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The EU’s democratic deficit is intrinsic and unfixable without dissolution

Transparency International EU, is part of TIs “anti-corruption movement” focused on happenings in the European Union. It gets around 40 per cent of its funding from the European Commission, itself, although they claim this does not compromise their “institutional integrity and independence”. Let’s hope not! They have just released a report – Vanishing Act: The Eurogroup’s Accountability (February 5, 2019) – which confirms, in case one wasn’t already aware (looking at the Europhile Left here) that the core decision-making body in the European Union – the so-called Eurogroup – (the Finance Ministers of the Eurozone), which “exercises political control over the currency and … the Stability and Growth Pact” – is inherently shady and anti-democratic. The Report finds that the EU’s democratic deficit is intrinsic to its design and resistance to any effective reform. While the Report proposes some changes to the structure and operations of the Eurogroup it maintains the line that the growing lack of democratic oversight in key EU decision-making can be improved. I disagree. The problems are endemic. The DNA of the Eurozone architecture is neoliberal to the core. That ideology has permeated all the major EU institutions and has left the EU citizens without an effective voice in the decision-making process. To resolve that alienation, people are donning yellow vests and taking to the streets. Progressives should encourage these anti-EU protests and support those who desire to abandon these neoliberal institutions. The reformers cannot seem to grasp that the basic structure is the problem. Any steps in the right direction require that basic structure (the Single Market, SGP, etc) to be abandoned. And doing that means the whole house of cards falls down. And it cannot come quickly enough.

As background Transparency International EU have published detailed studies on other significant EU governance institutions:

1. Two sides of the same coin? Independence and accountability of the ECB.

They find that:

  • “the ECB’s accountability consists of answerability rather than democratic control”.
  • “members of the Governing Council do not presently file public declarations of interests and assets, a standard precaution in economic and political institutions”.
  • “Many Executive Board members have gone on to accept posts in private finance, even while none of these highly accomplished civil servants had significant professional experience in the private financial sector prior to their Executive Board tenure”.
  • “the outdated whistleblowing framework, which does not compare well to international best practices”.
  • “a much higher level of transparency is needed on the ECB’s meetings with lobbyists.”

2. From crisis to stability: How to make the ESM transparent and accountable.

They find that:

  • The European Stability Mechanism to be largely unaccountable and it is hard to discern who drives the decisions
  • “Both the negotiation of ESM bailout agreements and the monitoring of implemented reforms are prone to heavy-handed negotiating tactics and brinkmanship …”.
  • “The conditionality attached to financial assistance programmes naturally challenges a government’s sovereignty”.
  • It is hard to discern “who is in charge of ESM programmes”.
  • “the ESM is outside of the EU treaties. This has real consequences and makes EU-level accountability impossible.”
  • “it is impossible to hold a non-EU institution accountable at the European level; on the other hand, enabling decentralised accountability by giving each member a veto can worsen the brinkmanship and expose members in need of financial assistance to blackmail.”

3. Investing in Integrity? Transparency and democratic accountability of the European Investment Bank

They find that:

  • There is a problem of integrity, in that senior managers “have too much discretion to favour companies from their ‘home’ countries”.
  • “The Management Committee does not take responsibility for the approval of projects”
  • “Management Committee decisions is exacerbated by a lack of transparency, as none of the EIB’s governing bodies publish their minutes”

So overall, the studies to date have revealed a major democratic deficit in the structures and operations of these key EU institutions.

The Report on the Eurogroup raises the stakes even higher and is salutory reading.

Written by Benjamin Braun and Marina Hübner, it sketches out the workings of an inner group of the EU political elite that is largely unaccountable and lacks any legitimacy.

One of the Report’s main findings is:

… that the Eurogroup has evaded, and continues to evade, the accountability that its European-wide impact deserves …

The Europhile progressives will respond saying that this is on their ‘reform’ agenda, that slippery list, which motivates an almost new reform proposal every week, meetings, conferences, announcements, and grand visions of a pan-European democracy where all voices are heard and the well-being of the people is front-and-centre.

The progress towards those reforms though is almost non-existent – and, if anything, the EU decision-making processes become more opaque and the democratic deficit increases over time.

I have been arguing for a long time (since the early 1990s) that the evolution of European integration in this neoliberal period has made the structures incapable of meaningful reform.

It is like a house where the termites have become entrenched. Eventually, the only way forward is to pull the whole construction down and start again.

The Transparency International EU Report provides nothing to disabuse me of that view.

The Eurogroup make decisions that “impact on the lives of millions of Europeans” and one would expect there to be a high level of accountability about how these decisions are made.

Greek prosperity, for example, has been destroyed by the way the Eurogroup (in tandem with the IMF and the ECB) have acted.

The Eurogroup Finance Ministers meet the day before the EU’s Ecofin Council (which is the body of all 28 EU Member State Finance Ministers).

But this body is not established under the EU Treaties and it has a ghost like infrastructure supporting it.

Despite this air of mystery, the Transparency International EU Report quotes the ESM boss as saying:

The Eurogroup already works as a government of sorts.

The problem is obvious.

Governments are meant to be elected, subject to democratic oversight (checks and balances), and be capable of being dissolved if there is public dissatisfaction.

However, the EU makes significant decisions, which are “adopted by the Council without further debate … without the authority to take decisions”.

Go figure!

It is a case of the elites taking control without any legal basis and not be held to account for that takeover.

We read that the Eurogroup makes a decision about something and then reconvenes under a different nameplate (for example, the Board of Governors of the ESM) and ratifies their own decision.

The wonderful world of the European Union, which the Europhile Left think is the exemplar of internationalisation of the progressive movement.

Since the crisis, the increasing empowerment of the Eurogroup has:

… not gone hand in hand with a proportionate increase of democratic accountability, with the effect of widening the EU’s overall “democratic deficit”.

The current Italian crisis is being created by the intransigence of the Eurogroup – insisting that a nation in recession and which still hasn’t regained the lost output levels pre-GFC move towards fiscal surpluses.

Overall, the Transparency International EU Report concludes that:

1. “the Eurogroup continues to evade proper accountability” – it violates basic principles of democratic structures such as “democratic control and accountability should occur at the level at which the decisions are taken”.

2. “Knowledge is power, and only Germany and France muster the resources to assess all national policies as well as read through all of the Commission’s opinions and recommendations for all countries.” – this means that the Eurogroup members “take decisions on (the rejection of) each other’s national budgets without having the resources to adequately analyse them”.

The Transparency International EU Report makes a number of recommendations, none of which will do much to change the intrinsic neoliberalism of economic policy making in the EU nor restore democratic accountability.

The problems are obvious.

1. The EU is not a democratic government but makes decisions equivalent to such a government.

2. The European Parliament is a sideshow in most cases.

The evolution of Ecofin and the Eurogroup

It is interesting to consider the way the Finance Ministers’ bodies have evolved as the EU has entrenched its neoliberalism.

In the early days, Ecofin (the Finance Minister’s body) were not unified.

For example, in August 1971, the French were deeply opposed to German attempt to jointly float the European currencies against the US dollar as the Bretton Woods system was breaking down.

When President Nixon refused the demands by countries to convert dollars into gold (principally from the UK) on August 15, 1971, the dollar became a non-convertible fiat currency.

The French refused to float and were steadfast in their desire to maintain the peg, and use capital controls to reduce the currency fluctuations.

The French saw danger in anything resembling a float because it would threaten the subsidies they enjoyed from Germany under the Common Agricultural Policy.

Up to May 1971, the Bundesbank was purchasing massive quantities of US dollars to quell the appreciation in the mark against the dollar as the last throes of the Bretton Woods system were becoming obvious in the markets.

But on May 5, 1971, the Bundesbank gave up and suspended further foreign exchange market intervention (that is, they stopped selling the mark and buying US dollars) and closed the foreign exchange market.

It was at odds with the German government though that wanted to put pressure on the US dollar through a float.

In the 1980s, Ecofin was pressured by the French to usurp the Bundesbank’s deflationary policy bias.

Édouard Balladur, appointed by Jacques Chirac as the Minister of Economy, Finance, and Privatisation, tried to pressure the Germans to take more responsibility in European Monetary System interventions – in other words, force the Bundesbank to sell marks to keep it from appreciating relative to the weaker European currencies such as the franc.

The Germans were clear that the force of adjustment to the on-going currency instability had to lie with the nations with weaker currencies.

Balladur petitioned Ecofin on January 8, 1988 (his famous Mémorandum sur la construction monétaire européenne) – to force the German hand.

He realised that without capital controls, the French economy would be more sensitive to the Bundesbank’s deflationary stance and that France would have to continue to use higher interest rates to maintain the franc parity. French politics, let alone national pride, would not tolerate that reality.

Ecofin was firmly against the German (Bundesbank) intransigence on currency stability.

Indeed, around this time, Jacques Delors, the so-called French socialist, was charged with forming a committee to come up with the plan for a common currency.

The Delors Committee deliberately excluded the Economics and Finance ministers at the suggestion of Delors himself.

He only want the governors of the central banks and some economists to be included.

Why?

In the – Collection of Papers – that accompanied the Delors Report, Delors himself noted that (p.63):

The creeping paralysis of the Community was the result of the Member States calling into question the Community method for the progressive and limited transfer of national powers to common institutions possessing a real power make decisions.

Delors knew that the Bundesbank would not budge at all on the independence of a new European central bank and that it would have been difficult to get agreement if the Ecofin Ministers were involved.

Many of the Ecofin ministers were opposed to the common currency.

Delors thus constituted his Committee to minimise any (legitimate) discussions of Member State sovereignty and to push through a homogenised Monetarist vision for the new united Europe. By excluding the diversity of opinion, Europe was setting itself up for monumental failure, which manifested in 2008.

In simple terms, the exclusion of the Ecofin Ministers meant that the Monetarist-orientated central bankers (working with conservative mainstream economists) would come up with a consensus fairly quickly.

All members of the Committee were firmly wedded to the new era of neoliberalism and the abandonment of Keynesian macroeconomic policies in favour of the hard-line pursuit of price stability.

And, one the dirty deal was done, the Maastricht process outlined in the – Delors Report (1989) – would embed the capacity of Ecofin to “have the authority … to impose constraints on national budgets to the extent to which this was necessary to prevent imbalances that might threaten monetary stability” (p.36).

In other words, fiscal policy would lose any correspondence with its underlying capacity and purpose, which, up until then, had been seen as providing a strong counter-stabilising policy tool to maintain low unemployment and strong economic growth.

The Delors Committee was proposing a Europe that would be united in the sense that it had adopted the Bundesbank culture, but which would soon be demonstrating very disparate outcomes in terms of economic growth and unemployment.

It is interesting how the excluded Ecofin members came to accept the Maastricht Treaty.

I documented that in great detail in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale.

Basically there was a whitewash, helped, in part, by the French fear of German power after reunification and the growing dominance of Monetarist thinking in the academy that was penetrating all levels of government policy making and homogenising previously seen differences among departments within government (for example, French planning and finance ministries) and across nations (for example, France v Germany).

The model of economic policy that emerged on the road to Maastricht was clearly ‘Modell Deutschland’ with the Bundesbank culture to be defined in the proposed legal framework of the new monetary union.

All the language of modern Europe was there:

1. “the potential threat of budget deficits and their financing”.

2. “no monetary financing of public deficits”.

3. “no bailing-out”.

4. “excessive deficits must be avoided” – although what was considered excessive as laughable.

Ecofin was not permitted to act as a European fiscal authority because the Germans considered this would compromise the focus of the new European central bank on inflation control.

Rather, fiscal policy was left as the responsibility of the Member States, with Ecofin designed to maintain and oversee tight ‘binding’ limits on what the national governments could do.

Ecofin was being reconstructed as a neoliberal police force rather than a body that would represent the interests of the citizens.

Its dialogue shifted to discussing nature of the fines that would be imposed on nations with excessive deficits.

And once the crisis hit in 2009, the neoliberal dimensions of Ecofin were on display for all to see.

To some extent the Transparency International EU Report constructs the evolution of the EU governance structures as a combination of the “French vision of a gouvernement économique for the euro zone” (leaving fiscal policy in the hands of the Member States) and the “German vision of a non-discretionary and rules-based economic governance architecture centred on the idea of sound public finances” (p.10).

The decision to leave fiscal policy in the hands of the Member States was, in part, a sop to the French. But it was crafty choice (under the guise of ‘subsidiarity’) to avoid having to set up a European fiscal capacity.

Delors and his ‘monetarist’ Committee knew that they could stifle any independent fiscal initiatives by the Member States through the rules and surveillance structures that they would introduce.

So it was better to avoid having to take responsibility for fiscal policy by creating a European-level body, given, as Monetarists, they eschewed the use of discretionary fiscal policy anyway.

The form that the Treaty took was not really a compromise between antagonistic French and German demands.

Rather, it reflected internal shifts within the spheres of influence within the French government towards the monetarists in the Finance Ministry, who were much more alike the Germans in outlook about monetary matters than the French Planning ministry economists.

No doubt that the French thought that they could dominate the governance mechanisms of the new monetary system. But they had the same neoliberal ambitions as the Germans by then.

But it is true that the informality of the Ecofin and Eurogroup was the result of a fear by the Germans that any formalisation of a fiscal authority would counter the dominance of the ECB, which the Germans wanted to become a new Bundesbank in outlook and behaviour.

The Eurogroup formed out of that sort of tension.

They didn’t want to be accountable (via formal processes etc) and wanted the membership to be limited (small) to avoid conflict. The Ecofin body has more than 100 people in attendance.

The Eurogroup has the 19 Eurozone Finance Ministers plus one bureaucrat each in attendance.

And so the Eurogroup set out to do just what it wanted with little scrutiny or checks on its authority.

The upshot is that “the Eurogroup has emerged as the new powerhouse in European economic governance since the euro crisis”.

Transparency International EU Report details all the interventions that have come from the powerful Eurogroup and I won’t analyse them here. I have done that often in previous blog posts.

Think six pack.

Think austerity and stagnation bias.

Think millions of people unnecessarily rendered unemployed.

Think billions in public wealth privatised to the benefit of the rich.

Think massive cuts in public services.

Think wage and pension cuts.

Think regressive labour legislation designed to reduce employment protections etc.

And all the rest of it.

The democratic deficit is intrinsic and EU dissolution is required

The Transparency International EU Report’s recognises that the “Eurogroup’s lack of political accountability is difficult to fix” because the “democratic deficit” is intrinsic to the architecture of the common currency.

The system was designed to generate a democratic deficit because that would make it easier to maintain the neoliberal mindset in the face of the devastating consequences for ordinary European citizens.

In other words, recommending that the Eurogroup publish minutes, and other things like that will not “fix the problem”.

The problem is intrinsic.

The problem is THE euro!

Thus the “incrementalism” reforms proposed by the Transparency International EU Report are really window dressing and the authors recognise that these reforms do not:

… address the underlying fault lines in the institutional architecture of the euro area that ultimately limit the capacity of the Eurogroup to govern democratically.

It also sees the solution to the “democratic deficit” in the guise of “Transformation”, which would fundamentally alter the architecture of the Eurozone by creating a federal fiscal capacity and aligning those responsibilities with fully elected positions at the European level (“a new parliamentary assembly for the euro area”).

I considered that solution in detail in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale.

While it would allow the common currency to function with the in-built austerity bias, the chances of it emerging are nil.

Germany will never cede its authority on these matters to a federal body.

Which is why the Europhile reformers come up with all these ‘dancing around the shadows’ type reforms – for example, a European unemployment insurance scheme and other similar changes.

None of which will redress the democratic deficit or alter the stagnation bias.

Conclusion

The Transparency International EU Report concludes by noting that for the “‘rule takers’ – the citizens of the 19 EMU countries” to accept the legitimacy of a European fiscal capacity” they must also have:

… a belief in collective identity – Max Weber’s Gemeinsamkeitsglaube – and trust in the benevolence of fellow European citizens.

And, there is the rub.

There is no collective identity. National divisions, cultures, languages, historical enmities and all the rest of the differences persist and dominate.

At best, the EU should be disbanded and reconstructed as a body for intergovernmental agreements on matters deemed to be too large in scale to be solved by each Member State individually.

Fiscal policy and full employment policy is certainly not at that scale.

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.

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    This Post Has 20 Comments
    1. Thanks as ever for you detailed analysis of European affairs Bill. It strikes me that your ‘progressive’ critics in the UK never seem to get round to actually answering the points you make. You’d think that failure would give them pause for thought, but no, much easier to just maintain (implicitly) that anyone Sceptical of EU power structures is an ill-informed and racist Little-Englander.

      I’m convinced the game plan here is to reinforce Project Fear and take us to 1 minute to midnight and then assume the Brit electorate will tolerate Brexit-lite via a late “compromise” by the EU or, failing that, a second referendum where the proles will (it is assumed) see the error of their ways. And in that case I ‘pray’ there will be a 2 percentage points swing that shuts the Europhiles up once and for all rather than a 2% swing that allows them to say they were right all along. It’s interestingn isn’t It to contemplate their stance if the result had been 52/48 in their favour – would they now be maintaining that the referendum was advisory only and not legally binding. Would they be insisting on another referendum to agree the terms of the UK’s membership? We all know the answer to that.

    2. “At best, the EU should be disbanded and reconstructed as a body for intergovernmental agreements on matters deemed to be too large in scale to be solved by each Member State individually.”

      That body already exists. It is Efta!

      We agree on the underlying issues with the SM and EEA is the Efta path to the SM.

      Still I have long recommended Efta/EEA as the path to a better Europe and for UK membership because:

      Efta/EEA = EU -CAP -CFP -CU -CCP – Euro -Eurogroup – ECJ -EU Parliament(Politburo) – Budget = EU–

      A strengthened Efta – the 4th largest trading lock on the planet means we are more likely to achieve reform of the SM via EEA since we have more influence on the evolution of the SM than within the EU:
      1) Possibly help integrate Switzerland into a revised EEA/SM
      2) Use Efta Court to defend right to work against ISDS like decisions of the ECJ
      3) Use Article 123 over capital controls etc.
      4) At worst we can then leave the EEA with 12 months notice (having already obtained any NTB agreement over various sectors worldwide as well as, hopefully, fair not just free trade agreements elsewhere (I agree with you on those too, the real issue is NTBs, no-one trades on WTO rules alone) either via Efta or directly as the UK). That gives us more leverage in revising the EEA/SM as a viable threat.
      5) No backstop which actually, ironically, breaks the GFA!

      It is not happening we all know but nothing I have seen, in theory, makes anything better including no deal. I agree the economic disaster of the latter is grossly exaggerated except with our government and parliament we will end up with worse, more neoliberal FTAs than now.

      We have a choice to vote in a non-neoliberal government, but,as well intentioned as Labour is, and as good as some of their ideas are, I think they will muck it up, as they still cant free themselves of neoliberal framing even as they oppose austerity and look at their political mis-management over anti-semitism, so easily dealt with yet they failed.

      Hence Efta/EEA whilst we get better evidence-based political parties into power.

      You cant unwind 45 years work of treaties and millions of man hours work and experience in one fell swoop without having a viable alternative.

      You have, AFAIK, never written about Efta (and EEA). I would greatly appreciate an analysis of this path. Or you could please point me to posts where you have discussed this.

    3. Martin Freedman says:
      “EEA is the Efta path to the SM.”

      Not sure what you mean by that (vague) assertion. A “path” it may be, but what is to be found at the other end of it? IMHO you’re kidding yourself.

      Norway is outside the EU but a member of EEC. Some spokespersons for the Norwegian political establishment have made statements claiming that that position gives them *real*, albeit informal and only consultative, influence on SM issues which have direct effects upon Norway.

      If you unreservedly believe that, you’re welcome. I’m deeply sceptical (and the burden of proof is on those who believe it not on the sceptics). Moreover Bill’s article (and the report on which he bases it) emphatically reinforces the impression that the authoritarianism embedded in the EU’s structure is steadily becoming more and more pronounced, thus placing the possibility of deflecting it from doing exactly what *it* wants to do ever more firmly into cloud-cuckoo territory.

      Forgive me, but to my mind you seem to be displaying the “wish is father to the thought” syndrome to no less a degree than the rest of the so-called “lexit” crowd.

    4. Bill:- “At best, the EU should be disbanded and reconstructed as a body for intergovernmental agreements on matters deemed to be too large in scale to be solved by each Member State individually.

      Fiscal policy and full employment policy is certainly not at that scale”.

      No, but (given the reversion to currency-issuing sovereignty which disbandment would entail) an effective mechanism for equalising trade imbalances – Keynes’s “bancor” but on a European scale not a global one – certainly would be. Without it the German mercantilist obsession would just reinstate itself all over again. One major consequence of that would be the indefinite continuation of German current account surpluses and everybody else’s CADs. Among other malign effects of that would be that other governments’ fiscal and full employment policies could be wrecked by unemployment becoming one of Germany’s principal “exports”, just as happened in the wake of the Hartz reforms. Only something along “bancor” lines would prevent that.

      But what chance of any foreseeable German government agreeing to it?

    5. Dear robertH (at 2019/02/11 at 7:25 pm)

      Unlike the previous attempts at monetary cooperation (Bretton Woods, Snake in Tunnel, Snake out of Tunnel, ERM, EMS), a floating exchange rate would soon sort Germany’s mercantile tendencies.

      The ‘mark’ would appreciate so much that lots of import substitution would be possible elsewhere.

      The bancor is not a sensible approach – it is a fixed exchange rate idea.

      best wishes
      bill

    6. Dear Bill,

      Another interesting, though depressing read. This information should be more widely known, especially on the left.

      A minor typo about halfway through: the Delors Report was 1989, not 1969.

      You may destroy after reading!

      Best, Mr S.

    7. I think the problems Bill points out are, to a certain extent, inherent to any form of nation-building. After all, countries like Germany or the United States had thier fair amount of trouble and even bloodshed till they reached the point where their “Gemeinsamkeitsglaube” was sufficient for a nation to emerge. In fact, every now and then, the scars from those unifications manifest themselves in the form of west/east and north/south grievances of old.

      I see Europe in a situation similar to that of Germany in the 1860’s and 1870’s, pre “Deutsche Einigung”? The unification of Germany is eerily reminiscent of that of Europe. Back then, Bismarck sought (and fulfilled) the prussian-led unification of Germany as a means to prevent a social revolution from toppling the prussian state. One could say he’d rather have it his way than leaving it to the liberal forces that sought the same goal but with a different motivation: end the arbitrariness and despotism of feudal/aristocratic small-stae rule. Hence the term “Revolution von oben”: the top-down revolution. To paraphrase the famous italian novel about the italian “Resorgimento” (Il gatopardo): “Everything must change in order to remain the same”.

      Similarily, modern day would-be Bismarcks as Schäuble seek the german-led unification of Europe so the socioeconomic status-quo can be preserved. As it happended back then, the preemptive attack on real reform is masked behind an idea that pleases current progressives the way a unified German national state pleased those in 1871 Germany: a united European state.

      Ultimately, I think this reasoning is way more powerful and present among those in the German political caste. The neoliberal/monetarist credo and institutions are but the tools that delivers the desired results and are therefore the “right” ones by definition. This is also why Germany is as lenient with itself as it is hard to others when the supposedly “essential rules” are broken. It dispels any notion that it ever had anything to do with the reasoning behind the rules themselves.

      I’d rather have the EU (and especially the ECU) reformed than taking a potentially dangerous detour through nationalism, but I recognize the chances of all stake-holding actors to collectively regain their senses to be negligible. Right now, the question is how much longer before the first larger scale social revolt erupts in a member state (I have my money on France).

    8. @Herman

      A very thought-provoking and persuasive argument. You almost had me convinced before some doubts set in.

      The trouble is, I think, that it attributes almost fiendish (to use Sherlock Holmes’s favourite epithet) cunning and intelligence to – of all people – Schäuble, who strikes me as a bigoted dolt. Bismarck yes, but Schaüble …?

      Furthermore, it requires that all those who became infected with monetarist doctrines were only putting on an act, or participating in a plot. That would include (in Britain) Geoffrey Howe, Nigel Lawson, his bête noire Alan Walters (Thatcher’s economics guru), Thatcher herself, Denis Healey, etc, etc. Though I’ve seen it suggested that that was exactly what they *were* doing that strains my credulity well beyond breaking-point.

      I believe that all these people were genuinely convinced at the time – and for a time – that monetarist prescriptions provided a heaven-sent way out of their economic difficulties. They eventually learned better but by then the damage was done. Meanwhile, applying those prescriptions had (from their point of view fortuitously) solved their *political* problems by enabling them to demolish the trade unions, and incidentally de-industrialise/financialise Britain’s economy into the bargain. Congenial though that outcome may have been to them, I don’t believe they had the slightest inkling when they embarked upon their project that it was going to turn-out the way it did.

    9. RobertH

      ““EEA is the Efta path to the SM.”

      Not sure what you mean by that (vague) assertion. A “path” it may be, but what is to be found at the other end of it? IMHO you’re kidding yourself.”
      You are either in the EEA via Efta & Efta Court or the SM via EU and ECJ or out. Not an assertion, a fact.

      “Norway is outside the EU but a member of EEC.”
      No it is a member of Efta and the EEA. The EEC no longer exists, it is now the EU.

      “Some spokespersons for the Norwegian political establishment have made statements claiming that that position gives them *real*, albeit informal and only consultative, influence on SM issues which have direct effects upon Norway.”
      There is much more than that. There has been too much selective quoting of Norway politicians to support ones viewpoint – confirmation bias. Anyway:
      1) Consultation at Commission level – same as now
      2) Veto versus QMV. Gives us more power than in and makes (1) far more than just a rhetorical exercise.
      3) Direct representation on other global standards bodies verusus via EU with limited influence within that structure. The EU is both a rule maker and a rule taker. It works both ways
      4) Surveillance/adjudication is via Common Law Efta Court advising upon request state constitutional courts. Efta is inter-governmental, state sovereignty is retained unlike in the EU with Napoleonic Law ECJ etc. Plus one of four judges in Efta Court versus one of 28 in ECJ.

      All in all, we would be more effective in the EEA both re regulations in the Eu and worldwide.

      The SM undeniably needs to be revised to but that is relatively far easier than disbanding the Eurozone, the ECB, replacing the ISDS-like ECJ etc.

      “If you unreservedly believe that, you’re welcome. I’m deeply sceptical (and the burden of proof is on those who believe it not on the sceptics). Moreover Bill’s article (and the report on which he bases it) emphatically reinforces the impression that the authoritarianism embedded in the EU’s structure is steadily becoming more and more pronounced, thus placing the possibility of deflecting it from doing exactly what *it* wants to do ever more firmly into cloud-cuckoo territory.”
      Nothing in Bill’s article addressed any of this. I agree we want to get out of its authoritarian technocratic tendencies, I am saying Efta/EEA is a good way. This path, literally, leaves the EU and much of that baggage.

      “Forgive me, but to my mind you seem to be displaying the “wish is father to the thought” syndrome to no less a degree than the rest of the so-called “lexit” crowd.”
      Well Bill is a hard Lexiter, you don’t think he is relying on wishes, do you? No you are not forgiven.

      We have invested 45 years and many, many man years of experience on all these treaties we cant just knock everything down like that and have nothing in its place. No-one else is in that situation. If we had not entered the EU we would likely be in Efta/EEA or Efta/Swiss equivalent.

      The fundamental point of Bill’s post was to get to an intergovernmental scenario. I am saying it already exists with Efta.

    10. Martin Freedman says:
      “The EEC no longer exists, it is now the EU.” Correct; “EEC” was a slip of the pen. I should have thought it was obvious from the context that “EEA” was intended.

      “You are either in the EEA via Efta & Efta Court or the SM via EU and ECJ or out”.
      Last time I checked, Switzerland was neither. She was a member of EFTA but not of EEA or the SM (the Swiss voted-down EEA membership, with the corollary of inclusion in the SM which would have been attendant upon it, in a referendum).

      That doesn’t square with your binary classification. (ignoring “out”, which doesn’t apply here).

      “Bill is a hard Lexiter”.
      Is he indeed? “Hard Lexiter” is a new one on me: did you just coin it? I wonder what it means.

      “The fundamental point of Bill’s post was to get to an intergovernmental scenario”.
      Really? You could have fooled me.

    11. eg, the euro and the EU are not identical entities, just in case anyone thought you might be conflating them. One can get out of the ERM without getting out of the EU, though not vice versa, up to now. You are right about the consequences of exiting the Eurozone. A common currency is a worthwhile idea, but not the way it is currently designed. As it is, it is terrible.

      Varoufakis has railed against the Eurogroup. According to his account, the Ecofin ministers had virtually no power. This primarily lay in the hands of Schaeuble (whom he liked because he was honest), Dijsselbloem (a liar), the president of the ECB (less influence), and the IMF, which in his view had no business being at any meeting. WTF was it doing there? The agenda was decided before the meetings. What a great group to belong to, if you don’t really want to have any responsibility for anything.

      As Bill points out, this group is undemocratic and unaccountable and, indeed, has no minutes, at least none that are publicly available. It is logically possible, it seems to me, to dissolve the Eurogroup while keeping the EU, though it would be a somewhat different EU and possibly somewhat better one, though how much better is a matter of debate.

    12. It would seem the Eurogroup almost spontaneously evolved to fill a power vacuum.

      It also seems surprising that while the Europeans were careful enough to prescribe a precise geometric design for the Euro symbol (see page 6 of TI report), the same care and precision did not entirely apply to the design of the governance structures of the EZ.

    13. Few understand there is a “social contract” embedded in all of life and not just for human beings who none can truthfully declare a “Final Product.” No one can say what force or forces put this “social contract” into life and how. It acts like ring of super-strength binding life and projecting it forward. The EU is a clumsy attempt to implement this “ring” which is a ring of co-operation. Should the EU collapse it’s inevitable it’ll be reinvented at some future date. It will still be in the form of a collaboration of nation states. Even at this scale it’s still the central “social contract” driven issue of individuals having to do their best in balancing their self-interest with those of others. Still the issue of “Inclusive Caring,” self and others. Bill Mitchell can’t gainstay this!

    14. @robertH

      It is precisely because Schäuble is no Bismarck (and a rather dim light if you ask me, hence “would-be Bismarck”) that he operates on moral/political ideology rather than economical knowledge or monetarist conviction. As larry points out, Varoufakis accounts as finance minister paint the picture of an economically illiterate hardliner with “germanlike order” as his maxime.

      I’m not proposing a conspiracy theory in which all the players you mention supported and promoted an idea they knew was dead wrong. I’m rather saying that, particularly from the german perspective, the neoliberal thought construct was telling them what they wanted to hear all along and confirmation bias did the rest. I’m sure that what applies to German consevatives applies to other europeans as well to a certain extent. Minus the Bismarck part :)

      I consider Schäuble nothing but a stubborn old fool that has long overstayed his welcome in German and European politics. In my opinion he is not “fiendish” but a living example of Hanlon’s razor: “Never attribute to malice that which is adequately explained by stupidity.”

      Cheers

    15. Hrmann:- ‘I consider Schäuble nothing but a stubborn old fool that has long overstayed his welcome in German and European politics. In my opinion he is not “fiendish” but a living example of Hanlon’s razor: “Never attribute to malice that which is adequately explained by stupidity.”’

      I buy that…

      ‘I’m sure that what applies to German consevatives applies to other europeans as well to a certain extent.’

      and that. Actually, as I said, I thought all of your post very persuasive; I just have a very slightly different slant on it :-)

      Cheers to you too!

    16. robertH

      Oh dear, this is getting tedious, but once more.

      “Last time I checked, Switzerland was neither. She was a member of EFTA but not of EEA or the SM (the Swiss voted-down EEA membership, with the corollary of inclusion in the SM which would have been attendant upon it, in a referendum).
      Switzerland is not in the EEA or SM so she is out. She does have 200 odd guillotine-clause agreements with the EU, that is not going to be repeated by either side with anyone else. So what?

      ““Bill is a hard Lexiter”.
      Is he indeed? “Hard Lexiter” is a new one on me: did you just coin it? I wonder what it means.”
      I am a soft Lexiter, out of the EU and back to Efta, and stay in EEA. Bill disagrees and argues we should be out of the SM (EEA) too. That is a hard exit or hard Lexit since his argument (and mine) are radically different from the typical free market libertarian Brexit position.

      He has shown no support for Efta nor, AFAIK, written about it, although that is an already existing inter-governmental European group, which he is arguing for here in this post, so I am just wondering why not discuss Efta in that case.

      ““The fundamental point of Bill’s post was to get to an intergovernmental scenario”.
      “Really? You could have fooled me.”
      I am not responsible for your reading comprehension ability.

    17. “Oh dear, this is getting tedious…”

      I agree, and so I won’t engage in hairsplitting refutation.

      However I won’t allow your closing salvo to pass without challenge.

      1) the sole reference in Bill’s article to what you term “an intergovernmental scenario” was this:- “At best, the EU should be disbanded and reconstructed as a body for intergovernmental agreements on matters deemed to be too large in scale to be solved by each Member State individually”.

      2) self-evidently that has nothing whatever to do with the UK, but only with “the 27”

      3) to hijack that and use it (as you do) as a springboard to introduce your own – unrelated – theme (British membership of EFTA/EEA as a superior alternative to a no-deal Brexit) was window-dressing at best

      4) you didn’t need to do that anyway: your argument stands or falls on its own merits, regardless of whether or not it connects with what Bill wrote (it doesn’t)

      5) when you now reassert that spuriously-argued but non-existent connection, while insulting my intelligence (gratuitously even if – some might agree – justifiably), that becomes simply disingenuous.

      (And this time I’ll take a leaf out of your book and skip the old-fashioned courtesies)

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