As I speak to many people about the upcoming referendum I am constantly surprised that few have much knowledge of the unsettling political trends across the EU. Most have a sense that it got ugly in Greece in 2015, but not a lot else. Yet the political trends suggest the EU will rip itself apart from the inside within a small number of years, as I explain below, starting in Greece and then reaching out across Europe.
Yanis Varoufakis is well known as the leather-jacketed, motorbike riding, ex-Greek finance minister. He was part of the team led by Alexis Tsipras, elected in January 2015, to finally do a deal with the EU/ECB over the debt which was sinking Greece. He failed, and was forced to resign within months, primarily due to German pressure.
So Yanis’s reflections on that period are both extraordinary eye openers as to how the EU really works, and also extremely worrying for the whole of the EU as European electorates are increasingly in open revolt, including German voters.
(It is all the more extraordinary that Yanis would like you to vote to remain in the EU! I link to his full article at the end)
Here’s a quick summary from Yanis on the EU democratic structure:
“The European Council comprises heads of governments, while ECOfin and the Eurogroup are councils of finance ministers. All of these [individuals] are, of course, democratically elected. Moreover there is the European Parliament, elected by the citizens of the member states, which has the power to send proposed legislation back to the Brussels bureaucracy”
“Brussels bureaucracy” is short hand for the European Commission, which proposes and implements legislation, and is made up of 28 appointed commissioners and 23,000 Civil servants.
With a big democratic mandate from the people of Greece, in February 2015 Yanis began negotiating with the Eurogroup (which is the common currency’s finance ministers) plus the representatives of the ECB, the European Commission, and the IMF (the so-called Troika).
In one 10 hour meeting “I struggled to reclaim some economic sovereignty on behalf of my battered parliament and our suffering people, and another finance minister tried to soothe me by saying “Yanis, you must understand that no country can be sovereign today””.
That was an extraordinary admission.
Yanis goes on to point out that although the members of the European Council and the Eurogroup are elected politicians in their home nations, the Council and Eurogroup themselves are not answerable to any parliament nor any voters.
Moreover, he continues “the Eurogroup, where most of Europe’s most important economic decisions are taken, is a body that that does not even exist in European law, that keeps no minutes of its procedures and insists its deliberations are confidential – that is, not to be shared with the citizens of Europe….It is a set-up designed to preclude any sovereignty derived from the people of Europe.”
The Eurogroup was (is?) effectively the fiefdom of Wolfgang Schauble, Germany’s Minister of Finance. An accomplished man in so many ways, but he doesn’t appear to suffer from a belief in democracy.
Yanis found that Schauble and those around him were impenetrable to rational debate. His proposals were never rejected by the Eurogroup because they were never fully put to them – as soon as he began speaking about them “they would look at me as if I were singing the Swedish national anthem”.
“Once I put it to Schauble that we, as the elected representatives of a continent in crisis, can not defer to unelected bureaucrats; we have a duty to find common ground on policies that affect people’s lives… He replied that what matters most is the respect of the existing “rules”… and the rules can only be enforced by technocrats… Whenever I attempted to discuss rules that were clearly impossible to enforce, the standard reply was “But these are the rules!”.”
He concluded that:
“As legitimate political authority retreats, we fall in the lap of brute force, inertia and demonization of the weak”
He resigned within weeks in 2015, effectively forced out by Schauble.
The impotence felt by Yanis is something which is growing throughout the EU, and can be measured at the ballot box.
It was ironic that in May the ECB (part of the Troika) issued a warning that a rise in political risk poses a challenge to reform and public debt sustainability – as the FT headline put it “ECB warns of populist risk to financial stability”.
What they don’t get is that it is the ECB and the rest of the EU establishment that is pivotal in fuelling the rise of populist, nationalist, anti-EU movements across Europe. And the idea that the greatest threat to the EU comes from its periphery is also no longer the case.
The recent Austrian Presidential election could not have sent a clearer message. The anti-EU candidate from the far right Freedom Party received 49.7%, barely losing and only after allowance for postal votes. [This is now being challenged]
There is a very strong chance that Dutch elections, which must be held by March next year, will result in a staunchly anti-EU coalition.
Anti-EU Marine Le Pen, heading up the National Front, is in the lead in French polls ahead of Presidential elections in May next year.
There is currently political deadlock in Spain, with anti-austerity groups prominent.
Poland’s new government is nationalistic and highly critical of Brussels.
In Italy the bizarrely named Five Star Movement, led by comedian Beppe Grillo, is again coming to prominence. As I write it seems likely their candidate will be elected mayor of Rome, which could be a catalyst for the party to be elected nationally in 2018 – they promise a referendum on the euro, or a return to the lira.
The Czech Republic, Hungary and Poland are also strong candidates for EU referendums.
The notion of “European solidarity” has been shown to be a sham as walls have gone up around borders.
In fact these populist movements which were born out of anger at high unemployment and low growth have been spurred on by new fears created by the refugee crisis.
Even in affluent Germany, the third most popular political party is now an anti-immigration, anti-euro outfit that is taking on Angela Merkel.
Until one of the anti-EU parties is elected (which I believe is just a matter of time) establishment parties are being forced to respond to domestic fears and protect their own chances of re-election – which has the knock-on effect of severely limiting the likelihood of EU-wide consensus on much needed reforms. (And the same problem could impact on trade negotiations with the UK, on which see Trade Facts: Hot Air And The Mole Hill”)
The EU appears to be crumbling in front of us – the trend to revolt is absolutely clear across Europe.
How might this end?
Well let’s go back to Yanis when he says the setup is:
“designed to preclude any sovereignty derived from the people of Europe.”
Against this backdrop, of popular revolt and an anti-democratic establishment how might this end? In chaos seems a credible answer.
For me this remains the greatest risk of staying in the EU. While the UK will not be immune from this if outside the UK, the UK government will be able to make quick decisions for the benefit of UK citizens – this is simply not going to happen staying in the EU.
I recommend reading the full Yanis story here.