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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Emmanuel Macron's "moralisation of politics" comes at a heavy price for his allies

"Fake" jobs in French politics, season 3 episode 1.

Something is rotten in the state of France. No political party – at least none that existed before 2016 – seems immune to the spread of investigations into “fake” or shady parliamentary jobs. The accusations sank centre-right candidate François Fillon’s presidential campaign, and led to Marine Le Pen losing her parliamentary immunity in the European parliament (and proxy wars within her party, the National Front). Both deny the allegations. Now the investigations have made their way to the French government, led by Edouard Philippe, Emmanuel Macron’s Prime Minister.

On Wednesday morning, justice minister François Bayrou and secretary of state for European affairs Marielle de Sarnez announced their resignation from Philippe’s cabinet. They followed defence minister Sylvie Goulard’s resignation the previous day. The three politicians belonged not to Macron's party, En Marche!, but the centrist MoDem party. Bayrou, the leader, had thrown his weight behind Macron after dropping his own presidential bid in April.

The disappearance of three ministers leaves Emmanuel Macron’s cross-party government, which includes politicians from centre left and centre right parties, without a centrist helm. (Bayrou, who has run several times for the French presidency and lost, is the original “neither left nor right” politician – just with a less disruptive attitude, and a lot less luck). “I have decided not to be part of the next government,” he told the AFP.

Rumours had been spreading for weeks. Bayrou, who was last part of a French government as education minister from 1993 to 1997, had been under pressure since 9 June, when he was included in a preliminary investigation into “embezzlement”. The case revolves around whether the parliamentary assistants of MoDem's MEPs, paid for by the European Parliament, were actually working full or part-time for the party. The other two MoDem ministers who resigned, along with Bayrou, also have assistants under investigation.

Bayrou has denied the allegations. He has declared that there “never was” any case of “fake” jobs within his party and that it would be “easy to prove”. All the same, by the time he resigned, his position as justice minister has become untenable, not least because he was tasked by Macron with developing key legislation on the “moralisation of politics”, one of the new President’s campaign pledges. On 1 June, Bayrou unveiled the new law, which plans a 10-year ban from public life for any politician convicted of a crime or offence regarding honesty and transparency in their work.

Bayrou described his decision to resign as a sacrifice. “My name was never pronounced, but I was the target to hit to attack the government’s credibility,” he said, declaring he would rather “protect this law” by stepping down. The other two ministers also refuted the allegations, and gave similar reasons for resigning. 

Macron’s movement-turned-unstoppable-machine, En Marche!, remains untainted from accusations of the sort. Their 350 new MPs are younger, more diverse than is usual in France – but they are newcomers in politics. Which is exactly why Macron had sought an alliance with experienced Bayrou in the first place.

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