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.