Yves here. The EU has gone so far astray of its original aims that its corruption and resulting fissures seem beyond repair, yet as Mathew D. Rose discusses in depth, its leaders remain dangerously complacent.
By Mathew D. Rose, a freelance journalist in Berlin
The recent revelation that Luxembourg under its former prime minister, Jean-Claude Juncker, had introduced laws that enabled multinational companies to avoid billions of dollars in tax is simply a further nail in the coffin of the European Union.
With his tax-dodging scheme Juncker, in the meantime newly appointed president of the European commission, transformed his economically floundering miniscule nation (population 500,000) into the per capita richest state in the world. This was not a case of subtly beggaring thy neighbour, but blatantly buggering the world.
The talking heads of European politics, finance and business are at pains to explain there was nothing remotely illegal about what Juncker and Luxembourg have done and are still doing, and there is very little clamour from the political class or the media for Juncker’s resignation or removal from office. Even the excuse of last resort has been utilized: Juncker, who was for much of the time concerned also Finance Minister of Luxembourg, did not know about his nation’s tax deals. Juncker is not in the least repentant.
This case is paradigmatic for the current demise of the EU, an institution that has lost its way morally and democratically.
The selection of Juncker as EU president was simply a further episode in a cascade of misguided decisions by Europe’s governments. Juncker has no credibility as a statesman, but is notorious as a backroom dealmaker, whose ideological lodestar is his own career. The only national leader who dared to publicly raise his voice against Juncker’s EU presidency was David Cameron.
The British prime minister interpreted the results of the EU elections in May of this year correctly: European voters are fed up with an EU that is not working in their interests. Cameron knew perfectly well that Juncker was a liability for the EU and especially for the Tories, as the British anti EU party, UKIP, threatens a Tory victory in the upcoming general election in the spring. Apparently even Angela Merkel initially had grave doubts about Juncker. What he promised in return for her support, we shall eventually find out.
Juncker claimed that he had been democratically elected to the EU presidency by the citizens of Europe in recent elections, despite a turnout of only 42.5 percent, whereby most voters had never heard of him, much less realized that their votes had anything to do with his appointment as EU president.
This was not the only recent incident that is eroding confidence and increasing controversy within the EU. At the end of October the British were perplexed to discover that they must contribute an additional 2.1 billion Euros ($2.7 billion) to the EU budget (of which 779 million Euros will be passed on to Germany as a rebate). This is the result of the United Kingdom’s economy performing better than expected in the past ten years. This was not only due to technical adjustments in the calculation of budget contributions. Germany has forced the Euro nations to adopt a disastrous regime of austerity following the Great Recession, resulting in stagnation and low inflation, while the UK financial policies have resulted in robust growth. This trend, which should continue for a number of years, means that the British, with their Anglo-Saxon pragmatic view of things, shall have to pay for what they see as Teutonic financial dogmatism and outright pig-headedness. EU officials are rather taken aback by British rancour, as these are the rules of the EU, which is based upon solidarity of the strong with the weak.
These two incidents highlight the current crisis of the EU and Euro group. Both have lost credibility, political and – probably even worse – morally. In southern European nations, as well as Ireland and now France, the EU’s and Euro group’s mishandling of the economic crisis, has given them both a character of a bandog of the German government.
The EU project was based upon a simple moral assumption: to end European nationalism that had led to two major wars, the second of which nearly destroyed the continent, by creating a sense of solidarity and equality among European nations. What began in 1951 with the prosaic European Coal and Steel Community from a very high moral ground wallows today in an undemocratic, intransparent morass.
Although initially an economic organisation, the goal of the European Coal and Steel Community and the European Economic Community, the precursors of the EU, was to unify national interests within Europe through amicable regulation, thus obviating political confrontation and ensuring peace on the continent.
The visions of Monet and Schumann were successful and the EU enjoyed decades of peace and prosperity. In its early years most Europeans saw the EU as something of an obscure bureaucratic affair and the politically ineffectual European Parliament – at least those that knew it existed – as an institution where superannuated or discredited politicians could continue to receive high salaries for little work, as well as skim a bit of cream from the top of the EU budget. To this day EU policy and laws are primarily dictated by the member governments. Not having legislative initiative, the EU parliament has a subsidiary role.
The Treaty of Maastricht of 1993 was however a watershed for the EU. A reunited Germany and an Eastern Europe free to make new alliances woke dreams of grandeur – and an ever-present simmering anti-Americanism – in both Berlin and Paris. Many former communist countries were drawn to the EU expecting a free lunch with EU money. Not only did the EU begin to expand rapidly – too rapidly – but suddenly a federal policy was on the agenda, although the citizens within the European Community were at no time consulted.
The introduction of the Euro in 1999 was seen as an inevitable step in this process. As we now know, the Euro was either poorly planned to benefit Europe or brilliantly designed to enable Germany to dictate financial policy to the other members of the Euro group. The European Central Bank can limit the autonomy of the national banks within the Euro group and determine national policy, even remove democratically elected heads of state. Yet the ECB proved in the recent sovereign debt crisis that it was not part of its remit to effectively help member nations in financial difficulties.
That things were not progressing smoothly towards a federal EU became evident with the introduction of the Euro. In a referendum in 2000 the Danes voted against adopting the common currency. Three years later the Swedes followed suit. No other nations held a referendum – for obvious reasons. One must understand that the Scandinavian countries, with a much stronger democratic traditions than other European nations, are a bellwether for the political mood in Europe.
This repudiation did not faze politicians trying to ram through European federalism. In 2005 they created an EU constitution. Following the Scandinavian referendums concerning the Euro some countries decided to hold a referendum concerning this historic step; but democracy has never been a friend of EU politicians. The planned constitution became untenable following its rejection by voters in France and the Netherlands, it being clear that voters in other nations that had scheduled referendums would follow suit. The project was terminated.
Undaunted by the dearth or popular support for European federalism, the EU political class, driven by economic interests that found it simpler and cheaper to purchase the passage of laws in Brussels than in the capitals of the numerous member states of the EU, pressed ahead.
In 2007, the failed constitution was repackaged as the Treaty of Lisbon, the adoption of which necessitated solely the authorisation of the EU member states, eliminating the need for referendums – that is except for Ireland, which was obliged to hold one under its 1936 constitution. The treaty was promptly rejected by the Irish voters in June 2008. Under the motto that the Irish should keep voting until they finally approved the treaty, it was endorsed in a second referendum four months later.
In the meantime, the EU has expanded its power over the member states. Members of the Bundestag claim that around sixty percent of the legislation they deal with is simply the confirmation of laws emanating from Brussels. This has been a comfortable arrangement for politicians of many EU nations who pass laws in Brussels that would be considered unacceptable by their own voters, then placing the blame on the EU.
As the decision making processes of the EU are opaque, it is no wonder that Brussels, similar to Washington DC, has become the focal point of thousands of lobbyists in Europe. This has become painfully obvious as the EU carries on secret negotiations for a trade treaty with the US, the Transatlantic Trade and Investment Partnership (TTIP).
A handful of politicians from the European Commission and cohorts of lobbyists and their lawyers control the negotiations. Leaked documents proved that TTIP was everything but beneficial for EU citizens, instead favouring international corporations and banks. This week, hundreds of citizens’ initiatives from throughout Europe filed suit at the European Court of Justice to force the European Commission to break off the current TTIP negotiations, as they violate the rights of EU citizens. A petition signed by almost a million EU citizens had been previously rejected by the Commission.
Nor has the EU’s policy of expansion at any cost been wise. Just as anyone who wished to know could ascertain that Greece, before and after its EU membership, was a thoroughly corrupt country where official economic data had little to do with reality, the tax system was dysfunctional and the government totally untrustworthy, will discover today the same is true today of Romania and Bulgaria, whereby one could probably safely claim that there is no rule of law in either nation. The political developments in Hungary have very little to do with democracy and the EU does not have the situation remotely under control. Add to these a costly EU adventure in Ukraine to support an oligarchy that has plundered the nation and subverted democracy.
The results of recent elections for the EU parliament saw a dramatic increase of support for parties that either question the present role of the EU and ECB or reject both institutions entirely. The support of these parties is increasing. Podemos in Spain and Syriza in Greece are leading polls in their countries. The Front National, which calls for France to leave the European Union, not only won the latest EU elections, but, according to a recent poll, its leader Marine Le Pen would prevail if presidential elections were currently held. In Britain UKIP last month won its first seat in the House of Commons in a parliamentary by-election and seems poised to gain a second in a further by-election next week. In Italy the anti EU party Five Star Movement is alive and well, biding its time as efforts by Matteo Renzi to reanimate the Italian economy wilt before EU interference.
The question is, if these parties, should they be successful in upcoming elections, will decide to abandon the EU and Euro or try to reform these institutions? Jettisoning the Euro would probably be similar to abandoning the gold standard during the Great Depression, resulting in rapid economic recovery. Being in the EU, but not part of the Euro is compatible, as Denmark and Sweden have proved. Not being in the EU, nor adopting the Euro, yet being integrated in the EU market is also viable, as practiced by Switzerland.
Historians have taught us not to expect events to repeat themselves. Thus the congratulatory back slapping on this one hundredth anniversary of the outbreak of World War I, assuming such an event could never repeat itself, is misplaced. So is the other extreme: concerns that the conflict in Ukraine could result in a similar conflagration. Events rarely repeat themselves as such, but mistakes do. The obliviousness and inaction of Europe’s political class to the fact that the political constellation in Europe could well be changing radically – very radically – reminds one of the complacency of 1914.
I’d hesitate before describing recent British growth as “robust,” but perhaps it looks that way from Berlin. Absolutely excellent piece, obviously.
Yes, you are right. That should definitely have been qualified with legitimate doubts about the authenticity and sustainability of Britain’s recovery, which I share.
Spot on – but from down here on the ground – UK robust recovery ?
Was just talking about this with a young colleague. We are both depressed when comparing what scientist were able to accomplish in a 10 year span in a great show of cooperation and collaboration (re: Rosetta/Philae) in pursuit of a *remote* event vs. what EU politicians and bureaucrats have (not) managed to accomplish in the same timeframe. At this point we can really appreciate why populist parties are enjoying so much support from their respective voter base. At this point we should either hope for some of golpe by the scientists of from some kind of popular (and messy) uprising.
We’re rooting for the former.
Historically, the only way progress is made is when the scientists and intellectuals join the populists and support the messy uprising. For reference, see France 1789 or even Britain 1832.
The premiss–that trade and commerce were bulwarks against the breakdown of peaceful international relations among European nations –is and was from the beginning a non-starter. Commerce fails as a unifier just when economies slump into crises–together or separately–and it’s that which brings out the liklihood of recourse to war. RE “The visions of Monet and Schumann were successful and the EU enjoyed decades of peace and prosperity” is simply circular reasoning. The EU did enjoy decades of prosperity– and that is what accounted for the decades of peace. But, absent (relative) prosperity, there’s little reason to expect durable relative peace which was held out as the operative rationale.
Perhaps a better reasoned ground for explaining the real intentions behind the creation of the Common Market as well as the more recent experiences of the E.U. is that it was supposed to create the conditions which it did in fact create– a supernational neoliberal supremacy which was more conducive to promoting a certain set of class interests beyond national borders–something at which it has conspicuously succeeded– than to promoting peaceful relations among “nations”–something at which it has conspicuously failed.
You need to read up on history. Rose is correct in the intentions behind the creation of the EU. And the project was set in motion LONG before neoliberalism had any traction. My God, in the Eisenhower era in the US, which was after the European Coal and Steel Community was established, top personal tax rates were 90%. Eisenhower wrote in 1954:
Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas.5 Their number is negligible and they are stupid.
Even when the Thatcher/Reagan economic project got underway, Europeans were not on board. It was later that those ideas began to get a following. They were much more attached to social democracy.
In other words, you appear not to know the history of Europe and are projecting current politics backwards into time, when there has been a huge shift in values and priorities that has taken place. You can accuse the designers of the EU project of naivete, but not mendacity.
So, on this, we read the narrative differently.
For me, naive,
Within five years–the blink of an eye in international relations–the pacts aims and ambitions had grown so that numerous conferences to discuss and direct these aspects were proposed and held–
and, already, peace through trade pacts as an informing concept began to show signs of strain
My read on this has been that from wars end there was a split within the US deep state that can usefully be personified by Marshall who managed the Post War in the West and MacArthur who managed in the East. Marshall was an East coast blue blood like Roosevelt and loyal to his Presidents policies, MacArthur was an Arkansas army brat, and while a great general, in temperament more in the Custer tradition. Perfectly happy to restore the Emperor in Japan at the end of the war he took on Truman and lost before receding into the deep state where you can see his imperialist predilections roll out through the ensuing decades, at first haltingly but with the Royalist (Reagan) Revolution, robustly. His arrangement in the East can be read as an Eastern precursor to our current “Praetorian” arrangement. The conversion of the OSS to the CIA, by institutionalizing secrecy created the soil in the West for the MacArthur’s system to take root here.
According to wikipedia, Marshall grew up in a middle class family in Pennsylvania, though his family was from Virginia, and he went to VMI. MacArthur may have been born in Arkansas, but his grandfather was one time governor of Wisconsin, and his father a prominent career army man. He deserved the blue blood label much more than George Marshall. Ironically, MacArthur’s mother was Southern. He cleared a church in Atlanta when hundreds of Atlantan’s refused to sit in the same room with him, as they remembered his father’s role in the burning of Atlanta.
Thank for filling in some biographical blanks!
I stick to my larger point about Marshall reconstructing Europe along New Deal lines while MacArthur’s institutional structure in Japan was more imperialist. As the New Dealers retired, the secret soil at the CIA provided strong roots for an imperialist deep state structured along the lines MacArthur used in Japan.
I used to know a number of pro-European social democrats. The story they always told was that, with the vast majority of industry in continental Europe destroyed in WW2, the iron and steel community was a way to avoid ruinous competition among different national “champions” until demand for these materials could be rebuilt, and to allocate slowing growing demand among the different producers to facilitate redevelopment across the participating countries.
I think both of you are correct. The EU started as a peace and tranquility project and became a neoliberal antidemocratic project. Look what Germany did to Yugoslavia just so that German corporations could get monopolies on banking and telecom.
This happened through the standard process whereby greedy sociopaths take over institutions.
Read about it in Theory of the Leisure Class, by Thorstein Veblen.
A great article as ever by Matthew Rose, though a trifle Berlin-centric. The British economy is hardly robust, and concerning Hungary the author has obviously swallowed the Soros etc. “NGO” Koolaid – since most EU citizens would give their eye teeth to have a PM like Victor Orban. His crime is defending Hungarians from predatory external banks and corporations, and naturally for this he is vilified.
Um, no. Orban has completely dismantled democracy in Hungary. His crime is banning the opposition parties (most of whom are socialists and communists, not “external”), and stacking the courts with corrupt party hacks.
Europe was fairly peaceful and very prosperous following the end of the Franco-Prussian war in 1871 to 1914. In fact most people believed in 1914 that Europe was so tightly economically integrated that another large European war would never happen (source — Guns of August). Just to say, economic integration is not enough
I would not quite call UKIP and the National Front populist parties. These parties are nationalist parties with a tinge of fascism. Even a French Jewish friend of mine, told me don’t tell my mother I voted for the National Front. She thinks they are fascists.
Remember what Hayek said, “In government, the scum rises to the top!”
Just a big of nitpicking: yes, Europe was fairly peaceful during that period, but I think it would be more accurate to modify the start and end dates a bit. Europe was fairly peaceful following the end of the Russo-Turkish war in 1878 to the outbreak of the first Balkan war in 1912.
Sir John Major in August this year on BBC Radio4 in Reflections repeated a comment about the UK Parliament elected in 1992. His observation was that virtually no MPs had any direct, first.hand experience of the War and its aftermath. As a result, he believed, the new Parliament was much less prepared to compromise on European matters than the previous ones, where many members lived through the horrors of WW2. If that happened in the UK, I would guess that the same thing happened in Europe at about the same time. My suspicion is that the European institutions shifted their aim away from the promotion of peace to the promotion of the EU as their main objective – typical of the bureaucratic behaviour C Northcote Parkinson described. This has led to the overexpansion of the EU and the overcentralisation of powers in Brussels to which its citizens currently object. Would anybody else agree that this may be part of the problem?
Well I agree there are plenty of problems with the EU but what are your solutions? Apart from Germany deciding it can actually relax its fiscal constraints, which I think should be part of the answer.
Breaking the whole thing up would bring a lot of problems – and unhappiness – with it.
As for the UK, I think the economy has been gunned up for the run-up to the election (it’s what is usually done) with tax cuts and public expenditure up 6% y-on-y IIRC (not much austerity there, despite the rhetoric). I suspect that after the election is over a lot of this will be reversed.
Breaking up the eurozone would take away forced austerity and artificial fiscal constraints.
juncker is awful and much of the eu is a mess. while he gets the basic history right rose fails to move beyond flawed incomplete critcism to polemic. the current eu contributes meaningfully to stability and the common good in member states. education, justiceenvironmental protection.
Dominant political ideology and morals reflect the values of those in positions of political control and influence. Besides the tax avoidance schemes and wealth concentration policies like the TTIP mentioned, I believe this chart reflects what they and those whom they consider their key constituents actually care about:
It is evident that they could care less about democratically elected legitimacy other than to enable them to foster an interpretation, no matter how weak, that their fiscal austerity policies reflect such.
Although I am not sufficiently well versed in the history of the EU to know the underlying intentions behind its original creation, the end result today is consistent with the view of proximity1 in his comment above: … “the conditions which it did in fact create– a supernational neoliberal supremacy which was more conducive to promoting a certain set of class interests beyond national borders–something at which it has conspicuously succeeded.”
I agree with Mr. Rose in his next to final paragraph that a possible solution may lie in adopting either a Swedish or Swiss approach assuming the political will of the citizens of Europe is sufficiently strong to overcome those with embedded interests in the status quo to allow it.
In the introduction to Mr Rose’s piece, Yves claims, The EU has gone so far astray of its original aims …
Much as I admire a lot of the analyses on this site, a few things jumped out at me when I read this post, including the above intro. I’ll try to be brief.
The original aims of the EU (as conceived of, and financed by a small group of elites in the US and mouthed by their proxies in Europe) were no different than they are today: the confiscation of any vestige of national sovereignty/autonomy by US corporate concerns.
The EU project was based upon a simple moral assumption: to end European nationalism that had led to two major wars, the second of which nearly destroyed the continent, by creating a sense of solidarity and equality among European nations. What began in 1951 with the prosaic European Coal and Steel Community from a very high moral ground wallows today in an undemocratic, intransparent morass. – Rose, paragraph 10
While I agree that the EU has become “an undemocratic, intransparent (sic) morass”, the preceding part of the paragraph above I consider to be relatively naive.
Leaving aside the real reasons for the two world wars, let’s take a look at the idea of ” … creating a sense of solidarity and equality among European nations.”
The idea of the EU was a US creation, pure and “simple”. In an important book, Circus Politicus (Deloire and Dubois, Albin Michel, 2012), the authors cite our own David Rockefeller, writing in 1954: “The US economy is solid and should provide the Old Continent a lesson in dynamism … The US government needs partners to develop economic growth in the free world and the Europeans are our natural partners … Insufficient attention has been paid to long-term planning and the evolution of the international order … Given time, our idea of world affairs must be extended to the entire world”. (Circus Politicus, pps 151-152, my translation).
The authors end this particular chapter (Chapter 6 of Part 2) with the following (paraphrased) questions: What if globalization is not a spontaneous phenomenon, as we are lead to believe? What if it was the realization of a policy born in the US and subsequently adopted by a socially and politically like-minded group of Europeans who would later impose this vision on their own countries? (CP, p 152)
They go on to explain that, three years later, six countries (Germany, Belgium, France, Italy, Luxembourg, Netherlands) signed an agreement for the abolition of customs barriers called The Rome Treaty. Coincidence? (CP, p 152)
Given only these hints, I would suggest that, far from being an altruistic desire for peace and equality, the EU was was formed to eliminate any pretensions to national sovereignty, to any ideas (socialist, communist, the social contract, the public good) that might be contrary to the predatory American (and now, international) neoliberal agenda.
To this day EU policy and laws are primarily dictated by the member governments. – Rose, paragraph 12
I would beg to differ. EU policy and laws are primarily dictated by lobbyists and committees of experts, just as in the US (CP, pps 241-242). European heads of state are simple mouthpieces for decisions made in Brussels.
Circus Politicus (cited above)
Dracula Contre les Peuples (Dracula versus the People), Patrick Le Hyaric, Les Editions de l’Humanité, 2014. This book contains a copy of “Directives for Negotiations relative to the Global Agreement on Trade and Investment … between the European Union and the United States of America”
Note: Don’t know if translations are available.
The EU was never about peace and equality. It was about, and still is, about corporate power and the elimination of state sovereignty. See “Circus Politicus”, Deloire and Dubois, Albin Michel, 2012.