Euro Bankrupting States Technocrats Now, Strong Man Next?
Politics / Euro-Zone Nov 16, 2011 - 04:26 PMBy: Adrian_Ash
The trouble is, this freedom thing has simply gone too far. Apparently...
YOU REMEMBER the Lisbon Treaty, right?
Rejected by voters in three of the five European Union states to be asked, it was signed regardless by the heads of all 27 member states in 2009, thus "complet[ing] the process [of] enhancing the efficiency and democratic legitimacy of the Union."
Only voters in Luxembourg and Spain gave the right answer first time, and only then with 56% of the vote and a 42% turnout respectively. The Irish were asked to vote again, but they had form after rejecting the Treaty of Nice – aimed at enlarging the EU – in 2001. Again, it was second time lucky, at least for a while.
"A dramatic fall on the Dublin stock market," said The Irish Times of the re-run in Oct. 2009, "was avoided yesterday due to the resounding Yes vote in the Lisbon Treaty referendum, according to stockbrokers."
Phew! But what of that "resounding" no in 2005 from France and the Netherlands? Well, in fact, "We need more Europe, not less," said European Commission president José Manuel Barroso, driving the Treaty forwards nevertheless in early 2006, and also claiming (with a straight face, no doubt) that "The EU is there to serve its citizens."
Former EC president, and by then Italian prime minister, Romano Prodi agreed, saying that "we always have to make efforts to understand the views of others, to take them on board," but "it would be a misinterpretation of the people's will" to actually do what the French and Dutch referenda said and reject the Treaty.
Besides, as former French president Valéry Giscard d’Estaing put it, "It is not France that has said no. It is 55% of the French people – 45% of the French people said yes." And even the nay-sayers were sorry.
"It was a pro-European no," said one apparently very confused man the BBC interviewed celebrating the no vote in Paris in May 2005. "We are not against Europe – we just want a different kind of Europe."
And now he's got it, good and proper.
"Our responsibility no longer stops at our countries' borders," declared German chancellor Angela Merkel to her CDU Party this week. Note the plural. Note also the same appeal as Barroso, Prodi and the rest make to some un-named, all-in-it-together "we".
"Our generation's duty now is to finalise the economic and currency union to form, step by step, a political union. We must develop the European Union's structure further. That does not mean less Europe, but more."
This demand for "more Europe" – also being parroted by Germany's Green Party – isn't a new phrase. Prodi began using it in 2002 (if not earlier), right around the time Greece joined the Euro and Ireland got round to giving the right answer on the Treaty of Nice. So it's been a key platform for Brussels' unelected policy wonks when they talk to each other for nearly a decade. Now "more Europe" is being pushed directly to voters as the only fix for Europe's mess. But just like the no voters of France and the Netherlands, Prodi's home country has already got way more Europe than it can handle. Pushing it further still, for all we know, may prove the best economic solution (although we sincerely doubt it). That's not our beef tonight, however. It's the political logic of "we" and "more Europe" that is coming to a head, and not in the way that the "We Demand More Europe" wonks might wish.
"Umberto Bossi of [Italy's] Northern League says he will relish entering opposition – where he can rail against the EU, immigrants and southern Italians," writes Gideon Rachman in the Financial Times. "Marine le Pen of the far-right National Front will have a big effect on next year’s presidential election in France. In the Netherlands, the government now relies on the votes of the Freedom Party led by Geert Wilders, which is running second in the polls. Austria's far-right Freedom Party is at level pegging in the polls with the governing People's Party. In Finland, the nationalist True Finns are still gaining ground and are easily above 20% in the polls."
Each of these buffoons has spotted leaving the Euro as a potential vote winner, whether now or soon, and "All of these rising parties rail against 'elites'," notes Rachman – a badge you can stick on Brussels just as easily as Wall Street or the City. But no matter; according to the FT's columnist, "Technocrats have something to be said for them in the middle of a financial crisis." You know, just like they did in the economic crisis of the 1930s. Just as the "strong man" last stepped up in Europe, ready to give a very political solution where technical, unelected experts failed.
"Our membership of the Euro is a guarantee of monetary stability and creates the right conditions for sustainable growth," claimed new Greek prime minister Lucas Papademos last week. Stop laughing! With a PhD in economics, and little else besides the obligatory hat-tip to Goldman Sachs, Papademos doesn't need the sense he was born with. This career policy wonk – breaking out of the central bank in a way his peers Ben Bernanke and Mervyn King could only dream of – believes that "Our membership of the Euro is the only choice."
There's that "we" again, and there's the political course he'll stick to, pretending to pull levers and twiddle knobs as the train-wreck piles up around him. Papademos' new colleague in Rome, the equally unelected prime minister Mario Monti of Italy, is more expert still – a professor of economics, no less, with no experience outside the academy and Brussels beyond the obligatory consulting for Goldman Sachs.
"His cabinet is to be made up of technocrats instead of career politicians," reports Deutsche Welle. "Apart from his own economics ministry, one of the key appointments is seen as the infrastructure and industry portfolio, which he has handed to Corrado Passera, the CEO of Italy's largest bank, Intesa Sanpaolo."
Yikes! The Shorter Oxford defines "technocracy" – originating in the early 20th century US – as "the government or control of society or industry by technical experts". The OED forgets to add "perjorative", but even without the bankers, there's plenty of people already wincing at what this sharp turn to nerd-dom now signals.
"Since 1973, 69% of Greek finance ministers and 55% of those in Portugal have had a PhD in economics; a qualification unknown to any British chancellor," notes Aditya Chakrabortty, economics leader writer at The Guardian, citing a new study. How come? "Countries appoint an economics specialist because they are in trouble," says Mark Hallerberg of the Hertie School of Governance in Berlin (and a professor himself, of course). "Countries that already have high debts, like Greece, Portugal and Mexico, face more pressure from the markets to appoint people that, at least in terms of their education, appear to be competent.
"For more economically stable countries such as the UK or Germany, being an economics specialist might be seen to be less important than being a skilled politician. Studying history, for example, was no barrier to Gordon Brown or George Osborne becoming Chancellor of the Exchequer."
Double yikes! That history was no barrier to Gordon Brown we knew. But what history now says about unelected policy wonks, and the very same bureaucrats behind Europe's slow-motion catastrophe, we only dare guess. So in the absence of poets, let's leave it to the pundits – today's equally unelected legislators of the world as Percy Bysshe Shelley might gurgle (if the Bay of La Spezia hadn't got him) – to help the technocrats set the right course.
"The EU crisis demonstrates that free trade has gone far enough," reckons Peter Wilby, former editor of the New Statesman, in The Guardian. "The world's supranational organisations, including the [World Trade Organization] and the EU, should draw up rules that allow countries – without jeopardising their trading opportunities – to re-introduce limited tariffs and opt out of regulations..."
Protectionism not strong enough for you? "The west is now in many respects too free," says Hong Kong property developer Ronnie Chan, writing in the FT. "Inefficiency is sometimes the price of democratic freedom, but not this level of inefficiency."
Yes indeed – despite "More Europe" being forced through, freedom is in fact the problem. No doubt the populist politicians standing ready to take over when the technocrats fall, alongside the Euro, will take note.
By Adrian Ash
BullionVault.com
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Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.
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