Wolfgang Münchau in Chained togetherEurointelligence 11/29/2020 explains why he thinks unity among the eurozone countries is a more urgent European economic and political need that great EU integration:
There would have been no eurozone crisis if the monetary union had been accompanied by a small fiscal and banking union from the outset. There would have been no Brexit if the EU had offered the UK a form of membership that did not include a commitment to ever-closer union. There would certainly be no stand-off with Hungary and Poland right now, because the two countries would not be in a position to blackmail the others over the EU budget.
The origin of my fundamental disagreement with Angela Merkel is precisely over this: she prioritised the cohesion of the EU and has been resisting eurozone integration. [my emphasis]
In a recent Eurointelligence podcast, Timothy Garten Ash on central European cakeism, Münchau interviews the British expert on eastern Europe about the current conflict over democracy and the rule of law in Hungary and Poland and how current EU structures make it a particular challenge to address. Ash says he thinks "illiberal democracy" is a term that still applies to Poland, but that Hungary is no longer an actual democracy, "illiberal" or otherwise.
A crackup of the eurozone would be a tremendous blow to European unity. Münchau is still sounding the alarm about the serious weak point of the eurozone construction:
Advocates of an ever-closer union have persistently misjudged the dynamics of a monetary union: that it leads to crises with terrible human consequences, unless it operates a fiscal union, a banking union and an unemployment re-insurance system. We have fledgling versions of all of them, but none work very well.
European banking is more national today than it was 20 years ago. As long as the recovery fund is anchored in the EU budget, it will remain a macroeconomic irrelevance. It should have been a eurozone-level project from the outset. Without more eurozone integration, internal imbalances will keep on widening. As constituted today, the eurozone is still unsustainable. [my emphasis]
Wolfgang Münchaus Eurointelligence argumentiert und greift einen Artikel von Erik Jones über die aktuellen Spannungen in der EU auf (What does European integration look like 30.04.2020):
Was jetzt im Vergleich zu 2007-2009 noch schlimmer ist, ist ein divergierendes Gefühl der Dringlichkeit. Die Situation in Italien ist derzeit verzweifelt, doch die EU geht auf die übliche Weise mit der Dose nach unten. Was wie ein Akt der Integration aus dem Norden aussieht, kontroverserweise, wird als Prozess des Zerfalls im Süden betrachtet. Die EU könnte sogar die formelle Integration durch eine weitere Runde von Vertragsreformen vorantreiben, doch das Gefühl des Zerfalls könnte zunehmen. Integration und Zerfall können gleichzeitig erfolgen. Jones argumentiert, dass der Sinn einer weiteren Integration nicht der Aufbau von Institutionen sein sollte, sondern die Unterstützung derjenigen, die durch die Lösung von drei aufeinanderfolgenden Krisen in 13 Jahren zurückgelassen wurden. [meine Hervorhebungen]
(Alle Übertragungen aus dem Englischen in diesem Beitrag sind meine.)
Ein kreditbasiertes Stabilisierungsprogramm, wie es die Europäische Kommission zur Unterstützung der nationalen Arbeitslosensysteme zur Verfügung gestellt hat, oder das von der Europäischen Investitionsbank [EIB] zur Unterstützung kleiner und mittlerer Unternehmen bereitgestellte, kann den relativen Druck sehr kurzfristig lindern, aber es kann den finanziellen Kontext nicht umgestalten. Ebenso wenig kann ein Notkredit an die nationalen Regierungen zur Unterstützung der Finanzierung der Gesundheitsversorgung aus dem Europäischen Stabilitätsmechanismus [ESM] gewährt werden.
Solche Instrumente lösen einen Teil des Drucks frei, der die Lage verschlimmern könnte. Tatsache ist jedoch, dass es für italienische Unternehmen schwieriger sein wird, den Shutdown zu überleben, als es für ihre deutschen Kollegen der Fall sein wird, ebenso wie es für italienische Unternehmen teurer sein wird, ihre letztendliche Erholung zu finanzieren. Die wirtschaftlichen Bedingungen in den beiden Ländern werden auseinandergehen, und die beiden Volkswirtschaften werden aufgrund dieser finanziellen Unterschiede weniger eng zusammenarbeiten.
Gleichzeitig werden alle Bemühungen des italienischen Staates, seine Haushaltslage wieder ins Gleichgewicht zu bringen, damit die italienischen Staatsfinanzen denen in Deutschland ähnlicher erscheinen, die Divergenz nur noch verschärfen. Es mag starke Argumente dafür geben, warum diese Aktionen notwendig sind, und erklären, wie die Italiener sich an ihren eigenen Stiefeln hochziehen sollten, aber diese Argumente ändern nichts daran, dass dies der Zerfall ist, vor allem, wenn man sie von Italien aus betrachtet. [meine Hervorhebungen]
Ich habe drei grundlegende Orientierungspunkte, wenn ich über die besondere Position Österreichs in der neuen Wirtschaftskrise nachdenke, die jetzt im Gange ist und die ursprünglich durch die COVID-19-Pandemie ausgelöst wurde:
Österreich hat stark von der EU-Mitgliedschaft profitiert, obwohl es auch negative wirtschaftliche Auswirkungen durch die Einbettung neoliberaler Ideologie in das EU-Recht gibt.
Auch Österreich als Exportnation profitiert erheblich von der Euro-Währung. Ohne sie müsste Österreich (1) seine neue Schilling-Währung abwerten, um die Exporte zu stützen und damit den Wert der österreichischen Ersparnisse und eine geringere Schilling-Kaufkraft im Vergleich zu anderen Währungen zu verringern, oder (2) einen hohen Schillingwert akzeptieren und den langfristigen Schaden für die gegenwärtige exportorientierte Wirtschaft bewältigen.
Die ernste Depression, mit der die Eurozone derzeit konfrontiert ist, hat eine starke Möglichkeit, eine neue Eurokrise zu verursachen, insbesondere in Italien. Italien ist nach Deutschland und Frankreich die drittgrößte Volkswirtschaft der Eurozone. Ein Austritt Italiens aus dem Euro würde wahrscheinlich zum Ende des Euro führen.
Wolfgang Münchau, who was one of the best commentators on the eurozone crisis in the Great Recession is hearing new alarm bells going off. (Eurozone stability is under threat againFinancial Times 03/15/2020)
The last ten years showed that there were two big issues that could blow up the EU: the flaws in the structure of the euro currency and the refugee crisis on the southern border. Both in practice promoted nationalistic attitudes that encouraged anti-EU sentiment. Neither has been adequately addressed. Now the COVID-19 crisis is showing the cost of kicking the can down the road on both issues. The scandalously overcrowded refugee in Greece are particularly vulnerable to COVID-19 outbreaks, which Doctors Without Borders have been sounding the alarm about. (Immediate evacuation of migrant camps in Greece needed to contain coronavirus, says MSFEuronews 03/14/2020)
And that makes both the current refugee emergency and the COVID-19 pandemic more difficult to address.
The "social distancing" that is requiring a massive reduction of immediate economic activity in EU countries, along with the lack of EU-wide fiscal policy to compensate for it, could very well bring a new round of the euro crisis. Which is what Münchau focuses on here:
Taken together, the national policies will constitute a stimulus of sort, but they will end up increasing the eurozone’s internal imbalances. The fiscal deficits of Italy, Spain and France will
increase a lot. Those of Germany, the Netherlands and Finland may go up too, but by a lot less. The fiscal gap between the north and the south will widen. ... we are back to arguing about Italy’s solvency, which depends on low bond yields.
In other words, it can set off a new euro crisis. "Italy has not forgotten the reluctance of other EU member states to take in Syrian refugees who landed on Italian shores. Italy will emerge from its Covid-19 nightmare to a different world. It is not good for the EU to antagonise a founding member state."
DiEM25 has functioned since its creation in 2016 as an advocacy group for left ideas in the European Union, including a focuses on economic stimulative politics instead of the destructive Herbert Hoover/Heinrich Brüning austerity economics. (The Progressive International is a new, loose alliance for various left-leaning groups and movements just stared by DiEM25 and the Sanders Insitute.) Their website defines their vision this way:
Europe is currently suffering from five crises: debt, banks, poverty, low investment and migration. DiEM25 is the infrastructure which European democrats of all political persuasions will use in order to develop common answers to these crises. We also demand more fundamental change: EU institutions, which were initially designed to serve the industry, need to become fully transparent and accountable to European citizens. Our long-term vision is for Europeans to write a democratic constitution for the EU.
Varoufakis has been DiEM25's most prominent leader to date. And, of course, he led a dramatic fight against the ruinous EU response to the debt crisis in Greece as Greek Finance Minister in 2015.
Varoufakis detailed that effort in Adults in the Room (2017) - German title Die ganze Geschichte: Meine Auseinandersetzung mit Europas Establishment - which gives a very valuable look at the vulnerability of the EU to economic crises and at the deep flaws of the euro currency. Varoufakis' account of austerity economics and the euro's problems is broadly consistent with those of Joe Stiglitz (The Euro: And its Threat to the Future of Europe, 2017) and of Varoufakis' close associate and ally Jamie Galbraith (Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe, 2016). Paul Krugman is more closely tied to neo-Keynesian views, particularly in his emphasis on the risks of budget deficits, but his account of the euro and the Greek crisis was substantially the same as that of Varoufakis. As were those of Brad DeLong and Wolfgang Münchau.
Up until this year, DiEM25 has been more of a left advocacy group, trying to rally left-leaning activists, parties, and voters around a pro-European (i.e., pro-EU) view that also rejects austerity and embraces progressive economic policies. Its current political manifesto strikes a left-populist tone (emphasis in original):
At the heart of our disintegrating EU there lies a guilty deceit: A highly political, top-down, opaque decision-making process is presented as ‘apolitical’, ‘technical’, ‘procedural’ and ‘neutral’. Its purpose is to prevent Europeans from exercising democratic control over their money, finance, working conditions and environment. The price of this deceit is not merely the end of democracy but also poor economic policies:
The Eurozone economies are being marched off the cliff of competitive austerity, resulting in permanent recession in the weaker countries and low investment in the core countries
EU member-states outside the Eurozone are alienated, seeking inspiration and partners in suspect quarters where they are most likely to be greeted with opaque, coercive free trade deals that undermine their sovereignty.
Unprecedented inequality, declining hope and misanthropy flourish throughout Europe
But in 2019, they will be standing up candidates for the EU Parliament election. They formed a party, Demokratie in Europa, to campaign in Germany, with Varoufakis himself heading the list. Obviously a provocative choice!
(Also, the usual German abbreviation for that party name would be DiE, which has a particular meaning in English! Proabaly, they intend the short form to be DE, which is the typical German abbreviation for Deutsch [German]).
I would describes DiEM25's position as a left social-democratic one framed as a left-populist appeal. Pascal Beucker notes that a Varoufakis candidacy in Germany definitely brings star power to the ticket. (Varoufakis plant Kandidaturtaz 20. 11. 2018) He has said he will use his candidacy to promote solidarity between northern and southern EU countries.
There doesn't seem to be much if any polling on Demokratie in Europa's potential performance next year. So there's not much "horse race" information available.
I've been saying since 2015 that the EU has two major threats that could break out again in a new immediate crisis that could wreck the EU: the faulty construction of the eurozone and immigration. Both came together in 2015, when Angela Merkel and the EU establishment promoted nationalist contempt against Greece in the debt crisis in the early part of that year, which severely complicated the response of the EU in the acute phase of the immigration crisis in 2015-16.
DiEM25 is not only in favor of reforming the eurozone structure to make the eurozone into what economists call an "optimal currency zone," they are also distinctly pro-immigration. On the last point, Varoufakis states that position polemically in the Democracy Now! interview above:
To answer an earlier question which I did not answer fully, our reaction to the arguments that we are being swarmed by foreigners and so on is: Let them in. Borders are a scar on the surface of the planet, on the face of the Earth. They make no sense. The only thing that they do is they increase the profits of the traffickers. And at the same time, we are failing to understand that Europe is aging. We need migrants. We need refugees.
So, in other words, you cannot compete with the fascists with fascism-lite, like Hillary Clinton the other day stupidly—and I use that word with a great deal of thought—suggested that the way to defeat populism in Europe is to erect borders around Europe and to stop migrants from coming in. Hillary Clinton said that, proving that she was unfit to be president of the United States yet again. You cannot compete with them playing their own misanthropic game. The only way you can compete with them is by appealing to the humanity of humans and also to their rationality. And using migrants as a football, in the end, backfires. So, we are going to fight them on the beaches - and when I say “them,” I mean the fascists, I mean those that Steve Bannon is organizing. They’re going to face up to the fact that we’re going to be there, and we’re going to be undermining their movement with arguments that appeal to rationality and to humanity. [my emphasis]
I don't assume that Varoufakis is advocating the immediate abolition of borders, but rather is making a provocative point which would benefit Demokratie in Europa's campaign if xenophobes pick up that quote to use against them. That would give them the chance to respond along the lines Varoufakis does there: "we are failing to understand that Europe is aging. We need migrants. We need refugees."
On both the euro and immigration, I would say that the EU leadership is generally aware that the kind of solutions toward which DiEM points are the practical and necessary ones. On the euro, Varoufakis in Adults in the Room recounts how eurozone finance ministers would agree with him in private on his proposals but reject them in public.
There may not be the same level of (private) agreement among European leaders on immigration. But the fact is, especially given the trend of climate change, the EU has a longterm immigration crisis. They are also experiencing shortages in candidates for various kinds of necessary jobs. To take just one example, in Austria, home care for the sick and especially the elderly is facing growing demand because the population is aging. And the demographics say that will only increase. But already in 2018, virtually every one of those jobs is filled by non-Austrian citizens. Many of them are from other EU countries, where borders already don't count when it comes to the movement of people.
But that also means that some eastern EU members are experiencing emigration of their own citizens, particularly younger ones, to wealthier EU countries offering more opportunity and higher pay. This is an important part of the background to rightwing-populist reactions against the EU in countries like Hungary, Rumania, and the Czech Republic. So, in other words, "Europe is aging. We need migrants. We need refugees."
Back in 2011, Charlie Pierce used to say of the Occupy Wall Street movement that sometimes it's enough to be shouting at the right buildings. DiEM25 is shouting at the right buildings in the EU.
