“I, for one, welcome our new …”: Stephen Collins and the euro crisis

As we approach one of the most significant European Council meetings in recent memory, no one quite knows what the nature of the plan to resolve the euro crisis once and for all is likely to be.  Will it involve new EU institutions with a specific remit to oversee national budgets, or will this role be assigned the the European Council (or Council of Ministers)?  Will it involve substantial Treaty change, or an additional Protocol to the Treaty? Will it apply to the EU-27 or just to Eurozone members?  And to what depths will the proposed fiscal unity extend?

Whatever deal is agreed, one thing is clear: it will be a good one.  Well, at least according to Stephen Collins in Saturday’s Irish Times.  Whatever price ‘we’ pay to save the euro, according to Collins will be worth it.  This is rather shocking, even by the standards of the Times.  They usually have the discretion to wait until a proposal is on the table before agreeing to it.  But Collins’ broad sentiment is echoed across the mainstream Irish media.  There is debate, of course, on what the likely outcome will be, with a wearied acceptance that whatever it is, we’ll have to suck it up, or end up scavenging for tins of dog food in a post-apocalyptic economic future.  However, there’s little or no attempt to engage with the fundamental democratic deficit not just within the EU, but at the heart of the international financial system more generally.

Collins hints at this when he writes:

Irish politicians and the media are already focusing on the threat to Ireland’s 12.5 per cent corporation tax rate as if it is the only important issue for debate. While President Nicolas Sarkozy has certainly targeted low corporate tax rates, Germany has taken a very different view, while the UK and the countries on the eastern side of the EU will all block the French threat from their own perspectives.

Whatever treaty changes emerge, harmonisation of tax rates is unlikely to be one of them. What Irish negotiators need to focus on is not just what we want to block but what kind of treaty changes we favour. EU institutions’ loss of power to the governments of the big powers is a trend that we should work to have reversed.

However, what is missing here is a real understanding of what has been demonstrated over the past year.  What we have seen has not just been the larger EU member states (Germany and France in particular) getting a little big for their boots, the solution being to reign them back in under the happy familial embrace of the EU, with the Commission acting as the warm benevolent Daddy.  No, it is now clear that when it comes to a genuine threat to the interests of international capital, the institutions – even the principles – of the Union are essentially irrelevant.  Nice to have during the good times, when we’re all friends, but when things get tough, best to leave the hard work to the grown ups.

Where was the European Commission, the supposedly defender of small countries against the dominance of large Member States when Papandreou was summoned to Cannes to answer to Merkel and Sarkozy for the impertinence of acting as the Greek head of government without their prior approval (not that this should be taken as any defense of Papandreou?.  The answer is nowhere, because the Commission – the EU qua EU – had no role to play.  Where was the principle of solidarity when Sócrates’ administration in Portugal was forced into requesting a bailout under pressure from national banks under the direction of the ECB (thanks to Donagh at Irish Left Review for the link – both pieces well worth reading) which led to the collapse of the government (again, not to be taken as a defense of Sócrates himself)?

At the risk of hyperbole, it could be argued that one way of looking at what we are witnessing has been the overthrow of last vestiges of democratic government by the forces of international capital, where national administrations which threaten financial markets must be removed, and replaced by more friendly regimes.  Like Chile in 1973 without the massacres.  Or perhaps that’s naive, and what we’re seeing is simply a more blatant, more naked display of the power of the markets over nation states, even over the European Union as an institution.

It was certainly the case that the run-up of the IMF/EU ‘bailout’ of Ireland last year was less an example of pan-European solidarity with a partner which found itself in difficulty, and more a shakedown reminiscent of a Sopranos plot.  Ireland was forced into accepting an extortionate loan to cover the liabilities of those who had irresponsibly thrown money at Irish banks over the past decade (and, needless to say, didn’t do it out of the goodness of their hearts).  Ireland was like the hapless store-owner forced to sell off the business to repay gambling debts owed to the mafia.  Or, to be more accurate, we’re like the family of the gambler, watching our home sold from under us to cover the costs incurred by one idiotic member of the household.

But what must be borne in mind is that the gangsters in this analogy aren’t France, or the Netherlands or even Germany (although maybe they’re the enforcers).  It’s the system of global capital itself, where a Prime Minister, even one as odious as Berlusconi, can be removed from office on the basis of the judgment of a private credit agency.

And, at a time when neoliberalism is finally genuinely in crisis (wishful thinking on the part of some over the past twenty years aside), we are likely to be faced with an agreement to enshrine the Goldman Sachs consensus into European law, binding on Member State governments in perpetuity.  This kind of blinkered thinking is exemplified in Collins’ piece where he writes:

Over the next few months, if all goes well, there will be agreement at EU level to a series of binding budgetary disciplines. This will probably require treaty change and, even though that may result in a bitter referendum, it is very much in Ireland’s interest that it happens. In the long run, such a development will ensure the Irish people will be saved from a repeat of the economic indiscipline and political incompetence that characterised the Bertie Ahern years.

as if the current dire budgetary situation in Ireland was caused by marginal increases in social welfare rates rather than the suicidal decision to guarantee bank debt (and to socialize the private losses).

In a sense, it doesn’t really matter whether the final deal envisages control over Member States’ budgets ceded to the Council of Ministers or to an independent body within the EU.  Once the principle of enshrining the failed policies of fiscal austerity into EU law is agreed, the battle is already lost.  The immediate challenge is to prevent this, and to imagine a Union founded on genuine democratic governance, one with the power to act as bulwark against the power of international markets.  The longer-term goal, of course, must be a meaningful challenge to the neoliberal consensus itself.

Of course, with cheerleaders like Collins declaring the fight over before the opening bell has sounded, this will be  anything but easy.