Summary: Recent events in Europe reveal much about the nature of democracy in the West, showing our leaders’ contempt for us. Europe is just America as seen in a mirror. See the links at the end for more information.
Europe is stunned. The Greek prime minister wants to allow the people to vote on the euro rescue plan for their country. … he has made the right decision. … The Greeks will, for a change, decide for themselves how they and their country will move forward … every Greek gets to decide, and can no longer complain about their government bowing to international demands. They have had no real opportunity to do so for quite some time.
— Sven Böll, op-ed in Der Spiegel, 1 November 2011
“We don’t want elections. We want to govern.”
— Premier Silvio Berlusconi, taken our of context but symbolically true (source: AP)
Papandreou, Prime Minister of Greece, astonished Europe’s leaders by calling for a referendum on the austerity package they’ve imposed on his nation. Their horror — and subsequent events — revealed much about the political foundation of the project to unify Europe.
(1) The project relies on support of Europe’s elites, not its people. For example, defeat of the Irish referendum on the Lisbon Treaty in June 2008 meant nothing; only approval was definitive. They tried again, successfully, in October 2009. So Papandreou’s call for a public vote struck at the project’s great weakness. Fortunately it was only a manuever, quickly abandoned.
I trust the wisdom and the maturity of the Greek people and I trust them … I’m not saying this romantically, I deeply believe in democracy. … We would never choose to hold a referendum on whether we leave or stay in the euro. It’s not something you can ask the Greek people about. It is self-evident (that they want to stay).
— Greek Prime Minister George Papandreou to the Socialist Party’s members of parliament, Reuters, 3 November 2011
Conservative leader Antonis Samaras said “the new loan agreement is unavoidable. And it must be secured.” Until now Samaras has consistently opposed the austerity policies demanded in the bailouts, including the latest deal which euro zone leaders agreed only last week. (Source: Reuters)
(2) Despite the certainty with which US conservatives label it a left-wing project, both Left and Right support unification (driven by Europe’s wealthy elites). This gives Europe’s voters no real choice.
- Prime Minister Merkel’s coalition of right-wing parties allegedly opposes unification — especially the Free Democratic Party (FDP) — yet has strongly championed the highly unpopular programs to rescue the PIIGS (the left favors unification).
- Governments have fallen during the crisis in Ireland and Portugal, but the opposition parties in turn were equally or more supportive of unification.
- Greece’s conservative parties, let by the New Democracy party’s Antonis Samaras, opposed unification until Papandreou’s move put the project at risk — then they showed their true colors and supported the extreme measures being imposed on Greece.
Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt. This acquis by the Greek people cannot depend on a referendum. The country must feel safe and stable and that is the first requirement in order for it to be truly safe and stable.
— Statement by Greek Finance Minister Evangelos Venizelos on 3 November 2011 (“acquis” means agreement, “that which has been agreed upon”)
These dynamics should remind us of our own recent past. As explained by Robert Reich (Prof of public policy at the UC Berkeley, and Secretary of Labor for Clinton) in “Should Greece reject the bailout?“, Salon, 1 November 2011 — Excerpt:
We’ve been here before, remember? Here in the United States, at the end of 2008 and start of 2009. Wall Street had made lots of bad loans, and the question we faced then was whether to bail out the Street.
The difference is, we didn’t hold a referendum. Instead, the Bush administration told Congress the nation risked “economic Armageddon” if it didn’t immediately authorize a giant bailout of the Street – with no strings attached. Of course Congress hastily agreed. Hank Paulson, Ben Bernanke and Tim Geithner (as head of the New York Fed) then doled out the money. And the Obama administration (with Geithner installed as Treasury Secretary) gave out more.
So instead of allowing the Street to live with the consequences of its negligence, we bailed it out – and allowed the Main Streets of America to suffer the consequences.
If Americans had been consulted about the bank bailout, I doubt it would have happened the way it did. At the very least, strict conditions would have been placed on the banks in return for the money. The banks would have had to eat the losses of the predatory mortgages they sold, and help homeowners reduce those mortgages. They’d be required to improve the capitalization of small banks in communities across the country. They’d be forced to accept stringent new regulations, including resurrection of Glass-Steagall.
But Americans weren’t really consulted. It was an inside job. As a result, Wall Street has prospered but the rest of the nation hasn’t. One out of four homeowners is underwater, owing more on their homes than the homes are worth. And with the worst economy since the Great Depression, we’re now embarking on fiscal austerity. Either Congress’s super-committee comes up with $1.2 trillion of federal budget cuts that Congress agrees to – going into effect a little over thirteen months from now – or $1.5 trillion of cuts are made across the board. Meanwhile, states and cities have been slashing public services for the past three years.
So which is it? Rule by democracy or by financial markets?
For more information about Europe’s crisis (this will be updated)
- “Europe’s Plan To End the Debt Crisis – Putting The “Con” in “Confidence”, by Satyajit Das, Naked Capitalism — Part 1 and Part 2
- ” Exit From the EMU: The Logistics“, Elisa Parisi-Capone, Roubini Global Economics, 4 November 2011 — Subscription only. A detailed roadmap for an nation to leave the EMU.
- “Europe’s democratic deficit grows wider by the day“, The Telegraph, 5 November 2011 — “The Eurocracy’s contempt for the nation-states it governs is growing ever more flagrant.”
- “A Gravity Test for the Euro“, Kenneth Rogoff (Prof Economics at Harvard, former Chief Economist of the IMF), Project Syndicate, 3 November 2011
- “The eurozone decouples from the world“, Gavyn Davies (see his bio on that page), Financial Times, 6 November 2011
- “Wishful Thinking And The Road To Eurogeddon“, Paul Krugman, New York Times, 7 November 2011 — He adds a few notes to the above article.
- “Germany Must Do It, Not China“, Michael Pettis, Roubini Global Economics, 7 November 2011 — Clear thinking about the problems of Europe, unlike that of Europe’s leaders.
Other articles on the FM website about Europe’s crisis
- The post-WWII geopolitical regime is dying. Chapter One , 21 November 2007 — Why the current geopolitical order is unstable, describing the policy choices that brought us here.
- Can the European Monetary Union survive the next recession?, 11 July 2008
- The periphery of Europe – a flashpoint to the global economy, 8 February 2010
- A great speech by the PM of Greece. How soon until an American President says similar words?, 3 March 2010
- Governments cannot go bankrupt, 2 April 2010
- Our government’s finances are broken. How do we compare with our peers?, 8 April 2010
- The EU does Kabuki for Greece. Is it the next domino to fall?, 14 April 2010
- About the Euro crisis: the experts are wrong; the German people are right., 7 May 2010
- Former Central Bank Head Karl Otto Pöhl says bailout plan is all about ‘rescuing banks and rich Greeks’, 20 May 2010
- The Fate of Europe, nearing the point of decision, 13 September 2011
- Europe drifts towards the brink of a cataclysm, 26 September 2011
- Delusions about easy fixes for Europe, dreaming during the calm before the storm, 30 September 2011
- Every day the new world emerges, yet we see it not. Like today, as Europe begs China for loans, 15 September 2011
- Is Europe primed for chaos, as it was in July 1914?, 7 October 2011
- We see the outlines of the next cure for Europe. Will it work?, 14 October 2011
- Today Europe’s leaders took another step towards the edge of the cliff, 27 October 2011