Portugal vs the Joffrey Baratheon of economic policies


Christ on a stick, that Portuguese Constitutional Court is a pain in the arse. This is the second bleeding time that they’ve ruled bits of austerity illegal. Will somebody please tell them they’re doing it wrong!

I don’t know if anybody’s noticed this, but it’s been just over a year since the EU’s Fiscal Compact was signed, the treaty that gives the European Court of Justice radical new powers to ensure compliance with permanent austerity in the eurozone and most of the not-so-eurozone (the UK and the Czech Republic excepted).

As a result of the Compact, the ECJ – which has been called a “rubber stamp for the EU institutions” by the editor of the European Law Review, legal scholar Damien Chalmers of the London School of Economics – is now the mouth-breathing, club-wielding mob enforcer for austerity.

Under the new treaty, the Court is to police the laws implemented to ensure budgets do not exceed three percent of GDP, that governments do not engage in “excessive macroeconomic imbalances” (which is not really defined, but you can bet that this does not include running deliberately neo-mercantilist economic and trade policies. I’ll not mention any names about who I’m referrring to there. Cough, Germany, cough), and that states bring down total government debt to 60 percent of GDP pretty damn quick – at an average rate of at least five percent a year until they get below the 60 percent reference point. For the average member state, this works out to be around a third of government debt.

If the required “implementation laws” – which are supposed to be made permanent, preferably constitutional – are not passed, the ECJ can hand out fines of up to 0.1 percent of GDP (it is presumed repeatedly) until a government corrects the problem.

The reason the court was given these powers was to remove the exiguous remaining sliver of democratic control over such matters. EU leaders of course don’t put it quite this way. They say instead that giving the court these powers will ‘depoliticise such decisions’. But it is exactly the same thing. De-politicise = de-democratise.

As Chalmers put it last year, shocked at the unprecedented control the judiciary had been given over fiscal policies:

“It might be thought that if national politicians decide to entrench a certain economic policy making model, it is ultimately their prerogative. They are accountable for that choice in both domestic and Union elections. Electorates can kick them out, if they wish, and bring in politicians who will change the policies.  However, whilst it will still be possible to give the politicians a good kicking, it will only be that: an exercise in political sadism which will probably be enjoyable, certainly fetishistic, but ultimately only empty. For this is where the Court of Justice comes in. It is there to ensure that the policies cannot be changed whilst the Union lasts in the current format … The Court of Justice judges ensur[es] that there is not the slightest expression of democratic deviation.’”

But now, the Portuguese Constitutional Court has gone and ruled that proposed cuts to pensioners and public sector workers, and reductions in sick pay and unemployment benefits were unconstitutional. The cuts were part of the quid pro quo for the 2011 bail-out for the Iberian nation demanded by the EU Troika. Last year, the same court put a halt to the government suspending payment of a pair of monthly salary payments for civil servants in 2013 and 2014.

Don’t worry though. It’ll all be all right. Responding to the constitutional court’s latest decision, Portuguese centre-right Prime Minister Pedro Passos Coelho says he’ll just slash spending on health and education more deeply than he’d intended instead, so it all balances out.

But all of this still comes at an awkward time if the whole point of snatching decisions out of the hands of elected parliaments and handing them over to unaccountable judges is that the judges are supposed to stick to the austerity line.

No matter, decides the commission. We shall carry on regardless of how hypocritical it may appear. From Sunday’s communiqué out of Brussels, directing Lisbon to disregard the court’s decision:

“Any departure from the programme’s objectives, or their re-negotiation, would in fact neutralise the efforts already made and achieved by the Portuguese citizens, namely the growing investor confidence in Portugal, and prolong the difficulties from the adjustment.

“The Commission therefore trusts that the Portuguese Government will swiftly identify the measures necessary to adapt the 2013 budget in a way that respects the revised fiscal target as requested by the Portuguese Government and supported by the Troika in the 7th review of the programme.”

And here’s where they say that if Lisbon does not do so, the government might just not get that relaxation of the payment period for the existing loans that they’d been all but promised:

“It is a precondition for a decision on the lengthening of the maturities of the financial assistance to Portugal, which would facilitate Portugal’s return to the financial markets and the attainment of the programme’s objectives.”

And, just to be on the safe side, make sure there’s a cross-party consensus on this, mmm ‘kay? So that voters don’t get any ideas that they can change things:

“The Commission reiterates that a strong consensus around the programme will contribute to its successful implementation. In this respect, it is essential that Portugal’s key political institutions are united in their support.”

Just so we’re clear here: Voters cannot be trusted with electing the right people, so we are taking fiscal decisions out of their hands and giving these powers to judges instead. Courts shall enforce austerity. Except of course if they don’t. In which case, courts shall be disregarded.

Austerity is the law. It is the permanent and irreversible law. Should any other laws conflict with this, austerity rests above these laws.

Basically, austerity has crowned itself king, untrammelled by the laws of men. It’s the Joffrey Baratheon of economic policies.

There is an old Latin legal term for this, Princeps legibus solutus est (“The sovereign is not bound by the laws”), a concept first described by Ulpian, a Roman jurist from Tyre. Black’s Law Dictionary explains Legibus solutus further: “Released from the laws; not bound by the laws. An expression applied in the Roman civil law to the emperor.”

Quod principi placuit legis habet vigorem.

What pleases the prince has the force of law.

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  1. #1 by Victor on April 8, 2013 - 9:30 pm

    This is not what the Compact says. You can´t swipe away important legal details to make your point. The Compact actually changes very little compared to the legal status quo ante. No national parliament would have given away its budgetary powers, that is simply absurd.

    And actually the ECJ is known for its “judicial activism”. The Council (Member States) in particular is not too fond of the Court.

    Ever since Maastricht the fiscal limits have existed. The Maastricht rules have changed very little, even with the six pack and the two pack and the Compact.

    One can simultaneously believe in balanced budgets and in solidarity. The question is who pays. The Maastrich rules don´t say who pays.

    The EU has actually been pushing in the right direction when it comes to less taxes on labor and more taxes on energy and senseless consumption and financial speculation. For newer European generations pension reform is also essential, because if the countries have chosen low growth, low fertility models, then you have an intergenerational fight for resources that the young were bound to lose because of their lower voter turnout.

    Your articles usually talk about “European” elites. There is no such thing, at least any more than an amalgamation of the national elites from the member states. The few EU officials (President of the Council and MEPs) have very little inherent power. Even the much maligned Commission is rather a college of glorified public administrators, appointed basically by the national governments. The ECB´s Governing Council is also dominated by national governments. Talk of EU elites negates democracy twice:
    1) by allowing national governments to shift the blame;
    2) by denigrating the Parliament´s right to fire the Commission.

    The Portuguese Constitutional Court is headed into interesting territory by forcing a discussion the left should have lead.

    The European Committee of Social Rights of the Council of Europe has also been laying the groundwork for the protection of the welfare state against austerity through legal means.

    But this is also a hollowing out of democracy. The poor and the rich get protections, while the middle class is stuck with the check. This wouldn´t be a problem if there were actually good jobs for the middle class, but that´s what the West´s real problem is.

  2. #2 by jon livesey on April 8, 2013 - 9:42 pm

    Portugal has both fiscal and economic problems. the fiscal problems are exacerbated by euro membership, while the economic problems require rising long-term investment in education and skills.

    So what is the response of the euro elites? Cut education spending in order to force the country to follow some self-defeating program of austerity.

    What is going on here is immoral. It harms human beings in the short term and limits their development in the long-term in order to continue to try to keep a badly designed currency limping along.

    We all suspect that sooner or later the euro will either break up or fracture into two currencies. So what exactly is the point of inflicting pain on populations that can only delay, but not prevent, that process?

  3. #3 by Pedrp on April 9, 2013 - 8:25 am

    …little englanders never cease to comment pertaining to matters of which they KNOW NOTHING about.

  4. #4 by RuiC on April 9, 2013 - 12:48 pm

    The article is so mindless it doesn’t even deserve a comment…

  5. #5 by Marcel on April 9, 2013 - 8:54 pm

    Little EU-peans (or: Fourth Reichers like Pedro) never cease to belittle those who prefer democracy over EU-rule-by-decree.