Two conservative takes on Ukraine policy and one left analysis

Oh, Lord! Max Boot is still offering the world his foreign policy advice.

Max Boot, Very Serious Person, gives advice on Ukraine

Boot was one of the most visible Iraq War enthusiasts in American media back in the day. He now claims to be repentant. But in 2003 - which turned out to be the first year of a long war - he was gushing with enthusiasm over it:

Coalition forces in the second Gulf War were less than half the size of those deployed in the first one. Yet they achieved a much more ambitious goal-occupying all of lraq, rather than just kicking the lraqi army out of Kuwait-in almost half the time, with one-third the casualties, and at one-fourth the cost of the first war [the Gulf War of 1991]. ...

Far from having a 3 to 1 advantage in lraq, coalition ground forces (which never numbered more than 100,000) faced a 3 to 1 or 4 to 1 disadvantage. That the United States and its allies won anyway-and won so quickly-must rank as one of the signal achievements in military history....

It was a "spectacular success," he gushed. And "a relatively easy U.S. victory."

Ah, those were the days, huh, Max? The American liberation army sweeping away the uncivilized heathen regime and bringing the blessings of civilization, democracy, and - not to be forgotten - women's rights. And, of course, doing away with (imaginary) "weapons of mass destruction."

Now Max has advice about the current Ukraine war, which he shares in This is no time to hesitate in Ukraine Washington Post 06/05/2022. Despite the title, Boot is cautiously reflective about his advice - no, just kidding! It's Max Boot, after all:

Putin reportedly calculates that he can still win the war by waiting for the will of the West to erode, and there are many in the West who have given him encouragement. Former secretary of state Henry Kissinger suggests that Ukraine must cede territory for peace, and French President Emmanuel Macron insists that Russia must not be “humiliated.” Meaning Putin should be rewarded for his unlawful aggression?

This is the counsel of despair, and it is divorced from the facts on the ground. A recent poll finds that nearly 80 percent of Ukrainians say their country is moving in the right direction, and many Ukrainian refugees are returning home. ...

This is not the moment to lose faith in Ukraine. This is the moment to redouble our support for its freedom fighters. [my emphasis]

We're in a macho adrenalin contest, people! Mano a mano! We're eyeball to eyeball and we've gotta make the other guy blink!

Fortunately, there are relevant lessons that we can learn from the disastrous Iraq War that Max Boot in mid-2003 was confident had already been "spectacular success." One of those lessons is: Never Take Advice On Wars From Max Boot Seriously.

Max doesn't mention anything about Russia having, you know, "weapons of mass destruction." Maybe he figures since it turned out that Iraq had none, Russia must not have any, either. Besides, adrenaline and testosterone are the only things that really matter anyway, right, Max?

Also, if you think the Ukraine refugee emergency in Europe is practically over - you are probably Max Boot.

Another conservative, Chrlstopher Caldwell, also has an essay on the current war, The War in Ukraine May Be Impossible to Stop. And the U.S. Deserves Much of the Blame. New York Times 05/31/2022

Caldwell is pretty conservative. He thinks the Mean Libruls are too whiny. (Age of Entitlement: America Since the Sixties, 2020) and worries about them thar Muslim immigrants (Reflections on the Revolution in Europe: Immigration, Islam and the West, 2010)

He also did an admiring essay on Robert E. Lee last year. (There Goes Robert E. Lee: His eclipse in American life. Claremont Review of Books Spring 2021)

Caldwell relies on the positions of a conservative French politician, Henri Guaino, to argue that Biden "is giving the conflict a momentum that may be impossible to stop." Somehow, Caldwell manages to argue that "Russia is most directly to blame for the present conflict in Ukraine" but somehow the US made the conflict inevitable.

The polemics over what role Western policy played in leading us to the point of Russia invading Ukraine have often struck me as weird. Of course, Russia was going to worry about NATO expanding toward its borders. But Caldwell wants us to believe that a particular the US-Ukraine strategic partnership agreement signed in November 2021 that set the invasion in motion. That looks more like a way to dump on the Biden administration than a realistic analysis. And for all the problems Russia is having in its current war, but arguing that "by 2014 [Russia] barely had a modern military at all" is clearly overstating the case.

He cites Noam Chomsky and Henry Kissinger offering cautions about prolonging the war unnecessarily and the need to make some kind of concessions during the peace process. And then uses that to launch into the vague conclusion that seems to be saying that the Biden Administration is incapable of doing anything but constantly escalate the war no matter what, which at this moment seems to be a big leap:

The United States is making no concessions. That would be to lose face. There's an election coming. So the administration is closing off avenues of negotiation and working to intensify the war. We're in it to win it. With time, the huge import of deadly weaponry, including that from the newly authorized $40 billion allocation, could take the war to a different level. President Volodymyr Zelensky of Ukraine warned in an address to students this month that the bloodiest days of the war were coming.

This sounds an awful lot like trying to cover all the bases without actually having to take any actual position about what an alternative course he would prefer to see.

Yanis Varoufakis has some actual ideas about negotiation

Former Greek Finance Minister, economist, and current Member of the Greek Parliament is not only familiar with game theory but was at the center of one of the most high-stakes negotiations of the last decade over the Greek debt crisis. He actually has coherent thoughts on The Peace Process Ukraine’s Supporters Should Support Project Syndicate/https://www.yanisvaroufakis.eu/ 06/06/2022. he makes this important observation about the sanctions on Russia:

While the war is going badly for Putin, the economic war is working rather nicely for him. Granted, underprivileged Russians are suffering, skilled workers are fleeing, and many industries are running out of parts. Even so, according to Robin Brooks of the Institute of International Finance, a gigantic current-account surplus is in the making (projected to reach $200-250 billion in 2022, up from $95.8 billion in April). No wonder the ruble has recovered fully.

This massive windfall allows Putin’s regime easily to finance a long-term war of attrition in Ukraine. Many Russians will be impoverished, and their economy will be condemned to long-term stagnation. But on Putin’s chessboard, ordinary Russians are mere pawns whose sacrifice is acceptable, if not necessary, to inflict long-term damage on Ukraine while waiting for ruptures to appear within NATO – especially once the fickle Western media turn their attention to other matters. [my emphasis]

And he offers a plausible scenario about how successful peace negotiations might look, though he knows as well as anyone that the specifics of the actual deal matter a lot:

A fair deal, we must agree, should leave everyone somewhat dissatisfied, while constituting a great improvement over every feasible alternative. Both sides must make gains that far exceed their losses, without losing face. To honor the Ukrainians’ aspirations and valiant resistance to Putin’s aggression, the envisaged peace treaty must decree that Russian troops withdraw to their pre-February 24 bases. To deal with sectarian clashes in the Donbas and surrounding areas, the Good Friday Agreement (which ended the “Troubles” in Northern Ireland) can offer tangible guidance on conflict resolution and governance. And, to assuage fear of military re-engagement, a wide demilitarized buffer zone around the Russian-Ukrainian border ought to be included. [The "around" means on both sides.]

Would Putin agree? Possibly, if the treaty offers him three things. Putin will want most sanctions lifted. He will also want the issue of Russia’s annexation of Crimea in 2014 to be kicked into the long grass, to be resolved at some undefined time in the future. And he will want security guarantees that only the US can provide, including the lure of a seat at the top table where new security arrangements in Europe must be hammered out. Ukraine needs similar security guarantees from both the US and Russia, so Ukraine’s friends should be planning such arrangements, under the auspices of the United Nations, and involving the US and the EU. [my emphasis]

The point about a settlement on Crimea is not something that doesn't seem to be discussed as much as I might expect in the commentaries I've read and heard. Caldwell seems to be arguing that Russia's claim to Crimea is pretty obviously valid. Actually, no, it's not. But some scenario like Varoufakis indicates that would leave Crimea for some extended period of time in a "frozen conflict" situation seems like a realistic possibility.

A couple of European left critics of Biden during this transition period

Here are a couple of European left perspectives on the immediate political situation in the US, a video and an audio interview from former Greek Finance Minister Yanis Varoufakis, and one from Sahra Wagenknecht, who has been a leading figure in the German Left Party for decades. I doubt that anyone would dispute that they are both figures of "the left".

Both touch on the perennial point of dispute within the US Democratic Party, class vs. social identity. It seems that everyone has their own take on how those divisions actually break down and their own preferred descriptions for them. Felix Schilk in a recent essay refers to the terms "economic cleavage" and "cultural cleavage" to refer to those differences, noting that they are common terms in academic research on populism. ("Die soziale Frage als Ordnungsproblem," Das faschistische Jahrhundert, 2020)

The use of "cleavage" to talk about party affiliations is identified in political science with a concept elaborated in 1967 by Seymour Martin Lipset and Stein Rokkan. Without folding in the particular structural analysis they made, these could be useful terms in discussed the "intersectionality" issue involved in understanding the current political distinctions among the center-left, the populist left, and the populist right in European and American politics.

Varoufakis gives a statement on the current US poltiical situation on behalf of the small DiEM25, for which in the serves as a Member of Parliament in Greece for the national party affiliate. Yanis Varoufakis on the 2020 US election DiEM25 11/10/2020:

His interview with Wolfgang Münchau of the Eurointelligence podcast can be found here at Varoufakis' blog, In conversation with Eurointelligence’s Wolfgang Munchau on Trumpism, European fiscal discipline & the US-China Cold War – 10th November 2020

Varoufakis thinks that Democratic progressives in the US are generally on the correct path. He suggests that it's key for Democratic progressives to remember, "It was Obama's failures that gve rise to Trump." And that he uses to stress the need for adequate economic and social policies to give a wider circle of voters and emotional stake in progressive Democratic policies.

Sahra Wagenknecht YouTube talk in her weekly Thursday video podcast is here, Böser Trump, guter Biden? Warum wir uns keine Illusionen machen sollten 11/12/2020:

In the notes to the video, she includes this message, which is not a transcript of the video. I've included it below, with my paragraph breaks added, and my translation into English below.

Joe Biden hat die US-Wahl gewonnen. Aber wird jetzt wirklich alles besser? Dafür lohnt ein Blick in die Biographie des neuen Präsidenten: Wer ist Joe Biden? Wofür steht er? Was hat er in der Vergangenheit gemacht?

Die Antworten sind ernüchternd. Um das tief gespaltene Land zu einen, helfen ein paar schöne Reden und symbolische Akte nicht. Das für viele Medien erneut überraschende Ergebnis von Trump ist Ausdruck davon, wie viele Menschen sich vom politischen »Establishement«, für das Biden steht wie kaum ein anderer, nicht vertreten fühlen.

In den deindustrialisierten Regionen der USA herrschen Armut, Kriminalität, Perspektivlosigkeit – und Politiker, von beiden Parteien, schauen seit Jahrzehnten weg. Die mangelhaften sozialen Sicherungssysteme, in denen Menschen nach 5 Jahren Bezug von Sozialleistung für den Rest ihres Lebens nichts (!) mehr bekommen außer Essensmarken, die schlechte medizinische Versorgung für weite Teile der Bevölkerung, lebenslange Schulden für einen Hochschulabschluss, explodierende Mieten und Immobilienpreise, Obdachlosigkeit, die Drogenkrise, Millionen Menschen in Gefängnissen, steigende Suizidraten, sinkende Lebenserwartung – diese und andere Probleme mögen sich unter Trump weiter verschärft haben, doch die Ursachen für die extreme soziale und kulturelle Spaltung des Landes liegen viel tiefer.

Ich hoffe sehr, dass jetzt besser Zeiten anbrechen. Bidens Bilanz aus fast 50 Jahren politischer Tätigkeit lässt anderes befürchten.

[Joe Biden won the US election. But is everything really getting better now? It's worth a look at the new president's biography: Who is Joe Biden? What does it stand for? What has he done in the past?

The answers are sobering. To unite the deeply divided country, a few fine speeches and symbolic acts do not help. The surprising result of Trump for many in the media is an expression of how many people feel unrepresented by the political "establishment" that Biden stands for like no other.

In the de-industrialized regions of the US, poverty, crime, lack of prospects – and politicians, from both parties, have been looking away for decades. The flawed social security systems in which people get nothing (!) for the rest of their lives after 5 years of receiving benefits except food stamps, poor medical care for large parts of the population, lifetime debt for a college degree, skyrocketing rents and property prices, homelessness, the drug crisis, millions of people in prisons, rising suicide rates, falling life expectancy – these and other problems may have worsened under Trump, but the causes of the extreme social and cultural division of the country lie much deeper.

Biden won the US election. But is everything really getting better now? It's worth a look at the new president's biography: Who is Joe Biden? What does it stand for? What did he do in the past?] (my emphasis)

Both Varoufaks and Wagenknecht articulate the idea that working-class voters were attracted to Trump in signficant part because they felt that politicians were not listening to them. This is okay as a throwaway campaign line. But in American politics, "I don't feel listened to" has become a stock complaint, essentially meaningless without more specific context. Especially for voters whose "cultural cleavage" includes a particular disdain for black people and Latinos, for instance, "I don't feel listened to" is a socially safe of saying they support extremely conservative Republicans without copping to more explicit prejudices.

And of course, here's where the "cultural cleavage" overlaps with the "economic cleavage." On the one hand, for many people the cultural cleavage actually is subjectively more important than any feelings of the now-proverbial "economic anxiety" in their voting decisions. Race and gender and nationalist sentiments count. But at the same time, the material conditions produced by extreme economic inequality, declining incomes, and increased economic security have a huge though not entirely predictable effects on how people experience the cultural cleavage. As Varoufakis notes, extreme economic problems have fueled left as well as rightwing movements in the past.

Varoufakis and Wagenknecht both also stress that Trump didn't start any new wars. This is true. Trump didn't go try to occupy any additional countries with US troops. Obviously, you can't say much about four years of US foreign policy in a sentence or two. But as a polemical point to argue against future unnecessary wars under the Biden-Harris Administration, it makes sense. E.g.: Even Donald Trump didn't do anything as drastic as invading Country X!

But it's important to remember that Trump's "America First" foreign policy was never a peace policy, any more than the Republican isolationism of the pre-World War II America First movement or its immediate postwar "isolationist" successors were. It is a narrowly nationalistic, militaristic view of foreign policy.

I am confident that the level of incompetence that has always characterized the Trump-Pence Administration has been a significant reason that his foreign policy hasn't been even worse. Speaking of invasion, the Administration's exceptionally clownish regime-change operation against Venezuela also included an even more fumbling attempt at an invasion of "freedom fighters" than the Pay of Pigs invasion of 1961 against Cuba. And Trump almost blundered into war with Iran early this year with his targeted assassination strike on a senior Iranian general. (Qasem Soleimani: US kills top Iranian general in Baghdad air strike BBC News 01/03/2020)

The Trump-Pence Administration also fueled the war in Yemen, an ongoing horror show. (War in Yemen Council on Foreign Relations Global Conflict Tracker; accessed 11/11/2020).

The last four years have been yet another serious setback for nuclear nonproliferation, with Trump's sad farce of negotiations with North Korea and his pulling out of the nuclear agreement with Iran. Trump was operating on a genuinely primitive view of foreign policy and international trade and self-enrichment for the Trump family business. A constructive peace policy is something very different.

In terms of EU-European relations, Biden won't be as obnoxious as Trump. But Varoufakis discusses how the expectation of a much better relationship with the US the next four years may remove some of the subjective urgency of strengthening the European Union. Britain has left the EU, weakening both Britain and the EU as actors capable of influencing international events. Trump is openly hostile to the EU. But the US policy under Clinton, Bush II and Obama was to favor a broad expansion of the EU but keep the EU as a relative loose organization with limited ability to challenge US foreign policy. The Cheney-Bush national security policy was very explicit about preventing the emergence of any "peer competitor" in global power. They wanted a weaker rather than stronger EU.

But I don't think anyone on the left or center-left should be complacent about a Biden Presidency. He's facing giant public health and economic crises and a very recalcitrant QAnon-ified Republican Party that will bitterly oppose him on every front.

Remembering the toll of the Great Recession and bracing for the current one

It's worth recalling how the Great Recession that began for the United States in late 2007 impacted so many people since we're not into what will apparently be a worse one. Colleen Shaley reported (The financial crisis hit 10 years ago. For some, it feels like yesterday Los Angeles Times 09/15/2018):

For many Americans, the significance became apparent when they faced a layoff or the loss of a home — and the ramifications were felt for years. Nearly 9 million people lost their jobs and at least 10 million lost their homes. Within four years, 46.5 million Americans were living in poverty.

The National Bureau of Economic Research (NBER) defines the earlier recession as dating from December 2007 to June 2009. That means that what turned out to be a continuing increase in the GDP had begun by June 2009, not that the effects of the recession had been erased or that the condition of those negatively affected have returned to the status quo ante.

NBER provides this explanation of its dating of the current recession started in February 2020:

The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below.

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion. [my emphasis]

Yanis Varoufakis talks about the comparisons he makes between what he calls the 2008 and 2020 recessions in this video, 2008 & 2020: The Combination That Changed Capitalism Forever New Economic Thinking 07/03/2020:

He actually frames his argument as showing how the current crash is a continuation of the previous world economic crisis (2008). He's talking here in the context of the framework he establishes in his book The Global Minotaur (2013) that the end of the Bretton Woods system in 1973, the trade deficits of the US became the primary center for the recycling of capital in the international financial system. He sees that system as having been in a continuing crisis since 2008.

This includes an explanation about how Germany's current economic policy has a strong tendency to create credit bubbles in other eurozone countries.

He also addresses on the most striking oddities of the current economic moment, the fact that the stock market is doing extremely well while the real economy is reeling in so much of the world. The current bailout money made available by the Federal Reserve in the US and ECB in Europe to cushion the current recession is going primarily to large corporations via large financial institution. (This is a continuation of the broad policy for responding to the Great Recession.) And the CEOs and governing boards of those corporations receiving the money have strong incentive to juice the stock market by buying back their own stock:

[I]f you are now in the shoes of the CEO of a car company in Europe, let's say, and you get all this free money from the central bank, ... what do you do with this money? Do you invest it in more cars? You see that people out there won't be able to buy them, won't be able to afford them at prices that are profitable for you. Well, no, there's actually something much easier that you can do. You can take the dosh [money] and you can take it to the finacial markets, to the stock exchange and buy back your own shares. So that's what's going to push them through the roof, the company seems to be doing very well, and you're doing very, very, very well, thank you so much, personally, because your bonus as a CEO, member of the board,  board of directors and so on, hinges on the share price.

That creates a very interesting situation. Financial markets are doing extremely well, the real economy doing extremely badly. Never before did capitalism generate this disconnect between huge quantities of savings and liquidity, on the one hand, and very low - by comparison in relative terms - levels of actual investment in fixed capital [plant and equipment]. This disconnect is the reason why we've been having trillions and trillions and trillions of dollars, dollar-denominated debt in negative-yielding territory, negative interest rates. It is why we had deflationary forces producing the political monsters across the world, because deflation, unlike inflation, deflation poisons politics.

But that's yet another discussion to have, especially with my German friends who for some reason misunderstand their own history and keep on believing that it was hyperinflation that gave rise to the Nazis. No, it wasn't.  It was deflation, after Herr Brüning introduced in 1930 fears and stringent austerity that started pushing prices downwards, creating deflationary forces that took over effect. (after 19:30 in the video; my transcript and my emphasis in bold)

That last point is worth remembering. I wrote about it in Did Heinrich Brüning have no other choice but austerity economics in the Great Depression? 01/09/2013.

That's also why tax cuts on corporate profits don't automatically induce more real investment, especially during recessions.

The EU recovery funding plan - hopeful or ominous for the near future of the Union?

The European Union has come up with a recovery fund to deal with the immediate effects of the Covid-19 crisis and the resulting start of a recession that is likely to be very serious (Jim Brunsden et al, EU recovery fund: how the plan will work Financial Times 07/21/2020).

The final compromise is a scaled-down version of what Ursula von der Leyen, European Commission president, originally requested from leaders in May. The core grants component of the recovery effort was reduced to €390bn, considerably less than the €500bn recommended by the commission and pushed by Germany and France.

However, it is still a landmark agreement, against considerable odds, which will give Brussels the unprecedented power to borrow hundreds of billions on the markets and hand it out as budgetary support to member states.

EU leaders have made the routine optimistic predictions that typically go with such supposed breakthrough moments. But opinions are very much divided on its prospects.

Mark Schieritz provides an optimistic take in Das rechnet sich Die Zeit 23.07.2020, starting with a caution about predicting historic turning points (my translations from the German):

Was it clear to the French when they stormed the Bastille that they would trigger a revolution and overthrow the king? Did the men who threw tea boxes into the sea in the Port of Boston in December 1773 in protest against British tax policy suspected that three years later the United States would declare itself independent? Probably not. History doesn't come out and say, Hello, it's me, History! It hides behind the events and in between. You have to look for them if you want to find them.

But he chooses to take what for him is a positive view that the deal shows the EU moving more into the macroeconomic role that the member states need it to play:

One could say that by financing itself like a state, the EU itself becomes a little bit of a state. And just as the nation-state in yesterday's world was the condition of national self-determination, so in the world of tomorrow a united EU is the condition of European self-determination. Because that is the only way they can preserve themselves. The British will still experience this. And maybe they will even come back. You would be welcome.

Shahin Vallée is also looking at the bright side in With its recovery deal, is the EU finally starting to act like a unifying force? Guardian 07/22/2020:

It was a long time coming, but the coronavirus crisis seems to have allowed Europe to make a leap towards genuine integration. The global financial crisis in 2008 exposed the inherent fragilities and incompleteness of Europe’s monetary union, prompting a decade of agonising debate over fiscal union. Essentially, sharing a common currency without sharing a real budget was always going to be unstable and potentially dangerous.

But now European leaders seem to be finally facing up this profound architectural problem. Common debt, common expenditure and the possibility of common taxation – which all seemed out of reach over the last decade – were accepted this week unanimously after a marathon summit that lasted more than four days.

Yet despite his optimism, most of the article is taken up describing the shortcomings of the proposal and the political risks for the EU that it has dramatized.

More pessimsitic take come from two sources that were very prescient about the 2015 Greece crisis, Wolfgang Münchau and Yanis Varoufakis.

(Münchau's) Eurointelligence reports (Why we don’t think this deal is historic 07/22/2020):

So, this is a list of things we think stand in the way of this programme being ultimately seen as historic

• the programme might not succeed on its own terms, or it might not be seen to succeed;
• member states may fail to use the opportunity of the fiscal boost by addressing structurally low productivity;
• member states may fail to endow the EU with an increase in the own-resources tax base;
• member states may fail to change the treaties to make it possible for the EU to raise funds outside fiscal emergencies;
• the programme pitches member states against one another, and could foster euroscepticism in the north.

Yanis Varoufakis, The EU coronavirus fund will take Europe another step towards disintegration The Guardian 07/24/2020. His commentary is in part at reponse to Shahin Vallée.

Varoufakis reminds us that Herbert Hoover/Heinrich Brüning austerity economics is still alive and well among the European establishment:

[T]he recovery fund is a distraction from the elephant in the room: massive austerity. According to the International Monetary Fund, the eurozone’s total 2020 income will fall by 10%, causing an average budget deficit of more than 11%, with weaker countries such as Italy and Greece facing a much larger drop.

That would not be catastrophic per se, if it were not for the determination of Berlin and other governments to push member states to balance their books by 2021 (as witnessed by the 11 June Eurogroup communique). Even if the nascent recovery brings down, for example, Italy’s budget deficit to, say, 9%, to balance its books Rome must impose a cruel level of austerity equal to a new 9% of GDP in cuts and taxes. Similarly with Greece. Given that even Germany will have to practise austerity to balance its budget, the whole continent will be treated to an intensification of the doom loop between austerity and recession. [my emphasis]

He also notes that the amount of the European recovery fund is actually a small amount giving the like size of the recession facing the EU, especially in light of "the austerity tsunami down the line" he describes.

And he fears that the conditions of the program "are a Eurosceptic’s dream. ... It is almost as if the whole thing were designed by a cunning Eurosceptic." And one big part of it is that:

... our great and good leaders also decided that each national government will have the right to freeze payments, for up to three months, to any other government while it scrutinises how the money is to be spent. Endless recriminations are guaranteed, as the Dutch lambast the Italian government’s pension payments and Rome returns the favour with reports on the Netherlands’ famous tax loopholes. Imagine the mood in the room when such a challenge is made to, say, Spain, by a prime minister whose government the EU bribed, in the form of Thatcher-like rebates, to get the recovery fund across the line. [my emphasis]

In other words, this is another case of the EU collectively trying to do the least it can get away with in terms of a sound macroeconomic policy. All while operating with the time bombs embedded in the construction of the euro and the ludicrous borrowing and spending limits the 19 eurozone have imposed on themselves.

The "Merkron" plan and the Frugal/Greedy Four

There is a discussion underway in the EU about a plan for the EU to borrow money and distribute it to member countries to counter the negative economic effects of the corona crisis. German Chancellor Angela Merkel and French President Emmanuel Merkel proposed a €500 billion recovery fund for the European Union in which the EU would borrow funds to distribute (not loan) to member countries to deal with the current recession that we're so far calling the COVID crisis or the coronavirus crisis. (Daniel Boffey, Merkel and Macron propose €500bn EU rescue fund Guardian 05/18/2020) One of the notable features of the proposed fund is that it would be an project of the full European Union, not of the euro currency zone.

The press like to refer to the relationship between the two leaders as "Merkron," reflecting the continued centrality of German-French leadership in the EU. A role that has now increased in relative importance with Brexit.

The "Merkron" proposal drew support from 23 of the EU's 27 members. Four countries, styled as the "Frugal Four," objected to the proposals on the grounds that it would be a direct EU support to member nations without an obligation to repay: Austria, Denmark, the Netherlands and Sweden. Austria's baby-faced Chancellor Sebastian Kurz has been prominent in making the case for the Frugal Four, also known as the Greedy Four. They made a counter-proposal whose central concept was that the assistance be made in the form of loans that would have to be repaid. This, of course, would affect the national credit rating and bond rates of countries like Spain and Italy, especially in the latter case increasing the likelihood of a new euro crisis.

The proposal has been evolving in the negotiations with the Greedy Four, with Ursula von der Leyen as head of the EU Commission proposing a variant. Lionel Laurent reports (An $826 Billion Battle Is Brewing in Europe Bloomberg Opinion 05/28/2020:

The European Union’s pandemic recovery plan has all the hallmarks of a historic leap in the dark for the 27-member bloc.

It aims to unleash as much as 750 billion euros ($826 billion) of fiscal stimulus, fueled by joint borrowing on financial markets - a big deal for member states that have always jealously guarded the power to tax and spend. The fact that the plan unveiled by Commission boss Ursula von der Leyen is so clearly aligned with the proposal from France’s Emmanuel Macron and Germany’s Angela Merkel is especially positive: Paris’s desire for continental assertiveness and foreign-policy grandeur hasn’t always matched Berlin’s focus on balanced budgets. ...

At the center of the battle are the so-called “frugal four” - the Netherlands, Sweden, Austria and Denmark - taking up a combative role similar to that of the British when they were members. As wealthy net contributors to the bloc’s budget, they’ve already been pushing back against what they see as unfair increases to the share they’re expected to chip in after Brexit; February negotiations on the next seven-year budget went nowhere after 28 hours of talks.

The Covid-19 crisis has redoubled efforts by the frugal four to push back against perceived profligacy, as the EU considers a bigger budget outlay than before, at 1.1 trillion euros (still only about 1% of gross national income), adds on pandemic stimulus tools and proposes aid in the form of grants rather than loans to be paid back — a package worth 2.4 trillion euros. The budget hard-liners may lack the diplomatic heft of Germany, but they can’t be ignored, as the plan needs unanimous support across national parliaments. [my emphasis]

Basti (Austrian Chancellor Kurz) is working this to promote his own anti-European credentials among the hard-right voters he works hard to cultivate. Basti has often aligned himself with the Visegrad group (Hungary, Poland, Czechia, Slovakia) on other anti-European positions like flat opposition to an revision of the Failed Dublin System of immigration and asylum processing. But his friends in the Visegard Group, including the EU's current start authoritarian, Hungarian Prime Mnister Viktor Orbán, want some of the money foreseen in the Merkron aid concept.

And, of course, different players try to negotiate deals over all kinds of things, so that's a factor always present in EU politics. (Just like every other kind of politics!)

Matthew Karnitschnig reports (Sebastian Kurz cautious on Commission’s €750B recovery blueprint Politico EU 05/27/20):

Austrian Chancellor Sebastian Kurz said that he and the other leaders of the EU’s so-called frugal four group were encouraged by some aspects of the European Commission’s proposal for a coronavirus crisis recovery fund, but cautioned it represents just a “starting point” for negotiations.

“What we find positive - not just myself, but the Netherlands, Sweden and Denmark - is that there is a time limit and that the fund will be a one-time emergency measure and not the first step toward a debt union,” Kurz, who has emerged as the unofficial spokesman of the frugal faction, said in a telephone interview with POLITICO on Wednesday.

“Considering that there are many in Europe who want such a debt union, it’s important to us that this be clarified in writing once and for all,” he said, referring to concerns among the frugal group that the fund could morph into a permanent fixture, opening the door to mutualization of members' debt under the banner of the EU. [my emphasis]

Such political melodramas need to be understood in the context of EU politics, which is too often superficially reported even by the European press.

The EU is a strange critter. Its formal justifications are that it has promoted peace and democracy in Europe. And that's true. It's done both. But the teeth of the EU legal structure is in the economic area, and that structure is very much in the mode of the neoliberal gospel that we see embedded in "trade" treaties that are actually corporate-deregulation treaties.´ So despite the reality of the peace and democracy rationales, which I think are generally taken very seriously, the EU has no common foreign policy (to speak of), no common EU military, and a unanimity rule on major policies that make it extremely difficult to enforce the democracy part.

But the trade laws based on the deregulation-privatization model are enforceable in the courts. And the corporate lobbies aren't at all inclined to give up the advantages the EU structure brings them. Business regulation is dominated by EU laws and rules, but the various forms of social insurance - "social state" polices as they are also called - are the responsibility of individual countries, which given the way the European Supreme Court (EuGH) interprets the laws, creates heavy pressure to lower social-insurance protections toward the lowest common denominator. But it's not just the courts. The EU Commission, which is the EU executive body, has for years pushed member states to privatize their national health insurance programs, though fortunately most EU governments weren't so politically suicidal that they actually did much of it.

There's a lot of justified talk about the "democratic deficit" in the EU. I'm guessing that not even half of the voters in EU countries could correctly describe how laws are made by the EU Commission, the European Council, the Council of the European Union (not the same as the European Council!), and the European Parliament. For corporate lobbyists, this is a *desirable* state of affairs. Neither Merkel nor Macron have any intention of rocking that boat. And here's where the unanimity principle comes into play. If Macron and Merkel think it somehow looks good politically to advocate a common EU borrowing-and-subsidy program that they may not actually want, as long as they know that even one country will veto it, they are free to posture without having to worry they'll actually have to carry through. That way they can be the Good Europeans whose enlightened proposal got blocked by some annoying small countries.

Generally, the richer countries would prefer to have the vetoing country be one of the former "Eastern Bloc" countries. But in this case, the lowly Eastern countries want the money, so it's the Greedy Four  who are the sticks in the mud on this one. If Germany and France apply even a fraction of the pressure they applied to Greece, Italy, Ireland, Spain, and Portugal in the last euro crisis to enact austerity measures, the dissenters will come around. (Craig Crowther, 'Frugal Four' will come round to EU's €750bn COVID-19 recovery fund, says former Finland PM Stubb Euronews 05/28/2020) If Merkel and Macron don't apply that kind of pressure, we'll know they aren't serious. Since we're talking here about using public funds largely to bail out failing corporations and banks, it's possible that Merkel and Macron are serious on this one. Even staunch neoliberal austerians are true believers in "socialism for the rich."

Florian Gathmann et al, Auf den Kopf gestellt Spiegel Online 28.05.2020

Yanis Varoufakis is skeptical of the proposal, which he doesn't think will help with the problem the "periphery" EU countries like Italy face with pressure on their bond rates in a crisis. On the surface, the Merkron proposal is a move to make the EU more of a "transfer union". But the more critical problem is to make the eurozone (18 countries) a transfer union. That would mean things like have a eurozone-wide unemployment support program, for instance. Otherwise, the eurozone still faces the problem of the kind of tremendous pressure for internal devalution, i.e., lowering wages and living standards, that countries like Greece and Italy faced during the last eurocrisis. DiEM25 on Merkel Macron Announcement 19 MAY 2020:

There is an important geopolitical consideration in play with the "Merkron" proposal, as Wolfgang Münchau explains in China is pitting EU countries against each other Financial Times 06/24/2020:

China has shown remarkable skill in playing EU countries off against one another — for example in the race to develop 5G mobile networks. But this is just the beginning. China is well on the way to emerge as the most influential external power for the EU.

China’s Belt and Road Initiative, a project of long-term infrastructure investment spanning the Eurasian continent, lies at the heart of China’s global industrial strategy. EU governments understand this well. The Franco-German proposal for the €500bn coronavirus recovery fund includes a specific demand for an industrial policy to protect Europe against investments by third countries in strategic sectors. Yet such a strategy would pose problems for Italy, the likely main beneficiary of future Chinese investment in Europe. [my emphasis]

And Münchau's Eurointelligence looks more closely at the smoke and mirrors involved (Why it is not €500bn 05/29/2020):

When we read through the official document for yesterday's briefing, we were perplexed that the numbers did not add up - at least not in an obvious way. Further study of the proposal has revealed to us the reason why. The European Commission's claim that €500bn of the €750bn package comes in the form of grants is misleading. A more correct assessment is €400bn, which includes the €310bn grant element in the recovery plan and various bits and bobs, including an increase in structural funds. But it also includes components which the EU classifies as grants but whose ultimate incarnation is a loan. This is the Commission's old Juncker-fund reflex. It starts off by taking some real money and then leveraging it into a large loan. Whether this works or not is beside the point. Economically, this is not a fiscal impulse because it relates to claims that must be ultimately repaid. [my emphasis]

Europintelligence also argues that this is a clumsy attempt to backdoor a transfer-union function that really pertains to the specific needs of the eurozone:

... will the package survive the onslaught of the frugal four? The EU will need the consent of each of them to move ahead. They each will extract a price. On a per-capita basis, the frugal four are among the five largest net contributors to the EU budget. Leif Pagrotzky, a former Swedish economics minister, made the argument in Dagens Nyheter that Sweden should not veto the recovery fund, but argue that it is a eurozone-only instrument and Sweden should not take part in it. We agree with that argument. There is a lot of muddled thinking in Brussels about the nature of the monetary union, which is one of the reasons why the eurozone is stuck in a perma-crisis. The recovery fund is an economic necessity that arises as a direct result of countries having locked themselves into a permanent monetary union. It is not another regional aid programme.

The Dutch and the Austrians will have different objectives. We don't think they will want to veto the package, but the net economic gain for the EU as a whole is likely to be reduced through rebates for these countries. For example, if non-eurozone countries were allowed to opt out from the recovery fund, the refinancing burden on the remaining countries would increase, which in turn would reduce the extent of the fiscal transfer that is built into the package. [my emphasis]

Jamie Galbraith and Yanis Varoufakis on the Coronavirus Recession

James K. Galbraith and Yanis Varoufakis: Another Now #7 DiEM25 TV 05/26/20020:

This is a discussion between my two favorite living economists, Jamie Galbraith and former Greek Finance Minister Yanis Varoufakis. They talk some about Jamie's father, John Kenneth Galbraith, at the start. But it's mainly about the COVID crisis and the economic fallout; how it has been handled in various places including China, the US, and Europe; and some about the US Presidential election.

(Trigger warning for conservative Democrats! They say nice things about NATIONAL HEALTH INSURANCE!!!)

Varoufakis asks Galbraith if he's going to vote for Joe Biden. Jamie responds, "I am a religious Democrat. Which is to say, it's the type of a relationship that many people feel toward their church. However ambivalent about it, it's exceedingly hard to leave. So the answer to that is yes, I will vote for Biden. Of course I will."

And he proceeds to say:

I'm not the sort to think that these problems and the kind of crisis that we're facing is the work of a late arriving individual. ... [T]he reason the US economy has crumbled under the impact of the coronavirus is not simply that it had a federal government in the hands of this particular *gang*. It really has to do with the way in which the economy has been engineered over the last 40 years, and in particular in the return from the financial crisis of 13 years ago.

Varoufakis mentions that for him a choice between Angela Merkel and Trump would be a "no-brainer" in choosing Merkel. Given his clashes with Merkel during the last euro crisis, that's a real "jumping the shark" comment for him!

Both of them are careful about excess optimism, it's safe to say. Galbraith quotes here a comment he attributes to William of Orange, "It is not necessary to hope in order to persevere." There's also this very Galbraithian comment relating to the flexibility of free-market dogma when big corporations are threatened with going under: "The US is sustained by its willingness to suspend all pretence of principle in an emergency."

His father took a similar cautious note in the final paragraph of his The Culture of Contentment (1992):

In the past, writers, on taking pen, have assumed that from the power of their talented prose must proceed the remedial action. No one would be more delighted than I were there similar hope from the present offering. Alas, however, there is not. Perhaps as a slight, not wholly inconsequential service, it can be said that we have here had the chance to see and in some small measure to understand the present discontent and dissonance and the not inconsiderable likelihood of an eventual shock to the contentment that is the cause.

That was in 1992, at a relatively early stage of the 40-year stretch of bad economic engineering that Jamie mentions in the video. The political and economic system of the US has had some serious disturbances of contentment in the decades since: Muslim terrorism including 9/11; the Iraq War; the Great Recession that begin in the US in 2007; the Afghanistan War: Hurricane Katrina's devastation of New Orleans in 2005; Hurricane Maria in Puerto Rico in 2017; increasingly obvious manifestations of the climate crisis like the California wildfires; and, now, the COVID-19 crisis.

The more chronic disturbances to public contentment include the decreasing trend on wages and reduced opportunities for retirement pensions that have been an integral part of the neoliberal order that we now conventionally date from St. Reagan's first administration. The state of both major political parties in the US in their state of asymmetric partisan polarization that has produced a Trumpified Republican Party and a quasi-paralyzed Democratic Party is also a serious crisis, although the extent to which it so far as disturbed the "culture of contentment" that J.K. Galbraith described in 1992 is rather hard to say.

Austerity economics, of course, was already well established as the norm for both parties in the Reagan and Bush 1 Administrations. As the senior Galbraith noted:

In a time of economic recession such as that of the early 1990s, there is a strong case not only for low interest rates but also for increased public expenditure, especially on roads, bridges, airports and other civic needs, and on unemployment compensation and welfare payments, all to employ or protect the unemployed and those otherwise adversely affected.

But there is here a conflict with the tenets of the age of contentment: it is not the comfortable who would thus be aided. And lurking also is the eventual tax effect. During the 1980s, the burgeoning years of contentment, there was the large continuing deficit in the federal budget. Though a topic for voluble discourse, it was less of a threat to the contented than the taxes that would have reduced it. In the ensuing recession a deliberate addition to the deficit, a benefit primarily for those outside the community of contentment and one which might later renew the call for higher levies on those inside, was strongly resisted.

This chronic (and bipartisan) under-investment in public goods has continued until this day. I was a little surprised in the video discussion to hear Jamie Galbraith suggested that not only the European Union but the United States might be confronted in the foreseeable future with a Yugoslavia scenario, i.e., the disintegration of the current political entities. We have seen a concrete example of that with Brexit. It seems less obvious for the United States. And the Yugoslavia scenario to which Jamie refers doesn't necessarily imply some replay of the Balkan Wars of the 1990s. But he's actually framing that in the historical context of how the Chernobyl disaster of 1986 was a major inflection point in the Soviet political system.

But is could be a useful metaphor. If Republicans want to claim that basic social-insurance measures will turn the US into Venezuela, we can respond that Ronald Reagan economics is actually turning us into Yugoslavia!

Yanis Varoufakis and the DiEM25 movement at the end of 2018

This is a 20-minute segment of Yanis Varoufakis talking about European politics in the context of his DiEM25 group's participation in the March 2019 European Parliament elections, Progressive International: Yanis Varoufakis; Bernie Sanders Launch New Global Mvt Against Far Right Democracy Now! 12/07/2018. Transcript here.

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 Kandidatur taz 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.

Yanis Varoufakis on the current Italian government's stance on European issues

Former Greek Finance Minister has certainly shown he would defy bad policies from the EU Establishment.

He's not impressed with Italy's current approach to doing that. Varoufakis Says Italy's Actions Bring EU Closer to Disintegration Bloomberg Markets and Finance 10/09/2018:

Varoufakis regards the current Italian government de facto led by the far-right Matteo Salvini (Lega) as a "fascist moment".

This Italian government, and the fascist moment it represents, is perhaps the Left's last warning: We need a new, credible EU policy agenda. We must explain how the bloc, and the euro, could be run democratically & sustainably - while preparing for its end https://t.co/jGQ1Cg63zO

— Yanis Varoufakis (@yanisvaroufakis) July 17, 2018

Here is an interview on the Italian situation from a few days earlier than the date on the clip above, The 5S-Lega Italian government is continuing the failed Renzi strategy Varoufakis.eu 10/03/2018:

As for migration and sovereignty, I am very much afraid that what Mr Salvini is doing – by treating flesh and blood fellow humans floating on the Mediterranean as bargaining chips against Brussels – is to promote strategic misanthropy as a legitimate negotiating tactic within Europe. This Italian government is, to put it bluntly, a clear and present danger for European civilisation. [my emphasis]