2020-09-28 On 21 September 2020, Christine Lagarde, the chief of the European Central Bank delivered a speech at the Franco-German Parliamentary Assembly titled Jointly shaping Europe’s tomorrow. Lagarde’s theme was in line with what the title implies and what one has come to expect from central bankers, namely, how the ECB helps forward the agenda of a more powerful political centre in the European Union, casually passing the unprecedented upward wealth distribution that the ECB’s policies lead to as just another step towards a decisively ‘European’ future. The symbolism of the event offers us stimulus for contemplation. Lagarde, an elite Eurocrat at the helm of the most powerful technocratic institution in the EU, addresses a body that is the vivid realisation of
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On 21 September 2020, Christine Lagarde, the chief of the European Central Bank delivered a speech at the Franco-German Parliamentary Assembly titled Jointly shaping Europe’s tomorrow. Lagarde’s theme was in line with what the title implies and what one has come to expect from central bankers, namely, how the ECB helps forward the agenda of a more powerful political centre in the European Union, casually passing the unprecedented upward wealth distribution that the ECB’s policies lead to as just another step towards a decisively ‘European’ future.
The symbolism of the event offers us stimulus for contemplation. Lagarde, an elite Eurocrat at the helm of the most powerful technocratic institution in the EU, addresses a body that is the vivid realisation of the Franco-German tandem’s ambition to effectively co-opt Europe.
The Assembly does not have competences of its own just yet. Its role is to provide guidelines to the respective governments, though students of the history of the European integration process know all too well that such is a common pattern that contributes to what I consider the obfuscation of the agent of governance.
In Europe it is not immediately apparent “who governs”. There is complexity, layers of decision-making that can only be rendered clear by careful analysis. That is so by design, as it actively hampers efforts at setting up an antipode to the supranational establishment. Citizens cannot easily track the source of their problems and, thus, are unable to act in a coordinated fashion towards enacting genuine reform. Put differently, it dilutes, confuses, and disrupts opposition to policies that have a supranational dimension. A profoundly anti-democratic practice shrewdly wrapped up in democratic procedure and decorum.
The Franco-German Parliamentary Assembly is but one piece of the puzzle. It must be examined in the wider context of the relations between France and Germany and, in particular, how their governments operate within—as well as outside the narrow confines of—the EU architecture. The Treaty of Aachen on Franco-German Cooperation and Integration (EN, FR, DE), which entered into force in January of this year, is a clear statement of intent. The two countries have long coordinated their positions on European affairs, especially ever since the economic crisis that started at the end of the previous decade. Equipped with this new legal instrument, they are announcing to the rest of Europe their plan to press on with moulding Europe in their image by exploiting the reality of a multi-speed, multi-tier EU that advances through the practice of differentiated integration (a process of policy harmonisation also known as “variable geometry”, which is formalised in the Treaties as the principle of Enhanced Cooperation—think, for example, how the Euro area is a union within the union, with its own rules and particularities).
France and Germany are forming a united front on all matters of common interest. They can impose their will on the rest of Europe by picking and choosing the necessary allies to each policy. For that is what enhanced cooperation is all about: a core group leads the initiative, with others are told that they free to join at a later point, with the proviso that they will accept whatever faits accomplis.
It, nonetheless, is false to think of this peculiar alliance as a mere caucus of sorts within the decision-making platforms of the EU. Their cooperation can use European instruments when needed, though it can also be bilateral in nature. Many policies such as foreign policy and military matters fall outside the exclusive competences of the Union. The Franco-Germans can simply deepen their cooperation in those areas and, once they have made sufficient progress, campaign to transpose their established lines into European law, with the potential of creating new institutions and/or modalities of rule formation.
Differentiated integration provides for the inexorable shift of competences to the supranational level. Given the complexity of the overall edifice, this is not necessarily the EU proper. It may be a subset thereof, characterised by ad-hoc policies and emergent centres of authority (e.g. how the Eurogroup became the de facto body for the handling of the Eurocrisis). What matters is the obfuscation of the agent of governance, which allows the Franco-German tandem to assume the role of the continent’s hegemon without ever appearing to do so.
In this light, the EU is structured as a superficially federal system whose locus of effective sovereignty is inter-governmental. Within that core, we then have the balance of power between the parties involved, where France and Germany stand in a position of strength. The rest have conflicting agendas and, courtesy of differentiated integration, will sometimes side with the Franco-Germans against other countries in the ‘periphery’ of core European power. In one way or another, the overarching objective of the Treaty of Aachen, that of empowering its two signatories, is always met.
Returning to the speech of Christine Lagarde, let us think what “jointly” means in the context of shaping Europe’s tomorrow and couched in terms of the aforementioned. The European Central Bank is the technocratic institution par excellence. It is practically unaccountable and wields peerless power. In summary of what I analysed at length in, inter alia, ECB independence: concept, scope, and implications (2017-04-02):
- The ECB has a strong form of institutional independence, enshrined in Treaty law. No body can influence its decisions and it is virtually impossible to change this state of affairs.
- The ECB determines on its own what it means to conform with the Treaty provision for price stability. It quantifies that as an inflation target that is below, but close, to 2% over the medium term, with the rate being measured against the Harmonised Index of Consumer Prices (HICP).
- The ECB does not clarify what “medium term” is, nor does it account for price inflation in luxury goods or the sheer expansion of the money supply, which are typically not included in the basket of goods that ordinary inflation is about. In practice, it does not consider price instability the expenses of Europe’s most affluent spenders, nor does it factor in the suppression of wages and concomitant reduction of demand to the bare necessities (i.e. austerity) as key factors that keep the average price level low. Put differently, it engages in class politics, revealing as naive the much-vaunted notion of money’s neutrality over the long term.
- The Monetary Dialogue is but a shadow play, a fig leaf that distracts us from the absence of true parliamentary oversight, as the European Parliament does not have authority to impose conditions on the ECB. It cannot establish an objective criterion or set thereof with which to gauge the performance of the ECB in accordance with its mandate (e.g. how many years does the “medium term” last, how close is “below, but close, to 2%”, and what happens if the conditions are not satisfied). Nor can it intervene in the decision-making processes of the ECB, perhaps to question the pro-wealthy assumptions that underpin these so-called “unconventional” monetary policies.
- Speaking of unconventional policies, neither the European Parliament, nor any other body for that matter, can determine what is conventional and what is not, nor can it instruct the ECB to pursue a certain course of action. Here “unconventional” just denotes the new normal or rather exploits a climate of crisis to usher in ever-more odious measures.
- Inflation targeting, including quantitative easing and whatever other “unconventional” recipe the ECB has concocted, can never be neutral because those who are closer to the monetary source (banks and other mega-corporations) have a temporal advantage to use their newfound liquidity or capital (little difference in practice) to invest in conditions that are in their longer term interest. The new money only reaches the real economy as a final step, once every other goal has been met, and always in the form of a bondage of interest. The beneficiaries in this inter-temporal flow, the banks and mega-corporations, stand in an effective position of security and symbiosis with the official institutions, while the rest of the economy operate under precarious conditions. The ECB sustains and amplifies the dichotomy between security and precarity, the privileged few and the unprivileged many.
Against this backdrop, we have Lagarde appearing before Europe’s aspiring hegemons to tell us how “we” are paving the way to a European future. The inattentive cheerleader or apologist of European integration will hail this as another step towards federalism or what is blithely referred to as “European Democracy” , while it is clear that (i) there exists no homogeneous European demos that could formulate a coherent programme for enacting change at the European level, and (ii) even if such a demos exists in some form, it is not the one that actively participates in the multi-faceted operations that determine the overall state of politics in Europe.
We are getting ersatz federalism and a democracy manqué, while we are being indoctrinated into thinking of some abstract European citizenry as the agent of reform in the grand scheme of things. In truth, we are left near-powerless to act, as we observe elites ostensibly deciding “for us”—a euphemism of forwarding their interests—always in our absence.
No central bank should ever be deciding for anything that is political in nature and because money is inherently political, no central bank should ever have the degree of independence the ECB enjoys. The fact that Christine Lagarde and her colleagues (and their predecessors) voice such opinions in their official capacity, is a clear sign of regression. The complexity of the European integration process has rendered us incapable of discerning the patterns. The engineered obscurity of the overall project forces us into submission where we no longer set ambitious targets pertaining to the very quality of democracy on the continent. It thus is to be expected that technocrats assume on their own terms the role of expressing some imaginary sovereign will of “the people”.
It is this very appropriation of Europe that should concern us. We are giving away the very notion of a continent, the abstraction of a culture, the symbol of Europa, to a power elite, as we are acculturated into becoming a homogeneous citizenry only terms of being subjected to the same class-conscious policies that repress our demands. The likes of Lagarde will tell you how righteous their pro-rich and undemocratic machinations have been. While the powers that be in France and Germany will continue to brand themselves as the avatars of European unity.
Make no mistake: it is not the everyday French and German citizen that is empowered by such appropriation. The main beneficiaries of every hitherto existing imperialism are the ruling classes. The average French and German person will continue to live in precarity and be controlled by policies they have had no meaningful part in shaping. Meanwhile, opportunists will exploit this state of affairs in an attempt to reignite gigantism within the confines of the nation-state, attempting to turn our angst against all the French and the Germans, while never pointing their finger at the local overlords who themselves have no problem forming pacts with their peers in France, Germany, or anywhere else for that matter.
Our fight against this drift towards imperialism has to assume the form of reclaiming Europe: the mythos, the symbol, the set of narratives. This demands from us to look both inward and outward. To reach out to our fellow neighbours in order to coordinate our actions at the local level, in pursuit of more egalitarian and ecosystem-friendly policies. And to draw linkages between the place and the space, our domestic struggles and those that unfold in our wider cultural milieu. We must organise ourselves on the principle of genuine solidarity and we must seek to establish networks of like-minded platforms across the region.
The response to the effective European Union, that which stands as-is, not the one fantasised by the people who operate in the Brussels bubble, has to be just as variegated as the challenges we are confronted with. Concerted yet locale-conscious action is necessary both at home, in our immediate surroundings and their geographic boundaries, and wherever our comrades are. For the time being, the ones who closely cooperate are those who appropriate Europe.
There has to be a day of reckoning. It starts with each of us assuming responsibility and escaping from the prison of egocentrism, to recognise that we are potent only when we stand together and that we must find the others.