Archive for category Spain

JP Morgan to eurozone periphery: “Get rid of your pinko, anti-fascist constitutions”

At times, I do marvel how antiseptic, bland even, that the language of the most wretchedly villainous documents can be.

Last week, the European economic research team with JP Morgan, the global financial giant, put out a 16-page paper on the state of play of euro area adjustment. This involved a totting up of what work has been done so far and what work has yet to be done in terms of sovereign, household and bank deleveraging; structural reform (reducing labour costs, making it easier to fire workers, privatisation, deregulation, liberalising ‘protected’ industries, etc.); and national political reform.

The takeaway in the small amount of coverage that I’ve seen of the paper was that its authors say the eurozone is about halfway through its period of adjustment, so austerity is still likely to be a feature of the landscape “for a very extended period.”

The bankers’ analysis probably otherwise received little attention because it is a bit ‘dog bites man‘: Big Bank Predicts Many More Years of Austerity. It’s not really as if anyone was expecting austerity to disappear any time soon, however much EU-IMF programme countries have been offered a relaxation of debt reduction commitments in return for ramping up the pace of structural adjustment.

The lack of coverage is a bit of a shame, because it’s the first public document I’ve come across where the authors are frank that the problem is not just a question of fiscal rectitude and boosting competitiveness, but that there is also an excess of democracy in some European countries that needs to be trimmed.

“In the early days of the crisis, it was thought that these national legacy problems were largely economic: over-levered sovereigns, banks and households, internal real exchange rate misalignments, and structural rigidities. But, over time it has become clear that there are also national legacy problems of a political nature. The constitutions and political settlements in the southern periphery, put in place in the aftermath of the fall of fascism, have a number of features which appear to be unsuited to further integration in the region. When German politicians and policymakers talk of a decade-long process of adjustment, they likely have in mind the need for both economic and political reform.” [Emphasis added]

Yes, you read that right. It’s in dry, banker-ese, but the authors have basically said that the laws and constitutions of southern Europe are a bit too lefty, a product of their having been written by anti-fascists. These “deep-seated political problems in the periphery,” say authors David Mackie, Malcolm Barr and friends, “in our view, need to change if EMU is going to function properly in the long run.”

You think I’m perhaps exaggerating a smidge? They go into more detail in a section describing this “journey of national political reform”:

“The political systems in the periphery were established in the aftermath of dictatorship, and were defined by that experience. Constitutions tend to show a strong socialist influence, reflecting the political strength that left-wing parties gained after the defeat of fascism.”

All this is a load of historical horse-lasagna anyway. Italy for example never went through a process akin to Germany’s denazification, and in Spain, the democratising king, Juan Carlos, played a major role in the transition. Only in Greece and Portugal were there popular socialist insurrections that resulted in or contributed to the overthrow of the regimes: the Athens Polytechnic Uprising played a key role in the Metapolitefsi or ‘polity change’ (although much, much more than the crushed student protests were involved here, including a failed coup d’etat and the Turkish invasion of Cyprus), and in Portugal a proper left-wing rebellion, the Revolução dos Cravos or Carnation Revolution, brought down the Estado Novo regime. Although it is true in the case of the latter three countries that their late-in-the-day construction of welfare states in the 70s and 80s was largely carried out by social democratic forces, the architects of the Italian post-war state were the Christian Democrats, who dominated government for 50 years.

“Political systems around the periphery typically display several of the following features: weak executives; weak central states relative to regions; constitutional protection of labour rights; consensus building systems which foster political clientalism; and the right to protest if unwelcome changes are made to the political status quo. The shortcomings of this political legacy have been revealed by the crisis. Countries around the periphery have only been partially successful in producing fiscal and economic reform agendas, with governments constrained by constitutions (Portugal), powerful regions (Spain), and the rise of populist parties (Italy and Greece).”

Let’s parse that paragraph, shall we? Weak executives means strong legislatures. That should be a good thing, no? Let us remember that it is the parliament that is sovereign. The executive in a democracy is supposed to be the body that merely carries out the bidding of the legislature. There is a reason why liberal democracy opted for parliaments and not a system of elected kings.

Oh, and we want strong central states. None of this local democracy nonsense, please.

JP Morgan, and presumably the EU powerbrokers they are ventriloquising for, finally are being honest with us: they want to do away with constitutional labour rights protections and the right to protest. And there has to be some way to prevent people electing the wrong parties.

Thankfully though, the authors note, “There is a growing recognition of the extent of this problem, both in the core and in the periphery. Change is beginning to take place.”

In particular, they highlight how Spain has begun “to address some of the contradictions of the post-Franco settlement” and rein in the regions.

But other than that, sadly, the process of de-democratization (okay – I’m calling it that. They call it “the process of political reform”) has “barely begun”.

Well, the JP Morgan paper may have been written in English, but there is a venerable Spanish phrase that that all good anti-fascists right across the eurozone periphery know and is probably the simplest and best response to such provocation: ¡No pasarán!

NO PASARÁN poster-8x6

Poster from the Spanish Civil War: ‘They shall not pass!’

, , , , , , , ,

29 Comments

Draghi’s Super-Secret Secret Squirrel show

SECRET SQUIRREL COLOR 3

Mariano Rajoy (L) and Mario Draghi (R) in fancy dress at the Transparency International Winter Gala

 

The European Central Bank’s Darth Draghi descended upon Madrid on Tuesday for a pep talk, saying that Spain had successfully stabilised its banking system and that borrowers with top-notch credit ratings should be seeing an easing of the credit drought by the end of the year. He saluted new laws making it easier to fire workers and did his best Bill Clinton impression, feeling the pain of the almost 60% unemployed youth.

After a closed hearing before a select group of MPs in the Chamber of Deputies, he told reporters that “Spain is on the right track,” while darkly warning that all EU countries still had far to go and called on PM Rajoy to put together a “credible, detailed plan” on further spending cuts.

Nothing really new here. Typical ‘Good work, now cut more’ generalities.

So why was the meeting held as a closed session?

It was reported ahead of the meeting by El Pais that according to parliamentary sources, the central bank had requested the secrecy as Draghi had wanted a similarly restricted format to that which he used when he spoke to Germany’s Bundestag.

The decision to keep the meeting closed to the public, with proceedings to be issued in none of the normal formats, provoked an angry response from left-wing deputies, who announced that they would just “retransmit” Draghi’s comments by Twitter.

All opposition parties, including the Socialists, denounced the move (although one has to ask if PSOE would really have done any different). The Socialists’ spokesman, Valeriano Gómez filed a formal protest, while the Plural Left (United Left and Greens) described the efforts at a closed session as a “failure of democracy”.

Shockingly, in response, the Speaker of the House installed mobile-phone jammers to prevent deputies from live-tweeting. So left-wing deputies Alberto Garzón and Joan Coscubiela just sneakily filmed the session on their iPhones and later uploaded the videos to YouTube.

The kerfuffle prompted Draghi to subsequently deny that he had ever wanted a closed session and that he would have been perfectly happy for it to happen in the open, adding that no harm had been done by it being posted on YouTube. See, look, I’ll even post my speech up on the ECB website.

On the one hand, the Sith Lord’s speech was so full of austerian banalities that it makes you wonder why whoever it was requested the meeting be held in secret in the first place.

On the other hand, if Draghi’s comments really were going to be incendiary and have such import for the Spanish political economy, then such words – if Spain is still a sovereign democracy – need to be said publicly.

Particularly as the ECB has such form since the crisis with secret letters to governments ordering them to liberalise their economies or commanding them to take a bail-out, or quiet phone calls to domestic banking bosses directing them to turn off the taps, citizens have every reason to be frightened of Frankfurt’s preference for the shadows.

In 2011, when former Eurogroup chief Jean-Claude Juncker was at a small Brussels think-tank function, forgetting that reporters were present, he for once spoke quite frankly about the need for secrecy, saying: “I’m ready to be insulted as being insufficiently democratic, but I want to be serious.”

Economic policy discussions were simply too sensitive, he said, potentially putting “millions of people at risk”, to have them in public. “I am for secret, dark debates,” he joked at the time, adding that despite his Catholic upbringing, he had often “had to lie.”

In the end, Draghi’s comments appear to have been largely banal. But this is the point. European leaders have become accustomed to operating beyond the glare of parliaments and the public, both for discussions of great import and for the prosaic.

The demand for state secrecy in economic matters is expanding – a sharp turn away from principles of open government, which require that citizens have a right to access documents and proceedings of government to assure democratic, public oversight.

It should be obvious that limitations on state secrecy, a core principle of democrats since the Enlightenment, is also required to prevent corruption.

At a time when great swathes of the current Spanish and Greek political classes stand accused of protecting themselves and those close to them from the taxes that mere mortals are subject to – and Draghi himself is caught up in a similar scandal of his own, we must be especially vigilant and on guard against what increasingly appears to be unblushing criminality amongst our leaders.

Enough clumsy cloak and dagger, Draghi. At least talk pretty to our face before you screw us.

***

For more details on Draghi’s Super-Secret Secret Squirrel meeting, just check the #openDraghi hashtag.

, , , , , , , , ,

3 Comments

Decree-o-matic: The periphery’s permanent state of exception

decree-o-matic chopper 4

The Greek Frankenstein’s monster of a coalition government – stitched together from the torso of the wounded conservative New Democracy and the decomposing, undead remains of centre-left Pasok and ex-eurocommunist Dimar – passed legislation last week raising taxes on ordinary Greeks and corporations and then this week approved another package of moves restructuring state assets for privatisation and expanding the powers of the finance ministry

I’ll not go into details of the problems with the legislation, termed ‘prior actions’, which was demanded by international lenders in return for the latest round of financing due this month. The imposition of suicidal and unjust economic policies in the European periphery is very much more ‘dog bites man’ these days than ‘man bites dog’. I’ll leave it to others to point out the errors.

Instead, what I find significant is that the different pieces of legislation have not been presented as proper bills, but as edicts in order to prevent debate, which would slow down the approval process.

The coalition felt it didn’t have time for the legislation to go through normal procedure as it wanted the bills to be already in the bag before finance minister Yannis Stournaras headed to the Eurogroup meeting (of finance ministers from the eurozone) on Monday, 21 January, where the first of three bail-out tranches worth €18 billion was to be considered and possibly approved.

Opposition parties, both the socialist Syriza party and the Independent Greeks – the anti-memorandum splinter from New Democracy – accused the government of bypassing parliament.

Their criticisms were – how should this be put politely? – let’s say ‘unvarnished’.

“You are introducing a new form of governing,” Syriza parliamentary spokesman Panayiotis Lafazanis said. “Ministers will issue edicts that will abolish parliament’s rights and will not be debated at all. You are responsible for turning a parliamentary democracy into a parliamentary junta.”

“We are observing a situation where parliament has essentially ceased working,” said Notis Marias of the anti-memorandum splinter from New Democracy, the Independent Greeks. “Your attitude is ‘Eurogroup uber alles.”

It seems strange to be talking about legislation by decree in the 21st Century. The words ‘decree’ and ‘edict’ evoke images of the Catholic Church releasing papal bulls, or absolute monarchs issuing proclamations changing the religion of a realm overnight.

The development of modern democracy placed great emphasis on ‘legislative supremacy’ (also known as ‘parliamentary sovereignty’). Whether called a parliament or congress or house, the deliberative assembly normally has exclusive authority to pass, amend or repeal laws, raise or lower taxes, regulate trade, and declare war. Western societies did not opt instead for a model of elected monarchs (athough Poland famously employed wolna elekcja, or royal elections, on occasion until the late 18th century).

Why did we do this? Well, it’s a long story and whole libraries could be and indeed are filled with discussions of theories of governance. But boiled down, the argument is that the executive branch – the body that enforces the law and carries out the day-to-day administration of the state – is the servant of the legislature, in order to ensure a separation of powers, which in turn serves as a sort of inoculation against tyrants.

By distributing power away from the executive, and maintaining the supremacy of the elected chamber, a polity is supposed to be protected against authoritarianism. In those places where there is little or no separation between executive and legislative branches, the different powers of government by definition are held by one person or one small group of people. (This situation, by the way – other than during times of national emergency, or ‘state of exception’ – is the very definition of despotism you will find in any dictionary)

Yet what happened in Greece this past fortnight is far from the first time that governments in the eurozone periphery have turned to the use of decrees to avoid parliamentary scrutiny. Indeed, though it has received little notice, the use of decrees, edicts and similar manoeuvres – a direct challenge to legislative supremacy – has been sharply on the increase in since the advent of the crisis.

Grand Duke Draghi of Frankfurt

Most controversially, the ECB’s humiliating ultimatum letter to Berlusconi in the summer of 2011 that was leaked to Corriere della Serra, the Italian daily, included not only a series of demands for legislation in return for central bank bond purchases, but the detailed timetable bills needed to be passed by and that they be imposed by edict, only later to be approved in a similar up/down fashion to this past fortnight’s Greek decrees. According to the letter, the package of austerity and structural adjustment bills had to be passed “as soon as possible with decree-laws, followed by parliamentary ratification by the end September 2011.”

The bulk of the shock therapy that unelected technocrat prime minister Mario Monti has applied to Italy have been performed by decree – the ‘Save Italy’ emergency decree, which took place days after Super-Mario took power; the ‘Grow Italy’ decree, the ‘Fiscal Simplification’ decree, the ‘Spending Review’ decree, the ‘Sustainable Development’ decree, and so on.

Some of the actions undertaken by decree any progressive could support; others decidedly less so. But whether one supports or opposes a move is immaterial – the method through which they are enacted is undemocratic.

Over in Spain, in May last year, Spain’s Mariano Rajoy used a decree to avoid parliamentary oversight of the decision to use public funds to bail out its drowning banks, offloading written-down assets into separate financial vehicles. Similarly, in February, Rajoy used the decree format to force banks to set aside certain amounts as cash buffers against losses. In March, there was a labour market deregulation decree in March, and in November an anti-tax-fraud decree and another delinking pensions from inflation.

After a woman killed herself when bailiffs tried to throw her out of her home and under pressure from protests, Madrid also passed a decree suspending home evictions for poor families with small children, the disabled and long-term unemployed. This action should certainly be welcomed, and probably did need to be instituted instantly for obvious reasons. But the question still remains, even for these sorts of measures – why is so much legislative activity now being done without parliamentary scrutiny?

By contrast, this past week, US President Barack Obama unveiled his gun control strategy. Alongside a series of legislative proposals, Obama announced 23 executive orders that are enacted immediately. Republican opponents and hyperbole-mongers have attacked the president for bypassing congress and ‘ripping up the constitution‘.

But in reality, every one of his gun control recommendations – criminal background checks for all gun sales, reinstating an assault weapons ban, a 10-round limit on ammunition magazines, outlawing armour-piercing bullets and providing mental health support services in schools – require congressional approval. The executive orders cover such matters as directing the Center for Disease Control to perform research into the causes of gun violence, requiring that federal agencies make relevant data available to the background check system, launching a national dialogue on mental health and starting a a national safe and responsible gun ownership campaign.

These are precisely the sort of relatively trivial moves that do not require parliamentary debate and oversight – the sort of direction from the directors of the executive branch of government to its officers and agents managing their operations or the appointment of senior civil servants. In France, these are called décrets (although the president may not rule by decree except during national emergencies) and in the UK Orders in Council. Not all executive actions need to be put through the legislative sausage factory.

But major policy changes with significant impacts, such as cutting pensions, radical overhaul of labour markets, bank bail-outs and so on certainly should indeed be looked over by parliaments with a fine tooth comb. And when they aren’t, if there is genuinely some sort of emergency requiring immediate executive action, there needs to be a bloody good reason, and it should be explained why this exception is necessary.

(If you want to be technical about this, what we’re talking about here is the distinction between primary legislation – crafted and approved by the legislative branch – and secondary or delegated legislation – laws made by an executive authority under powers transmitted to them by the primary legislation in order to carry it out)

Special powers

Citizens’ ears should prick up every time they read that something is being passed by decree or edict. Nine times out of ten, it is a sure sign that democracy is getting a bit of a hair-cut. An historical wander through the textbook exemplars of the use of decrees are instructive for comparison.

Famously, George W. Bush enacted a whopping 262 executive orders, the preponderance of which were a clear usurpation of congress’s position as the legislative branch. In this way, he blocked funding for stem-cell research, sidestepped the Geneva Conventions protection from torture, and offered impunity to US corporations operating in Iraq.

Those for whom the origins of Russia’s current ‘managed democracy’ remain a mystery could do worse than read up on Boris Yeltsin’s privatisation by decree and ultimate disbanding of parliament and rule by decree in the autumn of 1993. Fantastic sums in public funds were transferred to banks owned by major figures in the Soviet state and the former Communist Party higher ups. These banks then spent the effectively embezzled funds to snap up state industries on the cheap in privatisation auctions they themselves conducted.

From 1972 to 2007, governance of Northern Ireland was carried out under what was known as ‘direct rule’ – in effect rule by decree. While the people Northern Ireland still technically elected members of parliament to the House of Commons, legislation administering the region was made through Orders in Council, a situation opposed by by both nationalists and unionists for its lack of democratic accountability.

Similarly, during the Algerian War of Independence, in 1956, the governor general of French Algeria, Robert Lacoste, abolished the Algerian assembly and ruled by decree to deal with the mounting political violence. Then in 1961, President Charles de Gaulle became the only French president to rule all of France by decree during a national emergency, employing ‘special powers’ he requested from the National Assembly in the wake of an abortive rightist uprising in Algiers. Over the course of five months from April to September of that year, De Gaulle enacted 16 decrees expanding police powers, enlarging the power of the courts, banning publications, dismissing civil servants for ‘encouraging subversion’, and establishing special military courts, amongst other measures.

Now, one of the difficulties in discussing Europe’s democracy-on-a-diet approach to the economic crisis is that when anyone suggests that there has been a hollowing out of democracy, the cry immediately goes up from defenders of the strategy: “Where are the tanks? Where are the gulags? Where is the police state?”

But this is a category error, a conflation of autocracy and totalitarianism, as there can of course be creeping autocracy without totalitarianism. The advance of rule by decree does not signify the imminent appearance of a Duce or Fuhrer but with a blue and yellow flag. Mario Draghi is not Kim Jong-un.

Cindy Skach, professor of comparative government at the University of Oxford and one of the world’s leading experts on constitutional design, has described precisely this sort of legislative atrophying phenomenon as ‘constitutional dictatorship’. It comes from the use of emergency powers over a prolonged period “during which authority is transferred to non-partisan, above-party sources, leading to a loss of substance in the democratic process.”

In her work comparing Weimar Germany and the French Fifth Republic, she offers a warning of what results from this overuse of decree: “Such periods are also characterised by opaque, nonaccountable decision-making in which the democratically elected institutions of the polity, such as the legislature, have lost their controlling capacity, as presidents become increasingly less accountable.”

Such descriptions will of course be familiar to anyone who has followed the steady transfer of fiscal powers out of the hands of democratically elected parliaments – both in EU-IMF programme countries and across the eurozone.

To be clear, I am not saying that Italy, Spain, Greece and other countries are being ruled entirely by decree, but a lot of the new rules do come in the form of decree.

This state of exception is becoming permanent.

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

8 Comments