The European Union is so hostile to democracy and accountability that its new leadership is entirely made of people who have already been in power for years. It seems irrelevant that the policies they have deployed have ruined millions of lives — the only requirement for their appointment was being on the side of the wealthy.
There is a particular kind of sadism in rewarding a torturer with power. But for the Greeks, Italians, Cypriots, Irish, and Portuguese — and for the many other victims of the austerity politics of the International Monetary Fund (IMF) and its EU troika allies- the ECB and the Commission, this is exactly what has happened. The nomination of four candidates for the EU’s leadership, hashed in secrecy, is a clear commitment to continuing this torture by recycling technocrats to the top posts. Ursula von der Leyen - Angela Merkel’s defense minister, who was embroiled in a spending scandal involving tens of millions in payments to elite consultancies like McKinsey — was nominated to run the European Commission. She was voted through in the Parliament with a paper-thin majority.
But the far more disgraceful choice was IMF’s managing director and convicted felon Christine Lagarde. She was put forward to become the head the European Central Bank (ECB) — the most powerful role in the EU and one of the most influential policy posts in the world. Her nomination triggered an early leadership contest at the IMF. The list of contenders ranges from Goldman Sachs alumnus and outgoing ECB president Mario Draghi to career Conservative and former British chancellor George Osborne and former Dutch finance minister Jeroen Dijsselbloem, whose spell as Eurogroup head included the standoff over the Greek debt crisis. Together with Lagarde, these men have been among the chief architects of Europe’s decade of austerity. Despite the ravages caused by their policies, they are set for the highest-level jobs.
At the heart of Europe’s institutional and legal architecture lies an insistence on fiscal discipline — the neoliberal dogma that state spending cannot exceed tax revenues. When the global banking system collapsed in 2008 and triggered the continent’s sovereign debt crisis, the European political establishment rushed to save the banks. The huge mobilisation of public funds necessitated cuts elsewhere. Austerity became a tool to invoice the poor for the failures of the rich. In the case of Europe’s peripheral economies, which were particularly hit by the crisis, the troikabegan to dole out bailout packages.
The bailouts resembled the World Bank and IMF’s structural adjustment programmes - schemes for the large-scale upwards transfer of wealth presented as financial support packages. At the peak of a country’s economic crisis, the IMF or the World Bank swoop in and offer a loan - either to fund the government directly or to support the servicing of its private debts. These loans are usually conditional on the implementation of neoliberal market reforms - a legacy of attempts to slow the expansion of socialism during the Cold War. When the debtor country fails to repay its loans, the institutions force it into making further reforms - privatisations, pensions cuts, decreases in public wages, and deep cuts in social services.
This not only cripples national economies, austerity magnifies inequality and threatens a country’s future economic prospects, a fact recognised by IMGF researchers in 2016. The anthropologist Jason Hickel put it more bluntly, calling the structural adjustment programs the “greatest single cause of poverty since colonialism.” This top-down rule-enforcement also undermines democracy and accountability. In times of crisis governments are forced into imposing crippling economic sanctions on their own citizens. The economic crisis then becomes a crisis of democratic legitimisation.
A very clear example of this is Greece. The debt-ridden country was never helped out of its predicament. Instead, the troika coerced it into financing the bailouts of French and German banks by impoverishing its citizens. The agreement it signed with the Eurogroup was a Thatcherite dream - it required Greece to raise taxes on workers, reduce pensions, bust the unions, and, under the supervision of EU institutions, privatise state assets. Lagarde thoughtlesslysuggested that it was “payback time” for the profligate, tax-dodging Greeks. Similarly, Mario Draghi, then the governor of the Bank of Italy, brought this model to his homeland. In 2011, at the height of the sovereign debt crisis he and the then ECB president Jean-Claude Trichet demanded deep political reforms - mass privatisation of state services, wage cuts for public service employees, and higher taxes and pension reforms in exchange for a bailout.
More remarkably, austerity was also implemented voluntarily with no clandestine encouragement from Europe’s economic elites. George Osborne, increasing cuts already made under New Labour, is widely credited as the architect of austerity in the UK. The damaging policies that followed have been very much driven by politics rather than economic necessity and have led to a poor state of public services and levels of deprivation across the country not seen since Dickensian times.
Across the continent the aggregate effects of these policies are hard to exaggerate. Homelessness is on the rise; the share of workers living in povertyis increasing, social services, a key buffer against inequality, poverty and social exclusion. The systemic public interventions that favour the rich have created a vacuum whereby the right can feed on the anxiety and thrive.
Neoliberalism as creative destruction
In a 2007 paper, Neoliberalism as Creative Destruction, the theorist David Harvey described the logic of globalised capitalism as a one-sided class struggle - of the rich against the poor. “If the main achievements of neoliberalism have been redistributive rather than generative,” he wrote, “then ways had to be found to transfer assets and redistribute wealth and income from the mass of the population towards the upper classes or from vulnerable to richer countries.”
A careful manipulation of crises and an upward redistribution of public assets are still unfolding before our eyes. The IMF, the ECB and the World Bank and their chiefs are the system’s enforcers. The power structure is maintained through the reproduction of their roles. The system lacks democratic accountability – all key economic decisions that define the life chances of the majority of citizens, fall into the hands of technocrats: - people with decades of experience, whether at Goldman Sachs or government ministries, who collude to develop rules that best serve their needs to influence economic policy outcomes.
Even if Lagarde is a very bad choice, like Osborne and Draghi were, she is a tried-and-tested agent of the systems of capitalist extraction and exclusion, and therefore an obvious selection. To truly address the rising global inequality and the climate breakdown, institutional leaders must take the decision to shift to a new way of politics. But radical changes at the heart of the status-quo demand a democratic challenge to their very own hegemony. Often fresh, forward-looking, potential change-makers are called radicals. What they offer is a new kind of dawn and a different opportunity - but exactly the kind of opportunity EU rulers will not allow. The greatest barrier to change, and democracy itself, is their fear that they will become obsolete.