The high priests of austerity

To an EU elite determined to push harmful economic policies, democracy is an inconvenience.

Jean-Claude Trichet could have enjoyed a comfortable retirement after stepping down as president of the European Central Bank in 2011.  Commanding an annual salary of €370,000 in his old job, the Frenchman is now paid a pension of up to 70 per cent that amount.

Instead, Trichet has been kept busy playing a game of musical chairs with Italy's technocrat former prime minister Mario Monti. In one of his final acts as ECB chief, Trichet spearheaded the downfall of Silvio Berlusconi by insisting that the lascivious rogue introduce unpalatable economic "reforms" in Italy as a condition of emergency "assistance". 

The diktat helped Monti replace Berlusconi as prime minister (without an election). It also allowed Trichet to fill two posts that Monti had to vacate: those of European chairman with the Trilateral Commission, that secretive club for political and business leaders, and chairman of Bruegel, a think tank based in Brussels.  Trichet combines these responsibilities with overseeing the Group of 30, a Washington-based institution dominated by bankers.  

All this hyper-activity might explain why Trichet has been sending out some muddled messages.  During an interview on French television earlier this month, he blamed mass unemployment for the killing of a far-left activist by skinheads before advocating deep cuts to public expenditure: a recipe for mass unemployment.

Suave and confident,  Trichet probably didn't realise he was contradicting himself.  So I'd recommend that he reads a paper published by his minions at Bruegel in May.  An assessment of measures taken in embattled eurozone economies, it stated that austerity has caused "very high unemployment" in Greece and "record unemployment levels" in Portugal.

This was a rare admission from Bruegel that its preferred prescriptions are counterproductive.

Funded by Goldman Sachs (another one-time Monti employer), Deutsche Bank, Pfizer and Microsoft, the think tank has helped cloak the crude politics of austerity with intellectual gravitas. It is treated with reverence among the elite in Brussels and beyond. Top-ranking EU officials regularly attend its events, while opinion pieces by its staff grace such newspapers as Le Monde and The Financial Times.

Bruegel was established by Jean Pisani-Ferry, who was hired as an economic adviser by François Hollande, the French president, in April. The appointment indicates that Hollande, nominally a socialist, is shifting  to the right. In a syndicated column from December 2012, Pisani-Ferry parroted Margaret Thatcher's argument that "there is no alternative" to eviscerating the welfare state. "Rather than flirting with illusions, governments should confront the hard choices ahead of them," he stated.

Pisani-Ferry's new responsibilities have not caused him to be more reticent. When flaws were recently pinpointed in a by now infamous paper from the economists Carmen Reinhart and Kenneth Rogoff, he claimed it was "never a celebrated piece of economic research". The shortcomings did not undermine the case for austerity, he suggested.

One common misperception is that the EU's most powerful figures have made up their response to the economic crisis as it went along. The truth is that they have exploited the situation to dust down plans hatched earlier but which would have been difficult to implement under less straitened circumstances.

André Sapir, a senior fellow at Bruegel, was tasked with drawing up a series of recommendations for the European Commission nearly a decade ago.  The 2004 Sapir report advocated that the Brussels authorities be given greater powers to monitor the budgets of EU countries. 

Known to policy wonks as the "European semester", his proposal urged meddling in areas of responsibility that national governments guarded jealously.  The concept has been turned into reality over the past few years, leading to a situation where details of Ireland's budgets are sent to other European capitals before law-makers in Dublin get to see them.

Bruegel is part of a mushrooming network of corporate-financed think tanks dedicated to influencing debate.  A video posted on Bruegel's website about Latvia's bid to join the euro illustrates this point.  It tells the viewer that there is "wide consensus" that signing up to the single currency would be "the right move for the country". 

That must be news to the people of Latvia, most of whom don't want the euro, according to opinion polls. Such inconvenient details can, of course, be glossed over. More than likely, the Riga government won't be calling a referendum on this matter.

Democracy does not gatecrash the cheese and wine receptions that happen almost nightly in the world of think tanks. Without scrutiny, their "experts" can mould the outside world in the way that the wealthy and influential want. 

David Cronin's "Corporate Europe: How Big Business Sets Policies on Food, Climate and War" will be published by Pluto in August. Follow him on Twitter @dvcronin

A recent debate at the European Parliament in Strasbourg. (Photo: Getty.)
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Why did the Tunisian National Dialogue Quartet win this year's Nobel Peace Prize?

Thanks to Tunisia, it is no longer possible to argue that the Middle East and North Africa are inherently undemocratic or prone to violence.

It is a fitting that in a tumultuous year for global peacemaking, the Nobel Peace Prize has been awarded to the little-known Tunisian National Dialogue Quartet, a coalition made up of the union federation UGTT, the employers’ institute, the Tunisian human rights league and the order of lawyers . Over the past few years, the Quartet has been quietly shepherded in democracy to the country that lit the fuse of the Arab Spring. In part thanks to the efforts of this broad cross-section of civil society, Tunisia has stayed the course in transitioning from an authoritarian past to a democratic future, even in the face of terrorist violence and as other revolutions in the region have faltered.

The award comes at a time of escalating sectarian conflicts in Syria, Libya and Yemen. Islamic State’s campaign of terror has uprooted Iraqis and Syrians alike, driving desperate refugees into small boats to battle the waves of the Mediterranean. They join others fleeing to Europe from political and economic crises in Africa and Asia, forming a stream of humanity symbolising failures in leadership in three continents.

Among all this, it is not hard to identify why the Norwegian Nobel Committee awarded the world’s most coveted peace prize to the Tunisian Quartet.

First,Tunisia deserves to be celebrated for its momentous achievements in consolidating democracy. Unlike other countries in the region, it has trodden a path that is slow but solid, adopting a comprehensive and consensus-building approach to decision-making.

In this it provides a rare and extremely important example, not only for the region but also for the world. Thanks to Tunisia, it is no longer possible to argue that the Middle East and North Africa are inherently undemocratic or prone to violence.

Civil society steps up

Second, the role of civil society is fundamental for bringing about sustainable peace. Political leadership is important, but the scale of the challenge in transitional societies means that we cannot simply leave things to political leaders to sort out.

At local level especially, peace feels a lot more real when it comes with tangible improvements to quality of life. Citizens want to see the economy motoring again and to have confidence in the state’s institutions. They want to know that they can sleep soundly and safely, without fear of violence, persecution or poverty. Governments often lack the capacity and credibility to deliver these dividends alone. Civil society must step up to the plate – particularly the associations of trade, justice and human rights of which the Quartet is formed.

And third, the Quartet’s work relies heavily on forming constructive relationships across the political spectrum – from secularists to fundamentalists. It has walked a fine line, keeping disparate groups with diverging interests invested in an inclusive national process of dialogue. It has, in the words of the Norwegian Nobel Committee, laid the “groundwork for a national fraternity”.

Politicians are often the most cynical of creatures, yet the Quartet has managed to build a sense of collective endeavour among them. It has encouraged them to put the country’s best interest ahead of personal or sectarian interests, making this the guiding principle for decision-making.

Other bright spots

The transition in Tunisia is a work in progress and there will be more setbacks and successes. The country was left reeling from two terrorist attacks earlier this year, when 22 people were killed at the Bardo Museum in Tunis, and another 39 people died during an attack on a tourist resort in Sousse. But the message today is clear – Tunisia has made remarkable progress since 2010, despite the odds. This is in large part due to a credible and engaged civil society, a remarkable achievement in a new democracy. The country has forged a path of inclusive national dialogue from which many lessons can be learned.

Elsewhere this year, Myanmar goes to the polls in November – the country’s first free national ballot since 1990. Colombia is closer to lasting peace than ever, ending half a century of war that has taken 220,00 lives and uprooted six million people.

The US restored diplomatic relationships with Cuba, and also struck a landmark agreement with Iran over its nuclear programmes. And the UN has adopted the sustainable development goals, explicitly recognising peaceful and inclusive societies as a development priority for the first time. Behind every step forward there is an individual or institution worthy of the Nobel Peace Prize, but only one can win and the Tunisian National Dialogue Quartet is a worthy laureate.

Laura Payne is a Research Fellow and Director of RISING Global Peace Forum, Coventry University

This article was originally published on The Conversation. Read the original article.


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