The rise of technocracy: Full analysis of the Council roadmap for the completion of the EMU

2012-12-15

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Emblem of the European Council. Picture credit: Wikipedia

One of the most important European Council meetings is concluded and we already find ourselves in the midst of a rapid and forceful emergence of a technocratic sovereign state within the EU; what I am already referring to as the Euro-state which encompasses all Euro area member states and which has the potential to incorporate all other member states that have committed to adopt the euro as their currency but have done so, i.e. all EU member states except the UK and Denmark. The Council has effectively reproduced most of the Commission’s proposals that were enshrined in its November 30, 2012 Blueprint for a deep and genuine Economic and Monetary Union. It has avoided any reference to euro-bills, i.e. debt instruments of the eurozone with a short-term maturity of up to two years, and it has also omitted any reference to the Euro area parliamentary chamber, as a special and more important committee within the European Parliament, equipped with more powers than all other existing parliamentary committees. My interpretation is not that they will seek to avoid these perhaps thorny issues altogether, but in line with their incrementalist modus operandi they will bring them forth at their future meetings, perhaps by the summer of 2013.

With the above in mind I shall now proceed to a paragraph-by-paragraph commentary on the conclusions of the December 13-14 Council meeting, in particular on their Roadmap for the completion of the EMU. In this effort I shall abstain from commenting on all the facets of the financial/banking union, in particular on the Single Superisory Mechanism and its concomitant schemes for single resolution of banks and a common deposit guarantee mechanism. The reason I omit this subject is because the Council has published a more thorough document, a Council regulation to be precise, which I shall analyze separately in a future post. As such I shall not comment upon the few references on the ECB- and Eurosystem- related issues that are included in the Council’s roadmap. UPDATE December 16, 2012, 22:55 CET: I have just published my full analysis of the Single Supervisory Mechanism.

Proceeding thus, we read from the very first paragraph the following (all emphasis is mine and all quotes are taken from the Council’s Roadmap for the completion of the EMU, unless otherwise noted):

The European Council agreed on a roadmap for the completion of the Economic and Monetary Union, based on deeper integration and reinforced solidarity. This process will begin with the completion, strengthening and implementation of the new enhanced economic governance, as well as the adoption of the Single Supervisory Mechanism and of the new rules on recovery and resolution and on deposit guarantees. This will be completed by the establishment of a single resolution mechanism. A number of other important issues will be further examined by the June 2013 European Council, concerning the coordination of national reforms, the social dimension of EMU, the feasibility and modalities of mutually agreed contracts for competitiveness and growth, and solidarity mechanisms and measures to promote the deepening of the Single Market and to protect its integrity. Throughout this process, democratic legitimacy and accountability will be ensured.

Brussels. Outside the European Parliament. By Protesilaos Stavrou CC BY-SA-NC

From a political science perspective the most important element of the negotiations that are now culminating in such a roadmap for the completion of the EMU, is that we have witnessed, in fact ever since the creation of the Euro as an effective clique of states within the EU, a timid though radical shift in the diplomatic approach to European integration. In the founding decades integration was forwarded on the basis of the Aristotelean golden mean, through measures and decisions that would promote the common good in a context of mutual understanding. In stark contrast ever since the installation of the euro-cartel we are bearing witness to the fruits of the method of enhanced cooperation of states willing to impose their dictates on other governments that would never offer their consent for certain policies.

The very existence of the euro is a clear-cut case, however in recent times we are seeing how integration proceeds without the approval of all parties involved, through an undemocratic and manifestly unjust process of intergovernmental cooperation, effectively between Paris and Berlin. The emergence of duos such as the “Merkozy” or of trios and other cliques that spearhead integration in line with the ideological mindset they uphold, is evidence of the deprecation of the old European Community and a fortiriori of the usurpation of the EU by the Euro-clique which gradually asserts the most fundamental of all statist fictions: state sovereignty, in the proper sense of the term which includes the power to compel and to be superior to any other authority within a given geographic area. This must concern at least those who wish to see a genuinely democratic European community, resting on real solidarity and mutual respect between all of its peoples and which is stranger to any pattern of thought that forwards ‘we-they’ syndromes and which initiates various antagonisms and races to the bottom.

Let us now proceed to the closer examination of the text:

1. In the light of the fundamental challenges facing it, the Economic and Monetary Union needs to be strengthened to ensure economic and social welfare as well as stability and sustained prosperity. Economic policies must be fully geared towards promoting strong, sustainable and inclusive economic growth, ensuring fiscal discipline, enhancing competitiveness and boosting employment, and in particular youth employment, in order for Europe to remain a highly competitive social market economy and to preserve the European social model.

I have always felt profound uneasiness with this deterministic tenet of reasoning which claims that integration must proceed at all costs for the sake of effectiveness and efficiency as a mere reaction to an exogenous stimulus, to the financial and economic crisis that has revealed all of the structural malignancies of the eurozone. I am of the impression that such an approach may only foster the false dilemma of “integration or chaos”, which inevitably leads a person to two suboptimal conclusions of either rejecting the EU altogether or of sacrificing all democratic and other principles to the altars of bureaucratic convention and technocratic expediency, in an inane effort to reinforce only the economic, fiscal, budgetary and financial facets of the Euro architecture, while casting democracy—genuine democracy that is—to the dustbin of history.

In my opinion this cheap excuse must not be accepted, but must instead be treated for what it really is: a grotesque panoply of falsehoods and outright lies. Integration can and must be forwarded only for the sake of establishing a European democracy to enhance our liberties, rights and other lofty ideals we may have. In that respect integration is the means to a better life, and not an end to be pursued as such, often to our detriment. To present integration as a reaction to an external shock is to downgrade all laudable principles civilized people must uphold; it is in effect an indication of the technocratic “rationalization” of the whole process that knows no ethical constraints in its quest for power and control.

Next point:

1. The consolidation of EMU rests not only on completing its architecture but also on pursuing differentiated, growth-friendly and sound fiscal policies. While fully respecting the Stability and Growth Pact, the possibilities offered by the EU’s existing fiscal framework to balance productive public investment needs with fiscal discipline objectives can be exploited in the preventive arm of the SGP.

This statement offers priority to the logic of fiscal discipline we have seen in Europe over the last years. While I have never been in favor of frivolous deficit spending and of the inflationary policies it necessarily requires, I must say that to effectively prohibit states from exercising fiscal policy in a counter-cyclical manner, is to elevate idiocy to the level of constitutional law. Yes states must adapt sound policies, but only as a means to the improvement of their citizens lives and not as a preordained, pseudo-moralistic objective. The logic of such fiscal rules rests on a tissue of unexamined and ill-grounded shibboleths. The rates of debt and deficit they are seeking to introduce as “golden rules” are nothing but arbitrary, for in the real world there is a much more complex, interweaving web of factors that influences the fiscal position of a state and the overall conditions in the economy. To isolate two or a few more parameters as the most important ones is to obstinately refuse to recognize the complexity of the economy and to labor in a mechanistic, and therefore fallacious, frame of mind.

Proceeding to our analysis:

1. Further to the interim report submitted in October 2012, the President of the European Council, in close collaboration with the Presidents of the Commission, the European Central Bank and the Eurogroup, has drawn up a specific and time-bound road map for the achievement of genuine Economic and Monetary Union. The European Council notes the “Blueprint” issued by the Commission which provides a comprehensive analysis of the relevant issues combined with an assessment of their legal aspects. It also notes the contributions made by the European Parliament. The European Council sets out the next steps in the process of completing EMU, based on deeper integration and reinforced solidarity for the euro area Member States.

I have two short comments to make on this paragraph:

1. The Eurogroup is an unofficial forum that enjoys no institutional legitimacy. To provide it with such a crucial function is to circumvent democratic rules, especially when we take into account the fact that the European Parliament is merely “contributing” to the whole debate through opinions that in truth face the fate of the recycle bin. In addition the planning board of the European Central Bank participates in all these negotiations with eager alertness and they—these unelected technocrats—will decide on what we the citizens will have as an authority over our heads, to regulate our conduct, to force us to do this and prevent us from doing that.
2. My concern is that “reinforced solidarity” might imply a greater dose of the kind of coercive “support” we have had over the last years, usually epitomized in the troika’s methods of adopting decisions under overwhelming duress and of implementing measures against the popular will, often by deploying police corps, tear gas and other methods of compulsion; decisions that have in many cases harmed the social and democratic fabric. Isn’t there a limit to all this chivalry, altruism and sainthood? Personally I have had enough of this poisonous solidarity.

Next paragraph of the Council’s Roadmap for the completion of the EMU:

1. The process of completing EMU will build on the EU’s institutional and legal framework. It will be open and transparent towards Member States not using the single currency. Throughout the process the integrity of the Single Market will be fully respected, including in the different legislative proposals which will be made. It is also important to ensure a level playing field between Member States which take part in the SSM and those which do not.

This remark is quite important from a legal point of view, as it states quite clearly that no treaty changes are needed to effectively reshape Europe root-and-branch and center it around a technocratic Euro-state. However please take note of the fact that in case we citizens call for genuine democracy in Europe, for say, an elected European executive to replace the hypertrophic technocracy that is the European Commission, we must go through excruciating treaty changes, where certain member states who now feel quite comfortable with the status quo and with the direction integration is heading to, will place all sorts of obstacles and will demand all sorts of concessions, effectively rendering obsolete any effort for the democratization of the EU/Eurozone.

As for the rest of the paragraph I believe it contains certain antinomies. For instance how can we have a euro-state that will operate as a unified entity and as a permanent majority in all fora of decision-making, and at the same time have a level playing field with non-euro member states? There is no such thing as equality in this new reality, since some states will have the power and the means to impose their whims and caprices on those who do not wish to follow, and this will be done via the praxis of enhanced cooperation.

Further issues:

1. The immediate priority is to complete and implement the framework for stronger economic governance, including the “six-pack”, the Treaty on Stability, Coordination and Governance (TSCG) and the “two-pack”. Following the decisive progress achieved on the key elements of the “two-pack”, the European Council calls for its rapid adoption by the co-legislators.

Immediate priority is given to the implementation of the rigid fiscal rules that are enshrined in the above-mentioned legislations, especially in the fiscal compact (aka TSCG). If we examine this in line with the time-horizon that the Commission had established in its Blueprint, we must not be surprised, since the Commission had already stated that first we will concentrate all important powers at the level of the Euro area and then “after 5 years” we will open discussions on issues of democracy (at the end of this article in Annex 1 I quote the Commission’s time-frame).

I am now carrying the commentary to the next paragraph. However please note that §6-11 refer to the financial union and to topics such as the Single Supervisory Mechanism, which as I already mentioned, I intend to scrutinize thoroughly and systematically in a future article. As such analysis now moves on to the last paragraphs from 12-14:

1. In order for the EMU to ensure economic growth, competitiveness in the global context and employment in the EU and in particular in the euro area, a number of other important issues related to the coordination of economic policies and economic policy guidelines of the euro area will need to be further examined, including measures to promote the deepening of the Single Market and to protect its integrity. To this end, the President of the European Council, in close cooperation with the President of the Commission, after a process of consultations with the Member States, will present to the June 2013 European Council possible measures and a time-bound roadmap on the following issues:

a) coordination of national reforms: the participating Member States will be invited to ensure, in line with Article 11 of the TSCG, that all major economic policy reforms that they plan to undertake will be discussed ex ante and, where appropriate, coordinated among themselves. Such coordination shall involve the institutions of the EU as required by EU law to this end. The Commission has announced its intention to make a proposal for a framework for ex ante coordination of major economic policy reforms in the context of the European Semester;

b) the social dimension of the EMU, including social dialogue;

c) the feasibility and modalities of mutually agreed contracts for competitiveness and growth: individual arrangements of a contractual nature with EU institutions could enhance ownership and effectiveness. Such arrangements should be differentiated depending on Member States’ specific situations. This would engage all euro area Member States, but non euro Member States may also choose to enter into similar arrangements;

d) solidarity mechanisms that can enhance the efforts made by the Member States that enter into such contractual arrangements for competitiveness and growth.

Starting from paragraph 12, there are two issues that need to be highlighted, the first relating to the coordination of economic policies, which effectively will encompass everything from employment policy, to social welfare, education, the pension system etc. for all may be interpreted as “economic” policy since such issues are interdependent with fiscal and budgetary affairs. If we assume that the kind of economic policy we will get is what the troika has already been forwarding in the countries under bailout programmes, then we must expect a radical shift in sociopolitical life in Europe and a harmonization along a specific, ideological economic model. Whether this is good or not, I shall leave it to the judgement of the reader. The second issue I would wish to highlight is that consultations and negotiations along these lines do not involve the European Parliament at all, when we should expect the only democratic institution of the EU to be the protagonist in such issues that will affect the daily life of all European citizens. The fact that technocrats are once again deciding for us, without us, is a lamentable failure to ensure at least a minimum of democracy and of principled norms of political conduct.

Now on to the subsections. First point (a): What I have been saying for quite some time now, is that all these negotiations are leading to the installation of a troika in permanence with sovereign jurisdiction over the whole area. In this respect I find point (a) as the supervisory facet of the permanent troika, since by coordinating economic policies on an ex ante basis it is meant that (i) elected governments have absolutely no autonomy over initiating any kind of fiscal or economic policy, (ii) a permanent mechanism for realizing this ex ante coordination must be set in place. In effect this is a political and institutional straitjacket for elected governments and I am much concerned about the prospects for true democracy once this system has been given flesh and bones, for its “efficiency” might seem quite appealing to the powers that be. Furthermore “coordination” amounts to inter-governmental decisions using the Commission as the spearhead. This method contravenes democratic decision-making since citizens have no direct say in any of these affairs, and also some member-states now possess disproportionate power that they will use and abuse to impose their own understanding of policy-making on all the rest. This is the confederal method which all Europeans who stand for democracy should actively oppose (for more see my articles here, here, here, here and here).

On to point (b): I am not sure what kind of social dimension is meant here, given that this is a single sentence, that the precedent is not very promising, that such documents are the apotheosis of Orwellian palaver and that “social dialogue” with top-down faits accomplits amounts to nothing.

Points (c) and (d) must be seen in tandem as they contain euphemistic language which clearly delineates what was noted quite explicitly in the Commission’s blueprint (especially in ANNEX 1 of their document), as troika-style reform mechanisms, compelling member states into certain modes of conduct or placing them in whatever fiscal, economic or other straightjacket.

And finally the last and most egregiously technocratic point I wish to touch upon on the Council’s roadmap for the completion of the EMU:

1. Throughout the process, the general objective remains to ensure democratic legitimacy and accountability at the level at which decisions are taken and implemented. Any new steps towards strengthening economic governance will need to be accompanied by further steps towards stronger legitimacy and accountability. At national level, moves towards further integration of the fiscal and economic policy frameworks would require that Member States ensure the appropriate involvement of their parliaments. Further integration of policy making and greater pooling of competences must be accompanied by a commensurate involvement of the European Parliament. New mechanisms increasing the level of cooperation between national parliaments and the European Parliament, in line with Article 13 of the TSCG and Protocol No 1 to the Treaties, can contribute to this process. The European Parliament and national parliaments will determine together the organisation and promotion of a conference of their representatives to discuss EMU related issues.

Beware of the loopholes in the semantics I ought to say at this point. In my understanding the phrase “democratic legitimacy and accountability” is not equivalent to genuine democracy. Strictly speaking, democratic legitimacy means that all decisions must be in line with the rule of law and that the rulings of the judiciary are fully respected. This is mainly a theme of administrative and constitutional law and while it is an integral part of democracy, it does not cover the most important aspect of an inclusive political system: the direct or at least indirect participation of citizens in the decisions that determine their lives. Furthermore democratic accountability, also in a strict interpretation of the concept, suggests that the executive must explain its decisions before the legislative, which again leaves much to be desired since we already have such a process of “informing” the parliament(s) of all the predetermined decisions that are been made, and we know it is insufficient. Put together, the notions of legitimacy and accountability must be fully applicable to non-elected bureaus such as police, surveillance, judicial authorities and the central bank—in general to all unelected offices and centers of power. Consequently the Council advocates the creation of a sovereign Euro-state and in exchange they will offer basic principles of legality as substitutes to genuine democracy. To me this is a downgrade from whatever pitiful democracy and liberty we already have.

Furthermore the kind of political arrangement they envisage for the national level is in effect the identical praxis of the troika programmes in all countries that have been receiving bailouts. As we know, all of the troika’s dictates were approved by parliaments laboring under duress. In that perverted sense there was an “appropriate involvement” of national parliaments. As such this reference amounts or can amount to nothing principled. Directly related to this is the mere “involvement” of the European Parliament. As we know quite well the EP is currently involved in all sorts of policies but its role remains secondary to say the least. Moreover what is the effectiveness of such parliamentary involvement if the broader institutional arrangement that engenders faits accomplis through the inter-governmental route, remains in place and is actually reinforced with state powers of coercion and control?

Having said so it is fair to recognize that the cooperation between the EP and national parliaments is indeed something that can and must be done more effectively, but such a practice alone, or in combination with the above, does little to diminish the profound democratic deficit of the EU. The real and greatest problem, namely the lack of an elected executive and of genuinely democratic decision-making, has been completely omitted and is now being obfuscated by the diminution of democracy into an affair of communication between different parliaments, whose powers are substantially reduced before the omnipotence of existing inter-governmental decision-making.

As a conclusion I wish to remind my readers that I personally am in favor of a democratic, decentralized, federation in Europe as a means to expand on our liberty, prosperity and welfare, and to overcome the rigidities of the old nationalistic order in Europe. However what I now see emerging out of the current negotiations is antithetical to my principles, for it is a technocracy that no force will be able to restrain and which will hold powers that will intrude in every aspect of our daily life. To such a detestable technocracy, I shall always be opposed, regardless of what other federalists may think is happening in all this “integration” they so much laud. One must want democracy and liberty, not economic tzars to compel them to do this and to prevent them from doing that.

Annex 1

The Berlaymont building in Brussels housing the European Commission Picture credit: Protesilaos Stavrou CC BY-NC-SA

The Commission’s time-horizon as stated in their Blueprint for a deep and genuine Economic and Monetary Union (pages 12-13):

In the short term (within the next 6-18 months), while immediate priority should be given to the full deployment of the new economic governance tools brought by the six-pack as well as rapid adoption of current Commission proposals such as the two-pack and the Single Supervisory Mechanism, more can still be done through secondary law, in particular in the area of economic policy coordination and support to structural reforms necessary to overcome imbalances and to improve competitiveness. Once a decision on the next Multiannual Financial Framework for the EU has been taken, the establishment of a financial instrument within the EU budget to support re-balancing, adjustment and thereby growth of the economies of the EMU would serve as the initial phase towards the establishment of a stronger fiscal capacity alongside more deeply integrated policy coordination mechanisms. Together, the next step in fiscal and economic policy coordination and the corresponding initial phase of the build-up of a fiscal capacity could take the form of a “convergence and competitiveness instrument”. Following the adoption of the Single Supervisory Mechanism, a Single Resolution Mechanism for banks will be proposed.

In the medium term (18 months to 5 years), further budgetary coordination (including a possibility to require a revision of a national budget in line with European commitments), the extension of deeper policy coordination in the field of taxation and employment, and the creation of a proper fiscal capacity for the EMU to support the implementation of the policy choices resulting from the deeper coordination should be established. Some of these elements will require amending the Treaties. The reduction of public debt significantly exceeding the Treaty criterion could be addressed through the setting-up of a redemption fund. A possible driver for fostering the integration of euro area financial markets and in particular to stabilise volatile government debt markets is common issuance by euro area Member States of short-term government debt with a maturity of up to 1 to 2 years. Both of these possibilities would require amending the Treaties.

Finally, in the long term (beyond 5 years), based on the progressive pooling of sovereignty and thus responsibility as well as solidarity competencies to the European level, the establishment of an autonomous euro area budget providing for a fiscal capacity for the EMU to support Member States in the absorption of shocks should become possible. Also, a deeply integrated economic and fiscal governance framework could allow a common issuance of public debt, which would enhance the functioning of the markets and the conduct of monetary policy. As set out in the Commission’s Green Paper of 23 November 2011 on the feasibility of introducing Stability Bonds, the common issuance of bonds could create new means through which governments finance their debt and offer safe and liquid investment opportunities for savers and financial institutions, as well as a euro area-wide integrated bond market that matches its US dollar counterpart in terms of size and liquidity.

This progressive further integration of the euro area towards a full banking, fiscal and economic union will require parallel steps towards a political union with a reinforced democratic legitimacy and accountability.

The progress in terms of integration will also have to be reflected externally, notably through steps towards united external economic representation of the euro area.

Also from the Commission’s Blueprint we get the following concerning the Euro-state:

(page 11) A comprehensive vision for a deep and genuine EMU conducive to a strong and stable architecture in the financial, fiscal, economic and political domains, underpinning stability and prosperity is necessary. In such a deep and genuine EMU all major economic and fiscal policy choices of its Member States should be subject to deeper coordination, endorsement and surveillance at the European level. These policies should cover also taxation and employment, as well as other policy areas crucial for the functioning of EMU. Such an EMU should also be underpinned by an autonomous and sufficient fiscal capacity that allows the policy choices resulting from the coordination process to be effectively supported. A commensurate share of decisions with regard to revenue, expenditure and debt issuance should be subject to joint decision-making and implementation at the level of EMU.

The above paragraph, as well as the afore-mentioned time-horizon envisage the savage destruction of national democracy via the gradual but systematic concentration of all important state powers at the Euro-area level; all this without a genuine European democracy in place. Integration must be predicated on direct representation and participation, on genuine democracy and democratic customs such as elections; themes that are meticulously excluded from all EU-related documents.

As for democracy behold the height of hypocritical speech and the perversion of reality, in the way they think of the existing framework and of any possible objections that might be posed to the rising technocracy:

(page 35) The Lisbon Treaty has perfected the EU’s unique model of supranational democracy, and in principle set an appropriate level of democratic legitimacy in regard of today’s EU competences. Hence, as long as EMU can be further developed on this Treaty basis, it would be inaccurate to suggest that insurmountable accountability problems exist.

Bon courage to all of us people…