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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The case against TTIP

Let’s not weep for a US trade deal.

It was the sentence, we were assured, that torpedoed the referendum debate. Asked about Britain’s chances of securing a unilateral trade deal with the United States after leaving the EU, Barack Obama declared: “The UK is going to be in the back of the queue.”

The comment was catnip to the Remain side: the Brexiters have long conjured up the image of a newly divorced Britain taking her rightful place in the “Anglosphere” without the rest of the EU dragging us down. Instead, the US president was telling us, we would be left out in the cold.

But here’s a question for you: what’s so great about a US trade deal, anyway? For the past three years, the acronym “TTIP” has been floating across my vision. I’ve always had the sense it was a Bad Thing, without ever really understanding why. So what is the Transatlantic Trade and Investment Partnership, and should we be against it?

My first port of call is my nerdiest friend. “The first rule of TTIP is, anyone who thinks TTIP matters is a douche,” he tells me briskly. It’s safe to say that’s very much not the opinion of Mark Dearn, a senior trade campaigner at War on Want, who gives me a quick run-through of why the agreement has attracted such widespread protests, including a march by 150,000 people in Berlin last October.

“It’s the biggest trade deal in the history of the world,” he says. “It’s negotiated in secret: all the EU currently publishes is its offers. They don’t publish the US offers and they don’t publish the consolidated text – the legally binding documents.”

Such secrecy – which is, to be fair, not unusual in delicate negotiations – does make TTIP look sinister. Very few people are allowed to see the full set of documents, and they must do so in special reading rooms, after signing a non-disclosure agreement and handing over their electronic devices.

There are two areas that particularly alarm campaigners: food and health care. Last year, Alan Beattie of the FT summarised the objections as fears that TTIP will “gut public health-care systems and force American Frankenfoods down European gullets”.

War on Want’s Mark Dearn echoes this, and suggests that removing barriers to trade – the stated aim of TTIP – will lead to Europe lowering its food hygiene and additive standards to match those of the US.

“Eighty per cent of US beef is full of growth hormones or antibiotics that are banned in the EU,” Dearn says. “Forty per cent of US grain uses banned pesticides.” The US also permits “acid washing” of meat to remove contamination. “The EU views that as a form of moral hazard; it makes you think it doesn’t matter what you do [in the factory] up to that point, because you’re killing microbes at the end.”

Many campaigners also want the NHS exempted from TTIP. They worry its provisions on “indirect expropriation” will encourage private companies to sue governments for restricting their ability to do business. That could penalise any state that nationalised a failing industry or cancelled a planned project. Or, perhaps, ran a public health service.

The National Health Action Party has warned that TTIP could deliver a “fatal blow to the NHS”. I ask the party’s campaign manager, Deborah Harrington, what changes patients will experience if TTIP is implemented. “Nothing,” she answers, to my surprise. “But people don’t notice what’s different now, because it’s all behind the NHS logo. It will take people time to realise how the private sector has reshaped the NHS. There’s no big bang.”

Finally, I call the Adam Smith Institute, the country’s best-known libertarian think tank, reasoning that if they’re for it, then I’m probably against it. The ASI’s executive director, Sam Bowman, confirms that he backs TTIP in principle, “although it’s hard trying to predict what’s in an agreement we haven’t seen”. He tells me that the picture of the US as a food hygiene Wild West is not completely accurate: American producers can’t label beef from cows fed antibiotics as organic, for example, but Europeans can. He also doesn’t find the acid-washing of meat as alarming as it sounds. “It sounds gross – basically you’re dipping a chicken in swimming- pool water – but it’s done to comply with antimicrobial laws. And in the US, people find the idea of unpasteurised cheese horrifying.”

Bowman believes that TTIP, like the European single market, will increase GDP by increasing trade. He points out that the UK parliament will get a veto on the final text, and worries that campaigners “are taking the lack of transparency as an excuse to promote a conspiracy theory – that EU governments are colluding to deregulate”. He laughs. “As a libertarian, I wish that were true.”

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism