A euro based on supranational democracy would not fail to gain the highest credit ratings in all rating agencies worldwide. That is evident because it would have already been examined and rated that way by European civil organisations, businesses, workers and consumers, via their controlling chamber. Yet EU politicians want to do it their way: party political internationalism. They are fighting a tide of adverse criticism that says it will not work. Despite their efforts at the Euro zone summit, US credit rating agencies have downgraded Greece because of the long-term loan swaps are considered a selective default.
The answer? In a phrase, honest conduct for an honest currency. Honest conduct does not come from words alone. Nor does it come from a system where the policeman is a paid up member of a gang. The control must be public and legal, not political.
Amid the multi-billion euro deal at the Euro zone Summit on 21 July 2011, all the leaders appealed their fellow politicians to be honest. They had in mind Greece, which they said posed a unique problem. They were not addressing the public, that is the voters. The voters are hardly relevant at this stage when elections are not in sight. They were addressing the markets. Their audience for this section was headlined Private sector involvement.
In other words, forget the voters. What they are interested in is the private sector and if it is going to loan any more money to a bunch of people who clearly cannot trust each other.
The top Eurozoners said:
‘As far as our general approach to private sector involvement in the euro area is concerned, we would like to make it clear that Greece requires an exceptional and unique solution.’
The Statement they issued adds:
‘All other countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.’
So the leaders are saying: Do not consider what has happened in the past about what we said to the voters. We are now telling you bankers, financiers and capitalists, we will be honest.
Is there any reason why the bankers, speculators and financiers should not believe the government leaders? Aren’t they all honourable people?
Well, it only takes a brief look at what the leaders have said in the past to have some doubts. Did they say that their signatures could not be trusted? No. They said the opposite. The reality was somewhat different. They had to continue to repeat this when news leaked out that raised doubts.
Only on 25 March 2011 the European Council had already
‘underscored the need to give priority to restoring sound budget and fiscal sustainability. … Fiscal policies should aim to restore confidence by bringing debt trends back onto a sustainable path and ensuring that deficits are brought back below 3% of GDP in her time frame agreed by the Council.’
On 25 March 2010, the Heads of State and Government of the euro area issued a statement on unheaded paper:
‘We reaffirm that all euro area members must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for the economic and financial stability in the area.’
The paper is unheaded because the euro zone meetings are not officially part of the legal framework of the EU. Protocol 14 of the Lisbon Treaty allows them to meet ‘informally‘.
I do not know why the Statement issued on 21 July 2011 was published on paper headed Council of the European Union as it was not a meeting of the Council of Ministers. Hardly honest. Why this subterfuge? Is it illegality-creep because the case needed shoring up? At least they hesitated to call it a European Council to avoid prime-ministerial objections from the British, Poles, Hungarians, Danes, Swedes, Latvians, Lithuanians, Romanians, Bulgarians and Czechs who were absent. Did the absentee States protest that the Euro zone Statement was a false-flag communication of the Council of Ministers?
It is a pity that, when the Heads of State and Government of the euro zone ‘reaffirm their inflexible determination to honour fully their own individual sovereign signature‘, they do so in a fraudulent document. Worse, they say that ‘the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.’
On 17 June 2010 the European Council said in its conclusions:
‘The crisis has revealed clear weaknesses in our economic governance, in particular as regards budgetary and broader macroeconomic surveillance. Reinforcing economic policy coordination therefore constitutes a crucial and urgent priority.’
The government leaders were therefore obliged to present their accounts for inspection in the so-called ‘European Semester’. This involved preventive and corrective aspects of the Stability and Growth Pact, a pledge central to the euro. It is a legal requirement in treaties since Maastricht.
Yes, yes, but who checks up on all the politicians and their sums? The European Commission — but it is now composed entirely of politicians, not independent, competent personalities as the treaties require. The selection of the Commissioners is made by the governments who they are supposed to check. Hardly a guarantee of independence. The goverment ministers insist that all candidates should be party members! The Commissioners also insist on retaining party membership and attending party meetings. The outlaws are now the sheriffs!
Nearly all the States had distorted, corrupted or just ignored the Stability and Growth Pact. Among the first guilty Member States to do this were France and Germany. The French and German ministers immediately said that they should be let off the hook. The honest Dutch and others protested — in vain. The Dutch said they were now paying for the Franco-German deficits. Other States got caught out later when the level of their statistical fiddling became apparent.
The Council added that new measures were necessary,
‘ensuring the quality of statistical data, essential for a sound budgetary policy and budgetary surveillance; statistical offices should be fully independent for data provision.’
The 23/24 June 2011 the Heads of government and State in a full European Council noted:
‘the clear determination of all Member States to do everything that is required to fully implement the Stability and Growth Pact.‘
Why do government leaders need to keep repeating the same old thing? Firstly because they have been found out not adhering to the solemn pledge they had all made. Secondly even after they had repeated this pledge for growth and stability, some of the politicians still wanted to overspend their budgets — especially just before elections. And the others said nothing.
Is that an honest mistake or it because they wanted to be free for political or social bribery for votes?
It can be statistically shown that this was electoral bribery and not honest statistical mistakes. How? Because the errors in the statistics are all in the same direction. They are all hidden deficits. Deficits increase before elections.
So what should the leaders do about it? How can these addictions to bad habits be resolved? In a Community moral values must be agreed by all. The honesty of politicians’ decisions is exposed when times turn rough. When they were considering monetary union in around 1999, the price of oil was around 9 dollars a barrel. That was the free market price. Times and morals were easier. Countries like Italy had a huge surplus. Then energy blackmail recommenced. The twelve-fold rise in oil prices in a dozen years not only strained the economies but exposed corrupt practice and speculative bubbles.
Consider what would happen if your local tennis club, commune or parish had a group of politicians who were accused of corruption. One may have been a worse culprit than the others but they were all in it together. Would the local parishioners or voters agree that the secret meetings should continue? Would they be happy that in the many subsequent secret meetings of the clique of culprits, the group issued the same sort of communiques on offically headed paper saying: ‘Don’t worry, the entire Tennis Club is insisting on being honest‘?
Probably not. What may be happening was that the politicians were dividing up the spoils amongst themselves or inventing new ways to hide the corruption. They might be insisting on meeting in private so that the more corrupt members were putting pressure on the least corrupt members so that they would comply with their wishes. In some States, the politicians are now facing legal cases in the courts.
That is why Schuman and the other more politically honest Founding Fathers insisted that the Council should be open. Schuman wrote that
‘New Europe needs to have a democratic foundation. Its Councils, Committees and other organs should be placed under the control of public opinion, a control that should be efficient while not paralysing action nor useful initiatives.’
It is hard to argue that the current behaviour of politicians passes the democratic criterion.
The solution for the euro is ultimately:
- to establish its foundation as full supranational democracy
- to include the full participation of organised civil society
- to establish a fully independent European Commission.
The definition of the European currency should be based on a full meaning of what is the common European good, not as happened what seemed good to a handful of politicians. The Stability and Growth Pact — which was not observed by Member States with few exceptions such as Luxembourg — is a poor approximation of what should be done.
Openness is not impossible in monetary matters. It is only impossible when for years politicians have been making cushy deals between themselves. On Greece it covers a lax period of thirty years. The questions arose when a cushy deal was made by politicians that it should leap forward from the least qualified candidate to join the EU — according to the then Commission President Roy Jenkins — to be the first. The questions remained unanswered when lots of EU money went missing. They were reinforced when in spite of huge and constant increase in its deficits and its past history, the politicians agreed to let Greece join the euro. It got even deeper into murk when statistical fiddling in many of the new euro States was exposed.
Who is in charge of monetary policy the central banks or the politicians? If it is the central banks that are by treaty law independent, why do politicians still have secret meetings on the monetary fundamentals? Are the central banks so secretive? Good banking practice is to publish the minutes of the monetary committee a few days after the decisions are reached. That way openness and protection of the currency from speculation are guaranteed. The Bank of England and the Riksbank of Sweden, which are not part of the euro, do this.
So why does the European Council refuse to have open sessions on what should not be their business? Why does it refuse to publish anything that resembles minutes, even though it is obliged to by treaty law? Is it something to do with their concept of honesty and honest practice?
The question of honesty has now been raised in the context of a global financial calamity. It is for the Member States to show they are serious. It they are, they will implement the treaties that call for independent institutions, not continue to fill them with compliant politicians.Author : David Heilbron Price