We are living through crazy, crazy times. As the Financial Times wrote this weekend, “the euro emergency has wreaked a deeper shock than ever.” Last week, “world leaders and financial markets went on to red alert, and by the end of the week two democratically elected leaders — Greece’s George Papandreou and Italy’s Silvio Berlusconi — found themselves being eased out of office at Europe’s behest and replaced by unelected technocrats.”
If there ever was a confirmation of Žižek’s haunting thesis that the marriage between capitalism and democracy is over, this is it. While no one will shed a tear for Berlusconi or Papandreou, the process by which they were overthrown is a sign of even darker times to come. Their replacement by two economists with close ties to the banking industry has effectively put Greece and Italy “into political receivership by [the] international financial establishment.”
The most shocking thing, perhaps, is that our leaders are not even trying to hide it anymore. European officials now openly admit their intentions: to calm the markets, politics-as-usual simply has to be suspended. As the unelected President of the European Council, Herman van Rompuy, bluntly stated during a lecture in Florence last week, Italy needs “reforms, not elections.” Apparently, the time for window-dressing is over: markets rule, and that’s that.
The Birth of the Frankfurt Group
These disturbing developments point in the direction of a dramatic new chapter in European history. While the roots run much deeper, Europe’s post-democratic era began in earnest in Frankfurt — Europe’s financial capital — in the lead-up to this month’s G20 summit. There, under the shadow of Deutsche Bank’s headquarters, Angela Merkel convened a small group of unelected officials for secretive emergency talks on Europe’s rapidly deteriorating crisis.
Apart from Merkel and Sarkozy, the meeting was attended by European Council President Herman van Rompuy; European Commission President José Manuel Barroso; European Central Bank President Mario Draghi; IMF Chief Christine Lagarde; Eurogroup Chairman Jean-Claude Juncker; and Economic and Monetary Affairs Commissioner Olli Rehn. At the G20 in Cannes, the attendants could later been seen wearing badges saying “GdF” — Groupe de Francofort.
Even though no one was informed about its existence, the Frankfurt Group now acts as the de facto government of the eurozone. As Larry Elliot pointed out, “this group, which is accountable to no one, calls the shorts in Europe. The cabal decides whether Greece should be allowed to hold a referendum and if and when Athens should get the next tranche of its bailout cash. What matters to this group is what the financial markets think not what voters might want.”
In a profoundly disturbing article in the Spectator, Fraser Nelson writes how Europe’s new “hit squad” views democracy “with caution — even distaste.” He quotes Juncker as saying that “We all know what to do, but we don’t know how to get re-elected once we have done it.” The neo-imperial Frau Merkel simply stated that “domestic policy is at end.” As Larry Elliot puts it, “the democratic clock has been turned back to the days when France was ruled by the Bourbons.”
The Putsch of the Century
Last week, as bond markets rebelled over Papandreou’s unexpected flirtation with democracy, investors panicked and immediately turned their sights on Italy. Within a matter of days, Italy’s borrowing costs soared to the level where Greece, Ireland and Portugal had previously required EU bailouts. But unlike these smaller countries, Italy — the third largest sovereign debtor in the world — is considered both too big to fail and too big to bail.
And so Merkel and Sarkozy, backed by the financial firepower of the IMF and ECB, decided to take radical action. As one official confirmed last week, “we’re on our way to moving out Berlusconi.” Indeed, according to Fraser Nelson, “by last weekend, it was undeniable that an operation to remove Berlusconi had begun.” To begin with, Olli Rehn wrote a letter to the Italian finance minister demanding exact details about the 39 reform measures imposed by the ECB.
Meanwhile, further IMF inspections were announced to step up the pressure, and the ECB deliberately suspended its support by buying up a bare minimum of Italian bonds, all “to send an unmistakable Old Europe message: we have ways of making you quit.” Indeed, within days, the governments of both Greece and Italy had fallen, bringing an ignominious end to Berlusconi’s 17-year domination of Italian politics and the four-decade Papandreou dynasty.
The EU-sponsored coup d’étât is so transparent that even the pro-market Economist now confirms that “the immediate cause of [Papandreou and Berlusconi’s] downfall is plain: the ultimatum they received from euro-zone leaders at the G20 summit in Cannes to reform their economies — or else.” And so, just like NATO forced out Gaddafi, the EU has successfully forced out Berlusconi and Papandreou. If anything, this is the putsch of the century.
The Rise of the Technocrats
But a coup wouldn’t be a coup if its instigators failed to replace the overthrown tyrant with a puppet of their own. And so France and Germany further stepped up the pressure on the Greek and Italian heads of state. The New York Times cites a former top-ranking Italian government official as saying that Sarkozy and Merkel “privately urged Italy’s President, Giorgio Napolitano, to pick the technocrat, Mr. Monti” to form a new government.
The choice for Mario Monti and Lucas Papademos — both US-trained economists — as the new leaders of Italy and Greece has been justified with the argument that their expertise on financial issues will help them push through the necessary austerity measures and structural reforms to contain the crisis. The idea is to transcend “party politics” and subject national decision-making to the “rule of experts” with superior knowledge of the issues at hand.
In a ridiculously naive article, the BBC argues that “technocrats, by reputation, competence and experience, can persuade the markets and eurozone leaders that they represent change.” According to Marco Incerti of the Centre for European Policy Studies, “the markets and the international partners of these two countries are looking for concerted answers and determined answers and these can’t be provided by political figures.”
But, as future weeks and months will attest, there is nothing apolitical about having a neoclassical economist as head of government. In the end, as Heather Stewart points out, economic reforms and budget cuts are profoundly political issues, and technocracy is really just a thinly veiled nom de guerre for a much more sinister plot. In fact, the supposedly “neutral” Mario Monti and Lucas Papademos come with strong ideological and financial strings attached.
An Unaccountable Clique of Bankers
The son of a banker, Mr. Monti studied economics at Italy’s elite Bocconi University and at Yale. He sat on the board of multiple large multinationals, was an EU Commissioner, is a high-profile member of the shadowy Bilderberg Group, and serves as Italian Chairman for the Trilateral Commission — a think tank described by Piergiorgio Odifreddi as an “ultra-liberal American, European and Japanese Masonry inspired by David Rockefeller.”
To top the bill, Monti — who has been appointed to solve a crisis that started not in Italy but on Wall Street — still sits on the advisory board of Goldman Sachs. You can’t make this stuff up! To make matters worse, Monti is not the only supposedly neutral technocrat with ties to the “giant vampire squid“. Mario Draghi, the new ECB President, was European President for Goldman at the time it helped Greece obscure its true debt levels to allow it to enter the euro.
Lucas Papademos, meanwhile, is a former Vice-President of the ECB and also sits on the Trilateral Commission. Here, the connection with the ECB is particularly worrisome as the central bank is exposed to Greek debt to the tune of at least 45 billions euros. By planting a former Vice-President at the head of the Greek government, the ECB hopes to ensure that it will actually get all that money back. There is a blatant conflict of loyalties here.
Ultimately, as Richard Morris wrote for the New Statesman, Berlusconi and Papandreou were forced to step down “because the markets thought it would probably be for the best if one of their own was given the chance to run things for a while.” And this is the outcome: an unaccountable clique of bankers taking charge of the crisis. Robert Saviano astutely observed the irony of it all: “It is clear that the markets have succeeded where the electorate, the opposition, the media and intellectuals have not.”
The Death of Democracy
The consequences for democracy are profound. The New York Times writes how “the power of financial markets has upended traditional democratic processes.” The Financial Times talks about “the sidelining of elected politicians, and observes that “in effect, eurozone policymakers have decided to suspend politics as normal in two countries because they judge it to be a mortal threat to Europe’s monetary union.”
All of this is highly problematic since policy responses to economic crises are by their very nature profoundly political. Not only will these policy choices affect the lives of millions of people today, they will also shape the future of the global economic order for many generations to come. The notion that such monumental decisions can be taken in the absence of a genuine political debate is truly preposterous and will totally undermine the legitimacy of the state.
Papademos, for example, will be charged with pushing a highly controversial 130 billion euro bailout program through parliament; convincing the EU-ECB-IMF Troika to disburse the latest 8 billion euro installment of last year’s bailout package; pushing through a budget for next year that will be harsher than any other so far; enforcing a brutal new tax that risks leaving hundreds of thousands without electricity; and starting a 50 billion euro fire-sale of state assets.
How can any of these policy objectives be achieved without a prior consultation of the people? Both Greece and Italy have recently witnessed the outbreak of mass protest and political violence, both of which are only likely to be further aggravated as the so-called “technocratic” governments radicalize the ideological assault on their own people. In the absence of a real political debate, the only way for the people to channel resistance will be through more violence.
“The Citizens Will Revolt”
Jean-Pierre Jouyet, President of the Financial Markets Authority (AMF) in France, was therefore right to warn that “the citizens will revolt against the dictatorship of the markets.” This year has already seen a truly unprecedented outburst of popular indignation at detached elites cutting away at basic social provisions and fundamental democratic rights. As the crisis deepens and the political system bleeds legitimacy, these protests will intensify.
On October 15, hundreds of thousands of peaceful protesters took to the streets of Rome — and hundreds, if not thousands, clashed violently with riot police. Athens has experienced true street battles between protesters and police over the course of the past two years, as the level of poverty and precarity there risk turning the country in a Third World economy. As we have argued before, in Greece, “austerity puts revolution back on the menu.”
For many millions, a full-blown popular uprising may be the only way out of these dire straights. On Thursday, November 17, Lucas Papademos will experience the first mass protests of his term — followed by an inevitable outbreak of violence — as the Greeks commemorate the Polytechnic uprising that overthrew the military junta. Perhaps the date will once again take up historical significance as the start of a popular insurrection?
“Ultimately,” as Graham Turner of GFC Economics argues, whether the diktat of this unaccountable clique of bankers can be overthrown is “a question of the size of the demonstrations on the streets.” If the Greeks and Italians can muster the numbers and leverage the required non-lethal force, there is still a chance that the dictatorship of the markets can be overturned. The final battle for European democracy will be waged where it once began: in Athens and Rome.
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