this point onwards, the non-Eurozone states will become more and more peripheral. As for those within the Eurozone, the shadow of political integration will loom ever larger. Thursday's Guardian carried an extract from a forthcoming book by the legendary German sociologist Jürgen Habermas, entitled The Crisis of the European Union: A Response. As Habermas suggests:

'Angela Merkel and Nicolas Sarkozy appear to have settled some sort of compromise between German economic liberalism and French statism with a completely different intent. If I am not mistaken, they want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.'  
It is precisely this scheme that is now unfolding in both Greece and Italy. Lucas Papademos and Mario Monti are two of a kind: liberal economists and former heavyweights from the senior institutions of European government (Papademos used to be the Vice President of the European Central Bank; Monti is a former EC competition commissioner). Their commitment to European integration is no less certain than their faith that austerity economics will see their respective countries through present traumas. Both, likewise, have been parachuted in at very short notice. Neither has ever stood for elected office in their home country - Monti was created a lifetime senator by the Italian president Giorgio Napolitano no more recently than last week, specifically so he might form the national unity government announced yesterday. The economic logic of these moves towards technocracy is itself debatable. As Paul Krugman has pointed out repeatedly, the idea of technocracy is rather at odds with the practice of it by alleged technocrats such as Papademos, Monti and Christine Lagarde, with whom a supposedly apolitical, managerial model of government mutates into ideological anti-Keynesianism. 'These alleged technocrats', he writes, 'have in fact systematically ignored both textbook macroeconomics and the lessons of history in favor of fantasies.' Yet just as worrying, if not more so, is the fact that these developments are fundamentally undemocratic. Over the weekend, at least some of the reputable British press and blogosphere finally woke up to the fact that technocratic government is a specific alternative to democratic government. There's been some debate in Italy on the question of precisely how long Monti's new government is supposed to last, with some insisting that it merely implement the weekend's austerity measures and others seeing it as a longer-term operation. Yet even if it is limited to the former, the result will still be the implementation of a painful austerity package by a government for whom not a single Italian voted. This circumnavigation of democracy is, admittedly, less blatant than that which took place in Greece. In Italy, at least, the austerity package was passed by Berlusconi's elected government. In Greece, no sooner had George Papandreou called for a referendum on the debt deal than the combined rage of Merkel, Sarkozy and the markets forced him out. Still, some people do not appear to mind. The contempt for democracy showcased by this crisis is nowhere more clearly expressed than in the words of Gillian Tett, the assistant editor of the Financial Times speaking to the Guardian on Saturday:
'...the situation calls for very firm, forward-looking action that is almost impossible in a rowdy democratic political system at the moment...[Currently] you neither have anybody who has the authority to force a solution, nor do you have sufficiently free markets and genuine democracy to get a bottom-up solution. So you're caught in this limbo-land where you stagger from one mini-crisis to another.'  
As Larry Elliott wrote last week, the EU 'has always had problems with democracy, a messy process that can interfere with the grand designs of people at the top who know best.' The episode surrounding Ireland's rejection of the Lisbon treaty demonstrated this clearly, and so too have these events. The key decisions on the sovereign debt crises have been taken by the Frankfurt Group, which consists of eight people of whom only two - Merkel and Sarkozy - are elected. Sticking with Sarkozy's envisaged two-tier Europe, this is likely to result in immense domestic anger in those Eurozone countries it affects; the non-Eurozone countries, meanwhile, will keep their distance. In Britain's case, deranged ramblings about EU military interventions aside, it's hard to disagree with the substance of Boris Johnson and Charles Moore's arguments. This episode, it would appear, is on the verge of providing British Euroscepticism with an unexpected triumph.

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Europe’s democratic deficit

Paul Krugman: talks economic sense, gets ignored.

Angela Merkel’s speech to her party’s annual conference in Leipzig this morning contained a stark admission. ‘If the Euro fails’, she observed, ‘then Europe will fail.’ Her words will confirm what many had already recognised: specifically, that the Franco-German orchestration of the technocratic responses to both the Greek and Italian sovereign debt crises reflects a belief that the single currency must be saved as the very essence of the European project. Merkel’s speech comes less than a week after her French counterpart, Nicolas Sarkozy, speaking to students at the University of Strasbourg, speculated on the possibility of a two-tier Europe emerging after the present fiscal chaos: he envisaged a tight-knit federalist core comprised of the seventeen Eurozone member states, surrounded by a more confederal grouping of the ten non-Eurozone states. Since membership of the single currency is far from the only basis for an abstract stratification of European community, I’m not sure that Sarkozy’s vision is all that operable. Still, he and Merkel obviously have a federalist game-plan, and, in concert with others, are acting on it. It was always assumed, from the beginnings of the single currency in 2000, that the latter ten countries would adopt the Euro too at a later date. Over a decade later, with the Eurozone in crisis, that is clearly no longer on the cards. The consequent political rethink explains, to a point, Sarkozy’s open disdain for David Cameron’s involvement in the debt deal negotiations: from this point onwards, the non-Eurozone states will become more and more peripheral. As for those within the Eurozone, the shadow of political integration will loom ever larger. Thursday’s Guardian carried an extract from a forthcoming book by the legendary German sociologist Jürgen Habermas, entitled The Crisis of the European Union: A Response. As Habermas suggests:

‘Angela Merkel and Nicolas Sarkozy appear to have settled some sort of compromise between German economic liberalism and French statism with a completely different intent. If I am not mistaken, they want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.’

 

It is precisely this scheme that is now unfolding in both Greece and Italy. Lucas Papademos and Mario Monti are two of a kind: liberal economists and former heavyweights from the senior institutions of European government (Papademos used to be the Vice President of the European Central Bank; Monti is a former EC competition commissioner). Their commitment to European integration is no less certain than their faith that austerity economics will see their respective countries through present traumas. Both, likewise, have been parachuted in at very short notice. Neither has ever stood for elected office in their home country – Monti was created a lifetime senator by the Italian president Giorgio Napolitano no more recently than last week, specifically so he might form the national unity government announced yesterday. The economic logic of these moves towards technocracy is itself debatable. As Paul Krugman has pointed out repeatedly, the idea of technocracy is rather at odds with the practice of it by alleged technocrats such as Papademos, Monti and Christine Lagarde, with whom a supposedly apolitical, managerial model of government mutates into ideological anti-Keynesianism. ‘These alleged technocrats’, he writes, ‘have in fact systematically ignored both textbook macroeconomics and the lessons of history in favor of fantasies.’

Yet just as worrying, if not more so, is the fact that these developments are fundamentally undemocratic. Over the weekend, at least some of the reputable British press and blogosphere finally woke up to the fact that technocratic government is a specific alternative to democratic government. There’s been some debate in Italy on the question of precisely how long Monti’s new government is supposed to last, with some insisting that it merely implement the weekend’s austerity measures and others seeing it as a longer-term operation. Yet even if it is limited to the former, the result will still be the implementation of a painful austerity package by a government for whom not a single Italian voted. This circumnavigation of democracy is, admittedly, less blatant than that which took place in Greece. In Italy, at least, the austerity package was passed by Berlusconi’s elected government. In Greece, no sooner had George Papandreou called for a referendum on the debt deal than the combined rage of Merkel, Sarkozy and the markets forced him out. Still, some people do not appear to mind. The contempt for democracy showcased by this crisis is nowhere more clearly expressed than in the words of Gillian Tett, the assistant editor of the Financial Times speaking to the Guardian on Saturday:

‘…the situation calls for very firm, forward-looking action that is almost impossible in a rowdy democratic political system at the moment…[Currently] you neither have anybody who has the authority to force a solution, nor do you have sufficiently free markets and genuine democracy to get a bottom-up solution. So you’re caught in this limbo-land where you stagger from one mini-crisis to another.’

 

As Larry Elliott wrote last week, the EU ‘has always had problems with democracy, a messy process that can interfere with the grand designs of people at the top who know best.’ The episode surrounding Ireland’s rejection of the Lisbon treaty demonstrated this clearly, and so too have these events. The key decisions on the sovereign debt crises have been taken by the Frankfurt Group, which consists of eight people of whom only two – Merkel and Sarkozy – are elected. Sticking with Sarkozy’s envisaged two-tier Europe, this is likely to result in immense domestic anger in those Eurozone countries it affects; the non-Eurozone countries, meanwhile, will keep their distance. In Britain’s case, deranged ramblings about EU military interventions aside, it’s hard to disagree with the substance of Boris Johnson and Charles Moore‘s arguments. This episode, it would appear, is on the verge of providing British Euroscepticism with an unexpected triumph.

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