A German Social Democrat who has Ireland by the throat

 

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     A German Social Democrat who has Ireland by the throat.

                                 

Birtist fyrst í The Commentator 16. apríl 2012.

 

 

Tom Gallagher.

                                 

Europe is once more in the grip of arrogant technicians of power who believe they can engineer society, oblivious to history, culture, values and place. Prominent in their ranks is Jorg Asmussen, the young German representative on the European Central Bank. He has been at the heart of the operation to socialize the debts of the ailing financial sector in the core EU states.

It has been the only coherent policy to emerge from the ECB since the financial emergency began just over two years ago. Smaller and weaker states in the eurozone are being penalized for mistakes that were made at all levels of the eurozone. The priority is to protect the banks of France and Germany which spurred on the credit splurge and property boom in countries like Spain and Ireland in the 1990s.

The ECB has always insisted that when it forced a €85 billion loan on Ireland in November 2010, the aim was to prevent the country’s financial collapse and the social distress and dislocation that were sure to follow. Critics argued that it would have been better for toxic banks like Anglo, which had lost more than eight times its capital, to go bust and for Ireland to step outside the eurozone in order to be able to make the adjustments necessary for it to return to competitiveness.

As a member of the eurozone it cannot, like Iceland, devalue its currency or adjust its interest rates so as to promote growth. The one-size-fits-all policy shaping the eurozone is a classic utopian project, defying reality; and despite the emancipatory language, it benefits the best-placed members of the currency union. (Auðvelt er að komast frá Evrunni, ef menn vilja.)

Asmussen was in Ireland last week to supervise the steps that its citizens were taking to service a huge debt that was forced on them by bad political judgment in 2008 and an EU diktat in 2010. As a senior figure at the German finance ministry in 2010, he had been involved in drawing up the deal imposed on Ireland. Under it, the debts of private bondholders were to be met even though there was no provision in the Maastricht Treaty requiring it.

The loan was set at the usurious rate of 5.7 percent. A spokesperson for the European Commission said the ‘profit’ that the EU makes by lending to Ireland will be invested back into the EU budget and will be distributed to EU members at the end of each financial year.

A strategy of austerity without growth looks certain to plunge Ireland into depression conditions unless it is reversed. Ireland’s citizens face the prospect of setting aside, long into the future, a massive part of their state’s GDP to service a huge debt that was forced on them by bad political judgment in 2008 and an EU diktat in 2010. Foreign investment is bound to be discouraged, domestic business is certain to remain flat and the departure abroad of a large proportion of people often with valuable skills but who are unwilling to endure years of economic inactivity appears guaranteed.

On his Dublin visit, during an unguarded moment, Asmussen made a significant admission. He related that, ‘the main reasoning’ [behind the bail-out] was to ensure that no negative spillover effects would be created to other Irish banks or to banks in other European countries.’ In other words the imperative was to ring-fence (skjaldborg) the badly managed and over-extended banks in core Europe. It was the first time that a leading ECB official had been so candid.

In light of such an admission, it is not hard to view the bail-out as one in which it is Ireland coming to the rescue of the Franco-German pivot regulating the workings of the eurozone.

Perhaps Asmussen had become blasé because opinion polls showed that in a referendum on 31 May, a majority of Irish voters were prepared to back the EU’s Social compact which is meant to legitimise the centralisation of financial control across the eurozone. But there is mounting anger even in Ireland at the surrender of democratic control to faraway institutions that are responsible for decisions that have drastic impact on the livelihood of millions.

Searching into Jorg Asmussen’s background, it turns out, perhaps unexpectedly for some, that he is not a free market radical located on the political Right. On the contrary, he is a high-flying member of the SPD, Germany’s Social Democratic Party. Nor is he unique as anyone can soon see by a cursory glance of the last century of European history.

Successive Socialist figures have grown impatient with what they find to be the unglamorous task of lifting the living standards of the working-class or operating within the constraining framework of the nation-state. Instead of fighting the class war and restructuring society, successive number have been tempted to become involved in missions to promote sweeping change in Europe or even globally.

One striking example from the pre-1940 era is the leader of the Belgian Socialists, Hendrik de Man. He was well-known to many on the British left, later prominent in the Attlee government, through organizing conferences in the 1930s on the need to embrace corporatist planning. His chief collaborator was Paul –Henri Spaak, one of the architects of the European Union.

Hendrik de Man welcomed the demise of parliamentary socialism and endorsed the need for a new project that would take European civilization forward to a new era. In 1940, after the Nazi occupation of Belgium, he drew up the pro-collaborationist manifesto of the Belgian Socialists, one passage of which read:

‘Peace has not been able to develop from the free understanding of sovereign nations and rival imperialisms: it will be able to emerge from a Europe united by arms, wherein the economic frontiers have been leveled’.

The elite character of the European project would appeal to similarly restless and ambitious men of de Man’s stamp eager to experiment with a ‘third way’.

In June 1999, Tony Blair and Gerhard Schroder of Germany issued a paper called the “Third Way” (in German, “Neue mitte”), a sketch of a new kind of socialism to modernize Europe with the state taking the lead to shake up both capitalism and the labour market. Schroder described the idea as an attempt to ‘modernize the interpretation of basic social democratic values’.

In France, this spring, the Socialist candidate in next Sunday’s presidential election, Francois Hollande has struggled to obtain the support of sister parties in Germany and elsewhere for a crisis strategy that looks beyond the needs of corporatist interests and the financial sector. As a result, he has had to backtrack on his promise to renegotiate the fiscal pact if he defeats Sarkozy.

European Socialism is now largely in the hands of dedicated careerists, uttering empty phrases about socialist solidarity in a continental union dominated by economic cartels against which they only mount token resistance. Grand projects like the eurozone still have a mesmeric attraction even if mired in crisis. This helps to explain why an ambitious and able Social Democrat like Asmussen is prepared to act like a European colonial district officer in Ireland.

Ironically, it was Germany that in the 1950s produced an antidote to top-down Euro corporatism. Ludwig Erhard, the architect of Germany’s ‘economic miracle’ fought a lonely battle to slow the rise of the EU in its current form. He believed, in the words of one biographer, that ‘there were so many differences among the various European peoples or among the places where they lived that a single economy or fiscal policy for the entire continent would inevitably fail’.

As an alternative to creating supranational organisations shaped around French centralist planning, Erhard called for adoption of the subsidiarity principle in international relations. In effect, he wanted decisions to be made at the lowest possible level, thereby preventing the growth of a large European central bureaucracy.

He was unsuccessful in his attempt to place the economist Wilhelm Ropke in charge of the European Commission when it was created in 1958. Ropke wanted a Swiss model for the new Europe based on limits to bureaucracy and an active democratic component. He believed:

‘Decentralism is the essence of the spirit of Europe. To try to organise Europe centrally, to subject the continent to a bureaucracy of economic planning, and to weld it into a block would be nothing less than a betrayal of Europe and the European patrimony. The betrayal would be the more perfidious for being perpetrated in the name of Europe and by an outrageous misuse of that name’

It is doubtful if even the vigilant Erhard could have imagined the ascension of someone like Jorg Asmussen and how far the Eurocrats are prepared to go in building a proto-European state so thoroughly drained of real democratic content.

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