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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"We are not going to change": Barcelona defies terror with a return to normality

After a attack which killed 14 and injured scores more, shock gives way to defiance and unity.

A perfect summer afternoon in Barcelona suddenly turned into a nightmare on Thursday evening, a nightmare that has become far too common in Europe in recent years. 

“I was having a coffee here [in Plaça Catalunya] and was about to go and walk down there like everyday, because I live just off the Ramblas”, says 26-year-old Eneko de Marcos, pointing down the promenade. “I stayed because I was waiting for a friend, and when she came we heard a big noise and then everyone was running."

Thousands of people, most of them tourists, had been ambling casually along the Ramblas, the most iconic of Barcelona boulevards, which descends from Plaça Catalunya to the old port and the sea, when a white van had mounted the pedestrianised centre of the walk and began driving into people. 

Even after the van came to a stop, leaving a trail of dead and injured in its wake, De Marcos and hundreds of others were trapped for hours inside bars, shops and hotels while the police cordoned off the area and investigated the scene.

Seeing the Ramblas and the surrounding areas completely empty of people following the attack is, for anyone used to the area, unreal and the first reaction for most has been shock. Barcelona had felt safe both to locals and tourists, which had been coming to the city in increasing numbers since last year, many perhaps trying to avoid other destinations in Europe seen as more at risk of attack. 

Shock gave way to confusion and fear during the evening. The van driver was still at large and a series of ugly images, videos and unconfirmed rumours about other attacks spread across social media and the news. The number of victims increased steadily to 13 dead and more than 80 injured of many different nationalities.

At 11pm the city centre and its surroundings were eerily quiet and dark. Few people were venturing on to the streets, and the bar terraces which would normally be packed with people enjoying the late dinners Spaniards are famous for were half empty.

The next morning Barcelona woke up to the news that after 1am that night the Police had stopped a second attack in the touristic beach town of Cambrils, an hour and a half away to the south. What was going on? The streets of Barcelona were still quiet, far too quiet in a city usually noisy and crowded, and again the terraces, so symptomatic of the Barcelona’s mood, were unusually empty.

“I always said something like this would never happen in Barcelona”, says Joaquín Alegre, 76, walking through Plaça de Catalunya the morning after with his friend, Juan Pastor, 74, who nods and agrees: “I always felt safe.”

But slowly fear had given way to defiance. “Afraid? No, no, no”, insists Joaquín. “We’re going to carry on like normal, respecting the victims and condemning the attack, but we are not going to change”, says Juan.

Little by little the Ramblas and the whole area started to fill up during the day. People came from all directions, all kinds of people, speaking all kinds of language. The day was beautiful, the sky was blue, there are no clouds in sight and it got hotter by the minute. It began to look like Barcelona again.

“It’s important not to show fear, that’s what (the terrorists) want”, says Emily, an 18-year-old from Dresden, in Germany, who landed yesterday at Barcelona airport with her mother a few minutes after the attack. She says people were checking their phones while still on the plane and then one girl said aloud there’d been a terrorist attack in Barcelona. “It’s important to come here (to Plaça Catalunya) at this time”, says her mother, Anna, 42, both of them sitting on a low wall at the square.

Next to them, where the Ramblas begins, people once again filled the boulevard full of shops and hotels, which many locals also see as a symbol of how tourism has gone wrong in Barcelona. But Catalans, Spaniards from elsewhere and foreigners mingled happily, feeling united against a common enemy. Many left flowers and lit candles at the feet of a big ornamental lamppost on top of the Ramblas, many others did the same next to the famous Canaletes fountain a little down the promenade. 

“We the people have to respond to this by getting out and taking the streets”, says Albert Roca, a 54 year old publicist, who’s decided to come against the wishes of his girlfriend, who told him he was crazy. “I took a picture of the Ramblas and sent it to her and wrote, ‘Look how many crazy people there are’.”

Just before noon the Mayor of Barcelona Ada Colau visited the Plaça Catalunya with her retinue. She is a very popular figure who comes from civil society in a country where many citizens don’t feel properly represented by traditional politicians. Many people followed her carrying roses, a symbol of Barcelona, while they made their way into the square.

Shortly after, around 100,000 people packed Plaça Catalunya and its adjacent streets for a minute of silence begins for the victims. Only the flapping of pigeon’s wings overhead can be heard. And then an applause and a loud chant break the silence: “I am not afraid! I am not afraid!”, sang the people in Catalan.

Along with Colau in the centre of the square there was Carles Puigdemont, the head of the Catalan regional government and leader of the independence movement that has called for a referendum on 1 October, and along side them, King Felipe as the head of State, and Mariano Rajoy, the Prime Minister of Spain and a bitter political rival of Puigdemont. Seeing them standing together presents an image that until yesterday afternoon would’ve seemed impossible.

Very slowly people start emptying the square, where many still remain singing defiantly. “The attacks yesterday were a disgrace”, says a doorman just outside the city centre as Barcelona began returning to normality, “but we are going to carry on, what else can we do?”