Resurgent euro-left rides integration?

Seth Ackerman SAckerman at FAIR.org
Tue Mar 7 17:20:03 PST 2000


THE EUROPEAN, 14 - 20 Dec, 1998 COVER STORY CHAMPIONS OF THE LEFT TAKE GAMBLE IN THE DARK Julian Coman Intergration: Economic union will bring political accountability on the heads of Euro-11. WHERE did all the EMU mathematicians go? Last December the politics of European economic and monetary union (EMU) resembled a giant arithmetical puzzle. Finance ministers fiddled with calculators in an attempt to prove that an extra decimal point on growth was worth a point off the budget deficit/ GDP ratio. The infamous Maastricht criteria on debt, deficits and inflation woke many a government economist in the dead of night, haunted by looming price rises or threatening interest rates. Originally a political project, EMU became an economic beauty contest, judged according to the aesthetic of austerity. Eleven contestants were busily slimming down. To underline that the euro meant business (not ideology), Theo Waigel, the former German finance minister, would put on a mock-stern voice and give the Italians a talking to for their fiscal profligacy. That was last year. Now, as the single currency prepares to be born on time, the politicians have returned with a vengeance. With EMU in the bag, the political construction of Europe is back on the fast track. Governments, not bankers, are setting a new pace. Ask Oskar Lafontaine, the new German finance minister, who spends his days flying kites for ever deeper economic and political integration, darkening the skies over London in particular. Poor Tony Blair. The British prime minister and his new Labour government were keen to show willing on matters European and took the pseudo-economic debate very seriously; so seriously that they felt Britain could not join EMU until the Britain's own (rather leaner) economy had come into line with those within the slimmers' club. In the meantime, new Labour reassured the British public that monetary union, as laid out in the Maastricht Treaty, meant just that: a single currency joining all those countries which ran a tight financial ship. Any talk of an economic government for Europe or a common taxation system was strictly for the Euro-utopians, whose time had well and truly passed. "Maastricht was a high-water mark of integrationism," judged Robin Cook, the foreign minister, adding that "the concept of Europe as a superstate is one that is deeply unfashionable". According to one new Labour insider: "Blair believed that the ideal of further economic and political integration post-EMU was on the wane, giving him an opportunity to seize the high ground, particularly on employment and labour market reform." Like many a British government since the last war, new Labour had missed the point by some distance. Dazzled by the economic pyrotechnics of EMU gossip about growth projections and debt ratios, Blair and his finance minister, Gordon Brown, believed that the question of monetary union could be sold to the British public in the spirit of pragmatic empiricism. If EMU works and its economics are sensible, why not join? Other grander ideas, such as an economic government to manage the currency, were just so many tall tales. But the intellectual architects of the European Union have never thought much of Anglo-Saxon empiricism. From the days of the European coal and steel agreement in 1951, the constructors of European unity have have been more interested in a form of institutional dialectics in which X creates a need for Y, which in turn generates an expectation of Z. The political presentation of EMU as a merely technical economic exercise masked its true role as an intermediate stage in the wider construction of "Europe". Having already been surprised last May when all EMU candidates, even Italy, finished up as shoo-ins despite pan-European rumours of fiddled books, this month Blair and Brown read Franco-German storm warnings on harmonised taxation, contemplated plans to create a chairman of the Euro-11 who would represent EMU countries on the G7 and the International Monetary Fund (IMF), and learned that the safety net of the national veto may be removed. They were receiving their next lessons in continental theory. The logic is Catholic in its taste for the systematic. Jacques Delors, once president of the European Commission and still one of the most influential voices in the cause of European integration, has long maintained that the notion of a single currency for Europe administrated by an independent central bank was merely a convenient fiction. According to Delors: As soon as there is a serious economic crisis, public opinion will treat the European Central Bank [ECB] in Frankfurt as a scapegoat and rebel against la construction europeenne." Realising there is no prospect of undoing the whole EMU enterprise, the same public will then demand that "the European Council consider the questions of political integration and democratic accountability." In other words, a pan-European economic government. This, as the analyst Perry Anderson has written, is "the hidden gamble" of the project. The Euro-X committee, now transmuted into the Euro-11 and made up of EMU finance ministers, is this government-in-waiting. By the same token, a single market, together with a single currency, will naturally call forth a common system of taxation and a concomitant reorganisation and relocation of economic and political power. The logic of harmonisation will eventually see to that. The movement from the economic base to the political superstructure is not a new trick (Marx cracked it in the 19th century). It represents the consistent strategy of European unification. Back in 1956, when the burgeoning European movement was making little headway in trying to persuade Spaniards to say 'our Chartres', Englishmen 'our Cracow', Italians our Copenhagen and Germans 'our Bruges'," the Messina conference came up with a less airy route to the same goal: the Treaty of Rome, consolidating the coal and steel agreement and inaugurating the European Economic Community (EEC). Give me the wallet and I'll give you the man, to paraphrase the Jesuits.
>From the Common Market in 1958 to the Common Agricultural Policy (CAP) in
1962 and culminating in EMU in 1999, the same principle has been followed ever since. But while the tactics have remained consistent, the goalposts are being moved. In the days of Jean Monnet the European movement embodied an idealistic testimony to the experience of war. In 1945 Winston Churchill described Europe as a rubble heap, a charnel house, a breeding ground for pestilence and hate". Two catastrophic wars had broken the continent's spirit and crippled its economies. Pro-Europeans, led initially by a mixture of pacifists and Catholic intellectuals, aimed to restore peace and prosperity through a new internationalism. This war-scarred generation structured the horizons of the likes of Helmut Kohl and Franois Mitterrand and, through Kohl, lasted long enough to see EMU through. Times have decisively changed. Kohl, who was defeated in German elections in the autumn after 16 years in power, was the last statesman to see the continent's unification in the Tolstoyan terms of "war and peace". A new generation of leaders, almost all on the left, has taken the reins and, with them, a new kind of internationalism and a new vision of Europe. Earlier this month Lionel Jospin outlined its aims when commenting on the Franco-German relationship post-Kohl. According to the French prime minister: A real social agreement in Europe, progress on tax harmonisation, movement towards controls on international capital markets all this is part of the new dynamic of the relationship. What goes for France and Gerhard Schrders Germany also goes for Massimo DAlemas Italy and the EUs Scandinavian wing. These social democratic governments and their leaders are scarred not by the experience of war but by the near-total collapse of the left during the 1980s, a collapse which had its origins in the inability of the nation-state to cope with a new globalising phase of capitalism. Freed from exchange controls in the late 1970s and newly mobile thanks to the late-20th-century technological revolution, multinational capital and its camp followers in the speculative markets were no longer beholden to the dictates of Westminster, Bonn or Paris when it came to taxation, labour law and wages. The "commanding heights" of state power had become foothills in the global economy. Social democratic parties, set up in order to scale them, no longer had a reason for being. The election of centre-left governments in nine of the 11 first-wave EMU countries has turned Brussels into the platform for a belated counterattack. "Co-ordinated action" on direct taxation and "harmonised" indirect taxes will help insulate governments wedded to the politics of tax and spend from the successes of less statist economic experiments. EMU participants will sign up to a traditional "closed shop" in which the rulebook will be a Franco-German composition. The refinement of the Euro-11 committee and the likely creation of a single representative to the G7 and the IMF will dramatically increase the clout of coming European calls for a clampdown on the freedoms of international capital. As the recent European socialist paper, A strategy for solidarity, puts it: A more incisive and efficient taxation of capital is no longer an ideological position but an economic necessity. Now, it might have added, it is also a strategic possibility. Euroland is about to put social democracy back on the world map, using the postwar bandwagon of European unification as its vehicle. It is in the context of this left turn that the British prime minister has been forced to turn to the only right-wing governments in Europe as his allies, recruiting both Spain and Ireland to the public cause of "flexibility" in employment policy, the coded term for resistance to harmonisation upwards in taxes and wages. But that alliance only underlines his isolation from the mainstream, a loneliness which will not help persuade the British public to vote for EMU in the forthcoming referendum on entry. Ironically, Blair's crumb of comfort may come from the same source as much of his angst. The new Germany of Schroder and Lafontaine is in the vanguard of European integrationism but it is also in the grip of a paradoxically resurgent nationalism. When a German prime minister announces that the Bundesbank stands firm but "we can't and won't solve Europe's problems with a German chequebook", it is clear that Bonns postwar cult of the politics of accommodation is over. Berlin, from 1999, will be a different proposition. Should budgetary negotiations become entwined with enlargement negotiations and CAP reform, national interest may yet impede ideological cohesion. Euroland's further development could be put on hold. But as the continents centre-left politicians take a grip of European integration in the year of EMUs birth, it would be unwise for remaining Eurosceptics and agnostics to let go of their hats.



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