Corporate EUtopia: Business Lobbies Delighted at Plans for EU to Monitor National Budgets
“at the drafting stage, the implications of national budgets and of major national fiscal policy measures [should be] reviewed at the level of the Union,”
European Roundtable of Industrialists, 2002
Below is a press release from Corporate Europe Observatory on their just released paper Corporate EUtopia, which discusses in detail EU proposals to monitor national budgets; reinforce the Growth and Stability Pact, and provide a new early warning system allowing the EU Commission to intervene where member states show signs of “macroeconomic imbalance”. The paper also discusses why large corporations and business lobbies are so supportive of these measures: ultimately it ensures that their ambition of making “competitiveness” the centrepiece of EU economic policy is realised.
It’s a very interesting analysis, full of useful information and worth reading in it entirety. I’m adding in the lengthy conclusion at the end of this post which goes over the main points but also calls for a fuller debate on what will be very far-reaching and very undemocratic changes.
The full paper can be read here (PDF).
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EU member state parliaments look set to lose important powers to control economic and social policy as a result of the EU’s response to the economic crisis according to a new article from Corporate Europe Observatory which analyses the proposals, likely to come into force in 2011, and warns that they will lead to a reduction in democratic accountability and public influence. Corporate EUtopia also questions the role of big business lobby groups in setting the economic agenda.
Billed as a “silent revolution” by European Commission President José Manuel Barroso, the proposals include the introduction of the European Semester to monitor national budgets; tough new rules to enforce the Growth and Stability Pact, requiring member states to reduce debts; and a new early warning system which will allow the European Commission to intervene where member states show signs of “macroeconomic imbalance”.
Member states may face enormous economic sanctions if they fail to impose the economic ‘cures’ recommended by the EU Commission and Council - including potential fines for countries within the eurozone and the withdrawal of EU funding for non-euro members.
The proposals have been welcomed by big business lobby groups including BusinessEurope and the European Roundtable of Industrialists, which has been promoting this form of economic governance to improve competitiveness for the last decade.
Report author Kenneth Haar said:
“The EU Commission and Council, backed by big business, have put forward radical proposals to fundamentally change the way in which EU member states govern their national economies - and European citizens are being given no opportunity to discuss what these changes mean. The proposals are likely to mean EU-imposed austerity measures, without any opportunity for public influence. Member states will be required to cut social spending, slash wages and workers’ rights, while privatising basic services in the name of greater efficiency. These are important issues in a democracy and should be opposed.”
The European Parliament will consider the new proposals in April 2011, with a final vote currently scheduled for June 2011.
Averting EU shock doctrine
The response to the crisis is in reality determined by power play. It’s the preferences of the strongest that come to the fore - the strongest nations and the strongest corporations. The strongest nations for their obvious interest in the euro, and corporations for their interest in exploiting the crisis to win strong backing for policies on competitiveness.
Indeed, few could have received the ideas from the Commission from early this year, with bigger satisfaction than the big business representatives who have worked for years to consolidate their ideas on competitiveness with a new system of EU governance. Naturally, they jumped to it, and did their bit to offer support, and demanded a more heavy-handed approach where they deemed appropriate.
And while some may have dreamt of large transfers to the periphery, of a kind of nascent federal social state of Europe, to make up for the structural disadvantage to those countries caused by the euro, what’s in stock is more of a permanent structural adjustment programme to suppress wages and public spending, and to divert finances to the sole purpose of enhancing competitiveness.
In brushing this and other options aside, the model now being promoted by the Commission and the Council, has been chosen for a variety of reasons - and the solid consensus in European big business on the way forward is one of these. Their interplay with the higher echelons of the European Union - in the Commission and Member States governments - is now paying off and paving the way for their preferred model of a European Union.
This is a very drastic development in a very short time, the speed of which owes to the urgency of economic crisis. A scenario that resembles what Naomi Klein has described as the shock doctrine.
A doctrine she ascribes to the famous and infamous icon of neoliberalism, Milton Friedman, who in 1982 wrote: “Only a crisis - actual or perceived - produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable”.
As for EU cooperation to drive back macroeconomic imbalances by applying specific standards on fiscal policy, the “ideas lying around” - as Friedman put it - are those that have been promoted by representatives of big business for quite some time, and by the Commission. The idea to back up policies on “competitiveness” with strong enforcement measures were actually presented to the Council five years ago, but were rejected. This was lamented by several participants at a conference in January this year, not least by Commission staff. They were thrilled to see old visions become realistic, and former Commissioner Mario Monti received a very positive response when he stated: “Thank you, Greek crisis!”
At the same conference, the top civil servant from the Commission had a hard time responding to a critic who claimed that the reforms will do nothing to solve the present crisis. In other words, the reforms thrive on the present crisis. But they’re not the solution to the crisis.
Insulated and unaccountable
If a debate from the grassroots is not started soon, the long term consequences could be dire. If the package is accepted, 2011 will mark a step away from popular participation in key social policies that affect everyone. Far removed from any real public debate, it will mark the beginning of a new phase in what was once dubbed “the new constitutionalism” of the European Union.
Already in 1992, social theorist Stephen Gill saw in the European Union a distinctive move “towards construction of legal or constitutional devices to remove or insulate substantially the new economic institutions from public scrutiny or democratic accountability”. This year could see an important building block in such a political order become a reality. Only a few years ago the architecture of European cooperation was on the minds of millions. In the struggle over the Constitutional Treaty, it was the subject of a heated popular debate in many of the countries that had a referendum on the matter. Since then, the Commission and Member State governments have done their utmost to bar the populace from having votes on treaty changes. Now, major decisions on the EU future are being decided with no real democratic discussion. The message seems to be clear: public involvement is a nuisance. And given the stakes, its no underestimation to say that basic pillars of democracy as we know it are being called into question.
Luckily there are lots of signs that the victims of the euro-crisis, particularly in the periphery of the euro-zone, are not just accepting their fate, but are stepping up pressure on parliaments and governments to refute Brussels’ remedies. To succeed in the long term, that struggle will have to be more offensive and must certainly be complemented with a European political struggle - the build-up of pan-European political coalitions that do not shy away from addressing institutional matters in their demand for democracy of the kind that involves real people in all society, and not just a minuscule elite - and which is based on pan-European solidarity. Otherwise the resistance will soon turn out to be short sighted, defensive and ineffective, or at worst be subsumed by those who claim that the proposed form of intervention in economic policies of Member States are a kind of stepping stone to a social Europe. Another Europe will not come as an extension of the present proposals. An alternative to the new model of economic governance is required.
If adopted, the “economic governance” reforms will be a major step towards a common EU economic policy, underpinned by a corporate agenda, which will go a long way to remove deeply political issues from the sphere of democratic influence, and move them into a world of scoreboards, complicated “procedures”, regular high-level consultations, and the hammering out of political prescriptions well before any public debate.
Judging by the process so far, that debate will not come easily. The high level of agreement in the Council and in the European Parliament means that the chances of a debate in public coming from these quarters are rather slim. Parliament takes the first step to define its position on the proposals in April, and - according to the schedule - has the final vote in June. There’s a chance that the contradictions in Parliament and between Parliament and the Council, will be easy to surmount.
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