Saturday, 4 July 2015

How about some 'market non-conforming democracy' Angela Merkel?

If the yes votes wins Sunday’s Greek referendum and Syriza falls, “too many will believe”, fretted the Guardian’s columnist in chief, Jonathan Freedland on Saturday, that Brussels and Berlin engineered the toppling of a democratically elected government.

I wonder where they could have picked up that delusionary belief?

It clearly can’t have come from the senior German conservative politician, described as “one of Europe’s most influential politicians” who told the Times newspaper  last week that Angela Merkel’s CDU would block any deal with the ‘communists’ Alexis Tsipras and Yanis Varoufakis, campaign vociferously for a ‘yes’ vote, and then install a ‘technical’ government in Syriza’s place.

Revelations from Martin Schulz, German social democrat (!) and President of the European Parliament, to the effect he wanted to Syriza to resign and be replaced with a “technocratic government so we can continue to negotiate” obviously had no effect.

But, perhaps, you know, “too many” have just been paying attention to the record of Eurozone institutions and core country governments like Germany’s since the beginning of the financial crisis. A record that betrays an unbending desire to topple recalcitrant governments and views the will of the people as a minor impediment to which no credence should be given.

Let’s have a brief refresh

Ireland, February 2011

On the eve on the Irish general election in February 2011, the European Commission helpfully intervened to point out that the result would have absolutely no effect on the country’s IMF-EU bail-out conditions, imposed after the financial sector imploded and its enormous bad debts were transferred to the state. It could not be renegotiated as it was “between the EU and the Republic of Ireland, it's not an agreement between an institution and a particular government,” the Commission said.

The Irish government, it emerged last month, was strong-armed by European Commission into agreeing the 2010 bail-out in the first place, and also to accepting that ‘senior bondholders’ such as large banks, should not share any losses. The ex-General Secretary of the Irish government’s Finance Department, told an inquiry into the causes of the financial crisis in June that the European Commission applied enormous pressure through “misinformation” and “anonymous media briefings” so that Ireland swiftly agreed to the €85 billion IMF-EU bail-out.

All this was quite in keeping with the views expressed in May 2011 by now European Commission President Jean-Claude Juncker, that fiscal policy was “too important” for voters to have any say over, and should be determined in “dark, secret debates”.

But, you can say that, technically speaking, Eurozone institutions were not toppling governments, just telling them what to do.

Hang on a minute …

Portugal, April 2011

After months of Portuguese Prime Minister Jose Socrates refusing to accept a bail-out, the European Central Bank (ECB) intervened for the sake of the banks (sorry Eurozone). In April 2011, Portuguese banks decided to stop buying government bonds if Lisbon did not seek a rescue. The head of the country’s banking association admitted that he had been given “clear instructions” from the ECB and Bank of Portugal to cut off the tap.

During the ensuing general election campaign, ECB and European Commission experts demanded that all parties sign an accord agreeing to the bail-out memorandum. Before the election, that is. “Let's not have a public dialogue every day,” said EU economy commissioner, Olli Rehn. Portugal has since been lauded by the London School of Economics for establishing consensus over implementing austerity. Well done.

Moving swiftly on …

Greece, November 2011

You could be forgiven for thinking the Eurozone’s current travails with Alexis Tsipras and co were the first time a Greek Prime Minister had thought of holding a referendum on bail-out conditions. But back in November 2011, Prime Minister Georges Papandreou (of the centre-left Pasok party, currently riding high at about 3% in the polls), announced a referendum on whether to remain in the euro and accept the then austerity measures being proposed. But before it could happen he was called in for a swift re-education session with Angela Merkel, then French President Nicolas Sarkozy, the ubiquitous Jean-Claude Juncker, then European Commission President Jose Manuel Barroso and the IMF’s Christine Lagarde. “We made Papandreou ... aware of the fact that his behavior is disloyal,” said Juncker.

But they didn’t stop there. In the words of the Financial Times journalist, Peter Spiegel: “Mr Barroso had called Mr Samaras, the Greek opposition leader, from his hotel before the meeting. He knew Mr Samaras was desperate to avoid the referendum. Mr Samaras told Mr Barroso he was now willing to sign on to a national unity government between his New Democracy party and Pasok – something he had assiduously avoided for months in the hopes he could secure the premiership on his own. Mr Barroso summoned his cabinet and other commission staff to his suite… to plot strategy. He decided he would not tell Mr Sarkozy or Ms Merkel of the conversation but according to people in the room, they began discussing names of possible technocrats to take over from Mr Papandreou in a national unity government. The first person to come to Mr Barroso’s lips was Lucas Papademos, the Greek economist who had left his post as vice-president of the ECB a year earlier. Within a week, Mr Papademos would have the job.”

Technocrats, engineered to take over from elected politicians, who’d have thought it?

Last but not least:

Italy, November 2011

Alright, this one involves Silvio Berlusconi, who you could say, deserved it, but the point still holds. If the EU could remove an obstructive right-wing politician, they would have no qualms about doing so in the case of a left-wing government - like Syriza.

According to a 2014 book by former US Treasury secretary, Timothy Geitner, he was approached by EU officials in November 2011 with a plan to overthrow Berlusconi. The idea was that the US would refuse to back IMF loans to Italy as long as Berlusconi remained in power. Geitner didn’t oblige but the plotting didn’t stop there.

According Lorenzo Bini-Smaghi, Italy’s former member on the European Central Banks’s executive board, the EU decided to remove Berlusconi and replace him with former European Commissioner, Mario Monti, because he started threatening in private meetings to ditch the euro and bring back Italy’s former currency, the Lira.

What did definitely happen was that the interest rate on Italian government bonds rocketed in the autumn of 2011 and Berlusconi resigned on 9 November. He was replaced by Monti, who announced an austerity programme and the interest rate miraculously plummeted.

Greece, 2015?

The difference now is that the current Greek government is not prepared to accept ‘dark, secret debates’ or hotel room coups and won’t go quietly into the night. With a ‘no’ vote in Sunday’s referendum, Angela Merkel’s guiding philosophy of ‘market conforming democracy’ is threatening to turn into, heaven forfend, market non-conforming democracy.

And they are really, really asking for it …

Vote Oxo cube