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INSIDE RUSSIA, TWENTY YEARS ON FROM THE END OF THE SOVIET UNION – PAGES 10 -13
decemBER 2011 N o 1112
JONATHAN LASKER – ‘Stable Aberrance’ (1995) EUROPE IN CRISIS
Eurozone’s bank of banks
The European Central Bank regards itself as apolitical and run by technicians, yet is has clearly and specifically neoliberal policies, and politics. It has now taken over the supervision of Italy and Greece ANTOINE DUMINI AND FRANÇOIS RUFFIN
Rule by troika by Serge Halimi
Former bankers Lucas Papademos and Mario Monti have taken over in Athens and Rome, exploiting the threat of bankruptcy and the fear of chaos. They are not apolitical technicians but men of the right, members of the Trilateral Commission that blamed western societies for being too democratic.
In November, the Franco-German directorate of the European Union, the European Central Bank and the International Monetary Fund – the “troika” – were furious when the Greek prime minister, George Papandreou, announced plans to hold a referendum. This, they said, would call into question an agreement reached in October to strengthen the economic policy that had brought the country to its knees. Summoned to Cannes for an interview during a summit that his country was too small to attend, kept waiting, and publicly upbraided by Angela Merkel and Nicolas Sarkozy (who were responsible for exacerbating the crisis), Papandreou was forced to abandon the plan for a referendum and resign. His successor, a former vice-president of the ECB, promptly decided to include in the Athens government a far-right organisation banned since the Greek colonels lost power in 1974. (The troika expressed no views on this.)
of war”. But it is having the opposite effect, with drastic cuts, puppet governments at the call of the brokers, and renewed strife between nations. A young Spaniard voiced his anger at having to go to Berlin or Hamburg to find work: “We can’t go on being Germany’s slaves.” The Italians find the French president’s high and mighty attitude offensive and wonder, rightly, what exceptional talents might justify this. some Greeks are complaining about the “occupation” of Greece, with cartoons depicting the German chancellor in Nazi uniform.
For people in countries suffering under austeritymeasures,thehistoryofEuropeprovides some outstanding examples. In some ways, recent events in Athens recall Czechoslovakia in 1968: the crushing of the Prague Spring and the removal of the Communist leader Alexander Dubcek. The troika has played the same part in reducing Greece to a protectorate as the Warsaw Pact did in Czechoslovakia, with Papandreou in the role of Dubcek, but a Dubcek who would never have dared to resist. The doctrine of limited sovereignty has been applied, though admittedly it is preferable and less immediately lethal to have its parameters set by rating agencies rather than by Russian tanks rolling over the borders.
The European project was supposed to secure prosperity, strengthen democracy in states formerly ruled by juntas (Greece, Spain, Portugal), and defuse “nationalism as a source
Having crushed Greece and Italy, the EU and the IMF have now set their sights on Hungary and Spain.
Translated by Barbara Wilson inside this issue Greece: can a traditional society survive the dismantling of its way of life? Page 2 Libya: as the flush of victory fades, will the militias put down their arms? Page 4 People power: tidal wave of uprisings sweep the Middle East Page 5 DRC: second elections since civil war delight Congolese civil society Page 6
Indian takeaway: art to order for international dealers? Page 8 The low costs and high price of China’s coal dependency Page 14 Painting the map green: Africa’s own fight against climate change Page 15 Albert Camus: writer, witness and activist of WW2 and Algeria Page 16
Jean-Claude Trichet, about to step down from his presidency of the European Central Bank, delivered his usual speech – in English – at his last press conference, about “structural reform of the labour market”. He must have known it by heart: he had argued for it eight years ago, in his first speech as president. It was not only Trichet’s mantra: his predecessor Wim Duisenberg had repeated it monthly ever since the euro was launched in 1999.
This time, on 8 September 2011, the demands were more detailed: “We should see the elimination of automatic wage indexation clauses and a strengthening of firm-level agreements so that wages and working conditions can be tailored to firms’ specific needs. These measures should be accompanied by structural reforms that increase competition in product markets, particularly in services – including the liberalisation of closed professions – and, where appropriate, the privatisation of services currently provided by the public sector, thereby facilitating productivity growth and supporting competitiveness.”
“You would think we were in the Politburo a few months before the collapse of the Soviet Union. It’s the same old story, the same jargon, disconnected from reality,” said the Green MEP Pascal Canfin, who is vice president of the European parliament’s special committee on the financial, social and economic crisis. “Their agenda is completely ideological, and has nothing to do with the causes of the crisis. I don’t see how making the labour market more flexible, slashing public services or making firm-level agreements take precedence over employment law responds to financial deregulation. ECB leaders are imposing the policies of the IMF, with its structural adjustment programmes, even though these have largely failed. Despite everything, we’re doing it all over again.”
The bank’s familiar refrain makes it seem as though nothing has changed in Frankfurt, but in fact there has been a major shift: the ECB now has the means to turn its ideas, which go far beyond monetary policy, into reality. Its experts, along with the missionaries of the International Monetary Fund and the European Commission (who make up the “troika”), are acting as alternative governments in Athens, Dublin and Lisbon. They have ministers under their supervision, and have set out their 15 commandments, which include extending temporary layoffs, reducing agricultural workers’ pensions, and cutting public spending. According to the French daily Le Figaro, Trichet and his successor Mario Draghi even wrote to the then Italian prime minister,
Silvio Berlusconi, demanding he “make it easier to dismiss employees”, “favour agreements within companies over industry-wide negotiated agreements” and “privatise municipal services [public transport, refuse collection, electricity]”.
The two central bankers made clear their opinion of democracy when they recommended Berlusconi “proceed by decree, with immediate application, and not by bill which parliament always takes time to pass”. Le Figaro said the ECB was putting Italy under supervision, while the former European Commissioner Mario Monti, Italy’s new prime minister, denounced this “foreign authority” (1). This was no longer giving advice, however emphatic, nor a “message”, as the bank’s leaders claimed. These were conditions.
“Up to now, the ECB had no real power,” said Clément Fontan, a political scientist. “When the bank talked, political leaders would half-listen, saying to themselves that’s just the ECB being conservative, we’ll humour them. When the financial crisis happened, the countries of the eurozone came under attack from the financial markets. At first the ECB stuck to its dogma of independence and non-intervention, and refused to help. But then it came under pressure from governments and banks, and the general panic of the markets, and gave in.” Obliged to buy up the treasury bonds of countries in financial difficulty, the ECB imposed conditions: those countries would have to apply its structural reforms. “We are in a similar situation to Argentina and the IMF at the end of the 1990s, where the lender put strong pressure on the borrower to make sure it applied the reforms it considered to be right and necessary. In the end the financial crisis has opened a window of opportunity for the ECB,” concluded Fontan.
Even the bank’s most critical observers called Trichet a “great politician”. His opponents described him as the only real European leader. He seized the opportunity to slip through this window and extend his power and that of his institution.
We had arranged to meet Trichet at the top of the Eurotower, with its panoramic view of the skyscrapers of the Commerzbank, Dresdner Bank and Deutsche Bank. The ECB did not
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ntoine Dumini and Francois Ruffin are journalists