The End of Europe

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The crisis in Greece is part of a larger disintegration of the European project argues Ceedric Durand, a Professor of University of Paris 13.

The myth of intra-European convergence has also revealed itself. In the last five years, the apparent convergence between countries has evaporated, reinstalling the economic hierarchy between the German European core and the peripheries with a vengeance. While Italy now lags behind its pre-euro level in terms of GDP per capita, others like Greece, Spain, and Portugal have slipped into full-scale social despair, with ever-larger segments of the population unable to meet their basic needs.

The tragic irony is that all of this suffering is in vain. Debt-to-GDP ratios have risen despite harsh austerity measures, locking peripheral countries and their working classes into an endless cycle of debt peonage vis-à-vis financial markets and sovereign creditors. At the same time, internal trade imbalances within the eurozone persist, and the tighter coordination of neoliberal prescriptions at the EU level offers no mechanism to tackle the underlying structural problems of uneven development.

The adverse winds of economic depression have turned European governance into a class-warfare machine. The great leap forward of integration in the past few years has resulted in steadily declining control for national elected parliaments over economic policy.

Originally published on The Jacobin website

From a European perspective, the financial meltdown of 2008 was the prologue of a full-scale, continent-wide crisis. The US-made financial debacle triggered a complex chain of unexpected events throughout the old continent, contaminating all spheres of social life and resulting in a radically new landscape plagued by political and economic crisis.

As Ada Colau, the newly elected mayor of Barcelona and head of a coalition inspired by the indignados, says: “No one will come out unchanged from this crisis. What awaits us is a feudal horizon, with a sharp increase in inequality, an unprecedented concentration of wealth, new forms of insecurity for the majority of citizens. Or, a democratic revolution, where thousands of people are committed to change the film’s ending.”

We are very likely arriving at this historical turning point. The landslide victory of No in the July 5 Greek referendum indicated that the popular classes want a halt to decades of neoliberal European integration. This reopening of what Auguste Blanqui called the “chapter of bifurcations” is taking place in the middle of tectonic shifts shaking a continent that has fallen into a spiral of rancor and resentment not seen since the middle of last century.

Fifteen years ago, the successful launch of the single currency fueled a wave of Europhoria across the continent. The 2000 Lisbon Strategypromised to make the European Union “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.” Enthusiasts portrayed the union as “a beacon of light in a troubled world.” Marcel Gauchet and Jürgen Habermas argued that the new European formula — in terms of supranational democratic governance and the welfare state — was destined to serve as “a model for the nations of the world.”

The expectations of Europeanist days never materialized. On the contrary: in retrospect, the whole sequence appears a story of uninterrupted failure. The region lagged behind almost every other region in economic growth before and after the crisis, and the 2010 turn to austerity produced a magnificent economic debacle. GDP has still not recovered to its pre-crisis level, making it one of the worst economic crises in recent history — beaten only by the catastrophic Russian capitalist restoration of the nineties.

A straightforward confession of the irrelevance of economic management during this period is the sober statement by the OECD, shown below, that the expected follow-through to the initial recovery has been repeatedly delayed.

Figure 1: Past OECD economic outlook projections of euro area GDP (quarter 1, 2008 = 100)

Unemployment last year soared, with more than 44 million people unemployed or underemployed within the Union. This is not only a painful personal drama for workers and their families, but also a spectacular illustration of social irrationality resulting in a gigantic economic waste, especially considering European workers are among the most productive in the world.

The myth of intra-European convergence has also revealed itself. In the last five years, the apparent convergence between countries has evaporated, reinstalling the economic hierarchy between the German European core and the peripheries with a vengeance. While Italy now lags behind its pre-euro level in terms of GDP per capita, others like Greece, Spain, and Portugal have slipped into full-scale social despair, with ever-larger segments of the population unable to meet their basic needs.

The tragic irony is that all of this suffering is in vain. Debt-to-GDP ratios have risen despite harsh austerity measures, locking peripheral countries and their working classes into an endless cycle of debt peonage vis-à-vis financial markets and sovereign creditors. At the same time, internal trade imbalances within the eurozone persist, and the tighter coordination of neoliberal prescriptions at the EU level offers no mechanism to tackle the underlying structural problems of uneven development.

The adverse winds of economic depression have turned European governance into a class-warfare machine. The great leap forward of integration in the past few years has resulted in steadily declining control for national elected parliaments over economic policy.

Rule-bending, bureaucratic supervision by the commission and core governments, the installment of independent technocratic bodies controlling fiscal policy, and the enlargement of the European Central Bank (ECB) competencies has reduced the field of economic policy options for national government to the one-size-fits-all fundamentals of the old-fashioned Washington Consensus of the nineties: consolidation, privatization, and liberalization.

Unpopular austerity packages and labor market reforms have been met with huge popular mobilizations in southern countries of a magnitude not seen in decades, with multiple general strikes and quasi-insurrectionary phases in Spain and Greece. When the determination of national governments weakened, the European center resorted to open authoritarianism: bureaucratic coups ousted several prime ministers, while the ECB, led by former Goldman Sachs vice-president Mario Draghi, explicitly blackmailed recalcitrant leaders.

In no other case did the confrontation surface with such clarity than in Greece. In a mid-June statement, International Monetary Fund chief economist Olivier Blanchard wrote candidly: “Greek citizens, through a democratic process, have indicated that there were some reforms they do not want. We believe that these reforms are needed.” By explicitly contrasting democratic choices and bureaucratic neoliberal requirements, Blanchard was simply repeating the mantra of European leaders that there is no alternative to the status quo.

The discussions with Greece are thus a formal process designed to politically defeat Greece’s left forces, burying any prospects of meaningful political change across the continent. This is the only explanation for the creditors’ inflexibility despite Tsipras crossing all Syriza’s red lines in terms of pensions reforms, tax policy, privatizations, and market liberalization. This punitive stance was made crystal clear by late June, when the ECB actively incited a bank run, warning of an “uncontrollable crisis,” and abruptly capped its emergency loans to the banking sector, triggering bank holidays and capital controls.

However, the inflexibility vis-à-vis the Greek government is not only caused by a shameless neoliberal political will. It reveals a much deeper problem of Europe, which is the non-maneuverability of this political vessel.

A central part of the problem is the size and the legal complexity of the EU. Basically, EU governance is the painful sedimentation of hard-settled compromises into rules, which are almost impossible to circumvent. The decision-making capabilities of European polity are extremely narrow and tethered to the previous political balances of forces, making radical change almost impossible to contemplate.

Moreover, the European bureaucracy is tiny, with about thirty thousand public servants and a budget less than 1 percent of the EU’s GDP. Its sole political force results from an accumulation of rule-bending and procedures that the European elite is eager to preserve, even though it has resulted in a systematically chaotic management of the crisis over the past few years.

At a deeper level, the lack of EU maneuverability is a paradoxical outcome of the landslide victories of transnational and financial capital over the previous decades. These victories resulted in the building of EU state-like institutions focused primarily on capital’s core interests — competition, trade and money — while labor and social problems were reduced to adjustment variables in the European political arena.

Consequently, the European proto-state may be strong in promoting the immediate interest of a finance-led power bloc, but it lacks the consensual side of hegemony, which is indispensable to keep diverse societies and social strata together in turbulent times.

The combination of economic and social failures and limited political maneuverability has resulted in a diminishing appeal for the European project and the reactivation of centrifugal forces across the continent.

Europe is one of the most sophisticated political landscapes in the world, and its idiosyncratic mixture of strong and contradictory political legacies of liberal, fascist, and communist traditions with multilevel statehood governance and democratic legitimacies, vibrant social movements, and contradictory geopolitical ties is boiling once again.

In this context, regardless of what happens next, the political turmoil in Greece is already a landmark in the history of the continent. The country that in the early eighties exemplified the ability of Europe to provide a solid anchor in liberal democracy and socioeconomic stability to a post-authoritarian regime is now becoming a symbol of failure and disunion.

Syriza’s attempt to escape from the neoliberal cage has been met with nothing but sabotage and vituperation from the others governments and European institutions, leaving it with no alternative but capitulation or rupture, neither a positive outcome as far as the attractiveness of the EU is concerned.

Centrifugal forces are also growing as a result of the fading appeal of Brussels. Britain is demanding a substantial reversal of integration bythreatening to leave, reinforcing the attraction of the US. On the Eastern border, the definitive disillusionment vis-à-vis European integration leaves an open field for nationalistic forces (although with contradictory sentiments towards Russia’s newfound assertiveness). Even within the historical core, there is a growing sense of despair.

This enables the rise of far-right parties such as the National Front in France, but also racist discourses in mainstream media — exemplified by Berthold Seewald’s recent call in the leading German conservative newspaper, Die Welt, for the ethnic disqualification of Greece from its European membership.

Recalling the context of the 1820s Greek independence war, he wrote that at that time “the idea that modern Greeks are descendants of Pericles and Socrates, and not a mixture of Slavs, Byzantines and Albanians, was erected as a common belief in Europe.… This is why we accepted the Greeks breaking into the European ship in 1980. One can admire the consequences every day.”

In the meantime, signs of discouragement among mainstream leaders are abundant. Reduced to complicated calculations and deprived of any political inspiration, Europe is fueling nothing but acrimony and resentment.

The lack of solidarity surfaced once again when heads of governments discussed the migrant crisis. While thousands of migrants are dying in the Mediterranean, European leaders’ response has been revealingly focused on military attacks, and when discussing sharing asylum seekers between countries, selfishness is self-evident — prompting, Matteo Renzi, the fading Italian star of the European center-left, to say, “If that’s your idea of Europe, you can keep it.”

Recent polls in Spain and the UK confirm that disappointment with Europe is translating into diminishing votes for the “extreme center” in national political fields. Whether or not their ideological convergences translate into domestic alliances, the right-wing and the left-wing of the center are tightly knitted together in a permanent European grand coalition.

In this process, the so-called social-democratic parties are experiencing the highest toll; as their traditional positions on socioeconomic issues melted in the face of neoliberal dogma, they left their core constituencies with no further reason to vote for them, leading to higher rates of abstention or the emergence of new kinds of political movements.

On the Left, the emergence of new political movements across countries is related both to structural factors such as the intensity of the austerity and more contingent issues related to the organization of the political field. But regardless of their political fate in the short term, none of them will be permitted to delay discussions on key strategic points any longer.

Two years before becoming Greece’s finance minister, in his “Confessions of an Erratic Marxist,” Yanis Varoufakis endorsed the mission of saving European capitalism from itself. The Greece battle shows that this could prove more challenging than he anticipated.

Uneven and combined developmental dynamics in the European periphery highlights the need for the Left to move from a defensive fight against austerity toward a positive agenda of systemic alternatives. The Greek experiment demonstrates that, on this path, there is no other choice than breaking with neoliberal European institutions and regaining democratic sovereignty on domestic currencies.

This is a daunting challenge, however, considering how reluctant most people are to bear the transitional costs of the breakup, even if they could be convinced of the benefits of such a rupture in the long term. Formulating policy proposals guaranteeing people a safety net during this transition will be key to facilitating new electoral victories, beginning with Spain’s elections this fall. There, Podemos and its social movement allies have a significant chance to win.

As the Greece experience has shown, the European elite can be expected to be nothing less than merciless. As a member of the Podemos leadership recently advised me, “you had better be prepared.”

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