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.)
Gerald Wiener
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From the Kindertransport to Dolly the Sheep: a New Statesman subscriber's story

Gerald Wiener's life has now been turned into a biography. 

In 1997, Gerald Wiener, an animal geneticist, gathered with a group of friends in Edinburgh to celebrate the cloning of Dolly the sheep by one of his former colleagues. He was a respected scientist, who had contributed to the developments in research which led to this ground-breaking development – and a New Statesman reader.

It could have been very different. Gerald was born Horst, on 25 April 1926, to a German Jewish family. Raised in Berlin by his mother, Luise, he grew up under the shadow of the Nazi regime. He was forced out of his school, and left increasingly alone as friends and family fled to the United States and Britain. After Kristallnacht, when Nazis looted and vandalised Jewish-owned businesses, his mother was desperate for her son to escape. She managed to get him included in the last-ditch organised rescue of German Jewish children, which became known as the Kindertransport. At twelve, Wiener arrived in the UK, alone.

For many years, Wiener did not talk much about his past in Germany. Instead, he embraced a new life as a British schoolboy, and later travelled the world as a scientist. But when he met his second wife, the teacher and writer Margaret Dunlop, she began noting down some of his stories. Eventually she encouraged him to share so many details it has become a book: Goodbye Berlin: the biography of Gerald Wiener.

“I was moved by some of the stories, like his mother putting him on a train in Berlin,” Dunlop tells me when I call the couple at their home in Inverness. “I thought - what a terrible thing.”

“I rejected Germany totally for a long, long time,” Wiener, now 91, says. His mother, with whom he was reunited after she also managed to escape to Britain, threw herself into a wartime career as a nurse. “I had one friend from my school days in Berlin, and he was more like a sort of brother to me, but they also left Germany way behind.”

It was during this period of his life that Wiener first picked up a New Statesman. He spent the war years in Oxford, mentored by the Spooner cousins Rosemary and Ruth, related to William Spooner, who gave his name to the speech error.

Then, in the 1960s, his work took him to Germany, where he met fellow researchers. “They all detested the Hitler years,” he recalls. “I started feeling they are no different to me. I no longer felt bitter about Germany.” 

Still, the Nazis' atrocities had left Wiener almost completely without family. He lost his grandfather, aunt and uncle in the Holocaust. His paternal family fled to the United States. By the time Wiener found them again when taking up a fellowship to study in the US in 1956, his father, who survived the concentration camps, had died of a heart attack.

The next decades were spent patching his family together, and also reclaiming a connection to Germany. Wiener’s half brothers, who were born in Shanghai continue to visit. His American nephew, who works in the music industry, has a German girlfriend and lives in Berlin.

Wiener, too, went back to Berlin. In the early 1990s, the city invited former refugees to visit the city, all expenses paid. With some reservations, Wiener and Dunlop took up the offer. “It was quite exciting to go and see places that had been in my childhood,” he says. He also found the old people's home his grandfather had sought refuge in, before being taken by the Nazis.

Meanwhile, his career was taking him around the world, from India to North Korea. His belief in academic collaboration helped to build the momentum for the Roslin Institute, whose scientists eventually cloned the sheep known as Dolly. 

Wiener, who votes Liberal Democrat, wanted to remain in the EU, and he feels “very angry” that 48 per cent of voters have been ignored.

He adds: “I would be surprised if there was a single university or college who was in favour of Brexit.”

As for another of the great challenges of the present, the refugee crisis, Wiener feels a deep empathy for those living in wartorn regions. “Obviously I feel very, very sympathetic to refugees from more or less wherever,” he says. He sees the current German Chancellor, Angela Merkel, who acted decisively on this matter, as “a bit of a beacon”. At the same time, he believes that in order to fully integrate, refugees must make learning English a priority. “When I go down the street, and I hear people who still don’t speak English, that is the one thing that upsets me,” he says.

If Wiener, a successful scientist, is an example of how Britain can benefit by continuing to offer sanctuary to the world’s desperate, there is, however, a dark undertone to his integration. As a teenager, he knew there was no way back to the Berlin of his childhood. “There was no young generation,” he says of that time. “There was no future.”

Goodbye Berlin is published by Birlinn Books.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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