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Overcoming Austerity

PARIS, May 21 2012 (IPS) - “The greatest strength of tyrants is the inaction of the people.”

After so many budget cuts, belt-tightening, and structural adjustment programmes, a feeling of asphyxiation is gripping large numbers of citizens in many countries of the European Union (EU). This feeling is sharpened by the recognition that the alternation of elected political figures does nothing to change leaders’ appetite for austerity.

In Spain for example, the candidate of the conservative Popular Party, Mariano Rajoy, promised a society battered by brutal social adjustment programmes imposed since May 2010 by socialist president Jose Rodriguez Zapatero, “change” [i] and “a return of happiness” during the campaign for general elections last November 20. He won with an absolute majority. However, as soon as he took office he began the most aggressive programme of social cuts in recent Spanish history.

It was the same in countries like Greece, for example, or Portugal, where in June 2011 socialist Jose Socrates lost the election after imposing four unpopular programmes of “fiscal discipline” and accepting an equally loathed rescue plan of the Troika [ii]. The victor, current conservative president Pedro Passos Coelho, who was previously very critical of the socialists’ cuts, wasted no time in arguing once in office that in order to meet the needs of the EU, his goal was “to administer another dose of austerity [iii].”

What then is the use of elections when, in terms of social and economic policy, the new administration does essentially the same as its predecessor ­sometimes even with greater zeal? To ask this question can only raise doubts about democracy. In the EU citizens have lost control over a wide range of matters that affect their lives. In reality the primary exigencies of the markets are gravely impinging on the operation of democracy. Many leaders on both the right and the left are convinced that the markets are always right and that the problem is democracy itself, and public debate. They prefer competent investors to “uninformed voters”.

The people, on the other hand, have the feeling that in Europe today there is a single hidden agenda which has two concrete objectives: reducing state sovereignty as much as possible and completely dismantling the welfare state. Anyone who doubts this need only read the recent statements of Mario Draghi, president of the European Central Bank (ECB): “The European social model is dead, and whoever takes a step backwards in making budget cuts will trigger the immediate punishment of the markets… As for the European Fiscal Pact [iv], it is in reality a major political advance because thanks to this treaty states lose a part of their national sovereignty [v].”

What could be clearer?

In reality, we are living through a sort of enlightened despotism in which democracy is defined less by voting or the possibility of choosing than by respect for rules and treaties (Maastricht, Lisbon, the Fiscal Pact) adopted in the past; it is also defined by a process of ratification in a climate of general indifference, which imposes a juridical straightjacket from which it is impossible to break free.

Which brings us to the question being asked by so many defrauded citizens: “What is voting good for if we are condemned to elect governments whose only function consists of enforcing rules and treaties that are already decided one and for all [vi]?”

The European Fiscal Pact is a case of “pretend democracy”. Why is there no public debate on this pact now in the process of being adopted, even though it will affect the lives of millions of citizens? Like the European Stability Mechanism on which it depends, this pact constitutes a brutal attack on the rights of citizens. It permanently requires signatory states to reduce social spending, salaries, and pensions, to give priority to EU authority in budget matters of member states, and limit the competence of national parliaments, reducing their sovereignty and converting certain countries into mere European protectorates [vii].

Is there a way out of this situation? The recent presidential elections in France provide an interesting perspective, not so much because millions of desperate and exhausted voters opted for an extremist
anti-Europe, xenophobic right but because the social democratic candidate himself, Francois Hollande, promised to change things in this context.

President Hollande is demanding, in particular, the addition to the Fiscal Pact of a stimulus, solidarity, and growth package. He is also demanding that the ECB lower its interest rates and lend directly to states (and not to private banks) in order to immediately open up a path to recovery.

Although the changes he is demanding are minimal and clearly insufficient, president Hollande is taking a stand against German chancellor

Angela Merkel and the Bundesbank, who are in reality dictating the economic and financial policy of the EU. However, Hollande has stated that if Germany does not approve of these changes, France will not ratify the Fiscal Pact.

What will happen if Hollande sticks to his idea of freeing Europe from the oppression of austerity and recession and pushes structural reforms and stimulates growth? There are two possible outcomes.

In the first scenario, the markets will immediately attack France, as Draghi warned, and force it against the ropes; Hollande will lose his nerve and backtrack, caving in to financial speculation like his social democratic friends Zapatero, Socrates, and Papandreou and ending up the most unpopular leader of the left in French history.

The other possibility is this: knowing that the EU can do nothing without France, the second largest economy of the union (and fifth in the world), Hollande could stick to his position and radicalise it, tap into the mobilisation of populist forces in Europe (starting with the Left Front of Jean-Luc Melenchon) and win the support of the many European governments that share his call for stimulus and growth policies. This would force a change in the ECB-Bundesbank line. Ultimately Hollands would prove that in a democracy, when the popular mandate coincides with a firm political will, there is no objective that cannot be achieved. (END/COPYRIGHT IPS)

* Ignacio Ramonet is editor of Le Monde diplomatique en espanol.

[i] “Be part of the change” was his campaign slogan, copied from that of right-wing Chilean president Sebastian Pinera in his victorious 2010 campaign.

[ii] Comprised of the European Central Bank, the European Commission, and the International Monetary Fund.

[iii] Jornal de Noticias, Lisbon, 29 February 2012. The austerity policies of Passos Coelho are driving Portugal into a social catastrophe like that in Greece: 15 percent of the active population is unemployed (35 percent of youth); 25 percent of Portuguese live beneath the poverty line, while this year the recession is calculated to be 3.3 percent. In the last six months there have been two general strikes, on November 24, 2011, and March 22, 2012.

[iv] Pushed by Germany, the Fiscal Pact, or Treaty for Stability, Coordination, and Governance in the Economic and Monetary Union, was signed March 2, 2012, in Brussels by all EU member states except
Britain and the Czech Republic. It requires each signatory country to include in its constitution a structural deficit cap of 0.5 percent and provides for automatic sanctions for countries whose debt exceeds 3
percent of GDP. It is expected to enter into force January 1, 2013.

[v] The Wall Street Journal, New York, February 23, 2012.

[vi] See: Christophe Deloire, Christophe Dubois, Circus politicus, Albin Michel, Paris, 2012.

[vii] See: Ignacio Ramonet, “Nuevos protectorados”, Le Monde diplomatique en espanol, March 2012.

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