Blow EU Jacques, I’m not all right
The crisis has shattered the façade of European unity, as governments turn back to the nation state to defend their own brands of capitalism.
Whatever happened to the new age of European unity we were supposed to be entering, according to our leaders? Or, come to that, where is the all-powerful ‘Brussels Empire’ we have often been warned about by the shriller critics of Euro-bureaucracy? The financial crisis sweeping the continent has revealed that the European Union has no clothes. At the first sign of serious trouble, it has become every government for itself. Or to paraphrase an old British working-class saying, a case of ‘Blow you Jacques, I’m not all right’.
First the Irish government broke Euro-ranks and unilaterally declared that it would guarantee all deposits in Irish banks, thus risking conflict with financial institutions elsewhere in the EU. That might have been dismissed as the desperate action of a small European economy trying to avoid becoming the next Iceland. But when the government of Germany, the biggest economy at the heart of the Euro-zone, effectively did the same thing it was clear that big shifts are afoot. Just the day before, German chancellor Angela Merkel had led an emergency summit call for European solidarity. Within 24 hours, in the face of mounting problems, Germany had torn up that paper agreement and gone its own way, to the horror of ‘close allies’ such as Britain.
Amid the outbreak of confusion and consternation that followed, British chancellor of the exchequer Alistair Darling sought to reassure us that the German government had issued only a ‘political declaration’ of intent rather than a ‘legally binding’ guarantee for bank depositors. They had indeed, Mr Darling; it was a political declaration of the German state’s intent and determination to defend its national financial interests, regardless of what worthy EU summit statements might say. The governments of Denmark, Greece and Spain have followed suit in guaranteeing savers’ deposits, and more are expected to do so.
Meanwhile further tensions have come to the surface as EU governments prepare plans to try to rescue their banking systems. The British authorities were reportedly furious with the Germans for giving the game away about the ‘secret’ plans to recapitalise the banks, and startling the UK markets, before Darling announced his £50billion bailout scheme. Even when the big four leaders of Germany, France, the UK and Italy did sort-of get their act together last weekend, it seemed that the only thing they could really agree on was the immediate need to throw EU curbs on public spending state subsidies out of the window and let each government do as it sees fit to try to hold back the financial crisis. As one headline put it, ‘EU leaders tear up rules of eurozone’. Now that’s European unity in action!
In recent years, the European Union and the European Commission have proved themselves strong and tough when it comes to uniting to fight little battles of their own invention – for example, banning chemicals from plastic toys, regulating food labels, making offensive ideas illegal, and otherwise seeking to micro-manage the behaviour of the continent’s peoples. Yet confronted by a crisis in the real world beyond their control, the Euro-institutions appear frozen and flaccid. There are no EU memoranda or EC rulings that can order the global markets to submit.
Remember how our rulers have lectured us all about the need for Euro-unity, and the special opprobrium they heaped upon the heads of the Irish people for daring to reject the new EU treaty/constitution? The message has been that all must do as they are told for the greater good of the European future. But as soon as the financial ordure hits the fans, they forget about Europe and take cover behind their borders. And let nobody believe that our contemptuous elites have suddenly discovered a populist concern for the public and its savings – these emergency measures are designed to protect the banking arms of each national capitalism.
These events put the ‘European dream’ in more realistic perspective. From the 1950s, the European project was promoted as a way of overcoming the traditional tensions between competing national interests that had led Europe into conflict and two world wars in the first half of the twentieth century. The 1957 Treaty of Rome, signed by West Germany, France, Italy, Belgium, the Netherlands and Luxembourg, created the European Economic Community. The UK joined, along with Ireland and Denmark, in 1973. The organisation has since been renamed first as the European Community and then the European Union, and has expanded to include its current total of 27 members. It has also expanded its scope from the original trade organisation, becoming an increasingly political as well as economic body – a process that culminated in the failed attempt to introduce an EU constitution (rejected by the peoples of France and the Netherlands), and then to sneak it back through as an EU treaty (rejected by the Irish).
Despite the misgivings of many citizens of the Continent, Europe’s national elites have enjoyed closer cooperation through an era of relative peace and prosperity. Many predicted that the old conflicts were being overcome for good, and that the EU could continue to expand and prosper. The drawback was, however, that these arrangements had not been tested in a real crisis during the relative comfort of the eurozone era. Until now. No sooner did the financial crisis shake the walls of Europe’s citadels than it exposed the chimera of EU unity and integration.
In one sense this looks as if capitalism is reverting to type. The consolidation of the modern nation state began in England from the seventeenth century, and took hold elsewhere in Europe and America through the eighteenth and nineteenth centuries. These new nation states, with clearly defined borders and centralised powers, swept away the remains of the old feudal order and helped create the conditions for the growth of modern market economies (the ‘free market’ always needed a helping hand). Capitalism expanded first within the advanced nations and then internationally, where Western states protected their national interests in the age of empire and imperialism. The European and global competition between capitalist powers helped breed the conflicts that culminated in the carnage of two world wars.
During the 1980s, some of us old Marxists believed that the organic connection between capitalism and the nation state would limit how far European countries were able to subordinate their national interests and unite under the banners of the EU. The creation of the eurozone, where nations gave up their currencies and accepted both the euro and the authority of the European Central Bank, seemed to go against the grain of history. However, this apparent unity was made possible, at least temporarily, by the almost unprecedented conditions of economic, political and social stability in Europe, and the suspension of serious conflict.
How quickly those halcyon days now seem to have disappeared. Confronted with their first genuine crisis in years, the European elites have reverted to the safety of their own states to try to protect their national interests. Of course, they have not abandoned the EU in which they have invested so much. But they have soon discovered that a cumbersome institution built in one era cannot cope with the demands of another, more turbulent time. The EU has no answers to the scale and speed of the financial crisis and the disruption it is causing. Moreover, tensions between the national capitals are coming more to the fore as each experiences different scales of problems in relation to the banking and property crashes.
Yet as more EU states break ranks and search for national solutions to the crisis, it can only make matters worse by undermining any unified institutional response. If the surprise return of Peter Mandelson from European commissioner to UK cabinet minister symbolised the political dynamic away from Brussels this week, then the ridiculous notion that such a figure could somehow ‘save’ the British economy captured the desperate state that Europe’s states are in now. The fact that Mandelson ended up in hospital almost immediately on his return seemed a fitting metaphor for the whole sorry state of Euro-affairs.
Remember, it was the economic and political limitations of the nation state in the modern world that led Europe’s elites to seek wider forms of organisation and cooperation in the first place. The shortcomings of the EU in a crisis might now drive them apart again. But they cannot easily turn the clock back to an age of dynamic national economies. Instead they are caught between paper EU initiatives and ineffective national policies.
We have seen throughout the debacles over the EU constitution/treaty and the Irish referendum that the Euro-elites have nothing but contempt for the masses of Europe and popular democracy. Now, through the response to the financial crisis, we can see that, in a struggle for capitalist survival, they have little or no respect for their own institutions and golden rules either.
Perhaps we should treat our leaders then with the same respect that they show others. Europe’s way out of this crisis and into the future must surely lie in cooperation between its peoples rather than national divisions. But recent dramatic events confirm that the EU will not be the answer to the hard questions now being asked.
Mick Hume is editor-at-large of spiked.
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There Is (still) No Alternative, by Mick Hume
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Scapegoating the spivs, by Tim Black
It’s the politics, stupid, by Phil Mullan
Lehman Brothers: when confidence runs out, by Rob Lyons
Five myths about the Wall Street crisis, by Daniel Ben-Ami
From the politics to the economics of fear, by Mick Hume
Fannie, Freddie and the ‘economics of fear’, by Sean Collins
The truth about the ‘credit crunch’, by Phil Mullan
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