European Politics

Greece is at the hard end of another European policy problem, related to austerity, but this time to do with immigration, and it’s turning into a serious human rights and humanitarian crisis. According to Europe’s border control agency Frontex, 93% of migrants to Europe came through eastern and central Mediterranean routes in 2011.With the tightening of the patrolling of Spanish and Italian access routes, most of these arrived first in Greece, with legal rights under the European Convention of Human Rights to seek asylum status there. Greece doesn’t have the resources to provide adequate social services, and the justice system is grossly inadequate to deal with the demands put on it. This means that large numbers of people are cast adrift in Greece in a legal limbo and with no resources. They are then at the mercy not only of highly repressive policing but of the fascist organization Golden Dawn, whose growing influence is now also starting to contaminate the political discourse of other political parties. A new internet crowd-released film, Into the Fire, documents the human face on what’s going on.

This is not just a story about Greece, but about European policy more generally. Under what is known as the Dublin regulation, people can only claim asylum in the EU country in which they first arrive. It means that if anyone manages to move on to another country, their claim to asylum need not be heard in that country, but they can be summarily deported back to the country in which they first arrived. This was supposed to be a burden-sharing measure to cut out parallel asylum claims in multiple jurisdictions. But in effect, because of the way people arrive in Europe, it corrals the EU’s asylum-seekers into the southern European countries, and increasingly concentrates it in Greece. A 2011 decision by the European Court of Human Rights found that, unlike other EU member states, Greece was not able to vindicate people’s rights under the European Convention on Human Rights, and that deportations back there are not defensible. But as shown in the documentary Dublin’s Trap: another side of the Greek crisis, these rights are hard to access and the implications extend to very few people. And securing ’Fortress Europe’ is taking an even greater toll on human lives:

…at least 18,567 people have died since 1988 along the european borders. Among them 8,695 were reported to be missing in the sea. The majority of them, 13,733 people, lost their life trying to cross the Mediterranean sea and the Atlantic Ocean towards Europe. And 2011 was the worst year ever, considering that during the year at least 2,352 people have died at the gates of Europe.

There are lots of questions about other European countries’ ways of dealing with asylum seekers and refugees. Ireland’s citizenship laws were changed in 2004 to deter possible claimants; people are left for unconscionably long periods living in ‘direct provision’ accommodation; and the rate of successful application is very low indeed. But the scale of the humanitarian and human rights issues building up in Greece is something else again. And while many northern European policy-makers may well be silently grateful that the issue of rising refugee pressures (most recently from Syria) is kept out of their country, the fillip it gives to Golden Dawn, the third-largest political grouping in Greece in recent polls, should be a cause for deep alarm right across Europe.

The celebrated Swedish writer Jonas Hassen Khemiri has written a powerful open letter to the Minister of Justice Beatrice Ask (original in Swedish, English translation by Rachel Willson-Broyles). Following an interview in which Ask allegedly said that what people claimed to be racial profiling was merely a matter of “personal experience”, Hassen Khemiri gave his account of how it is to grow up in Sweden in a skin that’s darker than pale white, and with black hair. And what the new law that is leading to this racial profiling does to (some) people, including some Swedish citizens.

This is powerful stuff. Do read it.

“Du kan gå nu.” Without apologies.

Mark Mazower has a good piece on Italy in today’s Financial Times.

The turmoil produced by the Italian elections has directed attention back to where it should have been all along – to the politics of the eurozone crisis. We have had six months of complacency, rising stock markets and wishful thinking. The conventional wisdom was that the crisis had been contained, with Ireland recovering and the risk of a Greek exit from the eurozone reduced. But this view always ignored the politics. … Technocrat prime minsters, such as Italy’s Mario Monti or Greece’s Lucas Papademos … are creatures of banking and economics. While they may understand money, that no longer recommends them to the voters who would rather have someone who understands them. The result is dangerous. It is but a short step from writing off the political class to writing off the institutions of democracy. So far most voters have not done this in either Italy or Greece. But some have and the temptation is there for more to do so [click to continue…]

In yesterday’s elections in Italy, ‘voters defied a failing policy and a clapped-out political establishment‘, resulting in an indecisive outcome. Here is more evidence in the Eurozone of what the late Peter Mair called the conflict between ‘responsible’ and ‘responsive’ politics. The centre-left ‘responsible’ party of Pier Luigi Bersani won most votes, just about. But the über-’responsible’ Mario Monti, the technocratic prime minister and Bersani’s most likely coalition partner, gained only half the support he had hoped for. Quelle surprise, one may be forgiven for thinking, since the mix of ‘austerity’-driven tax increases with no real structural reform, and with none of the stimulus that would enable reform to work, has proven highly unpopular with voters.

Once again, it seems to me, we see that it really is a mistake to leave the politics out of politics. I have some thoughts about why this is a bad idea in a recent talk (audio and slides here).

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The current issue of the online journal Intereconomics features stories about the politics of adjustment in Greece, Ireland, Spain, Italy, and Portugal. Aidan Regan and I contributed the article about Ireland. Each paper outlines the measures that have been taken in recent years, and the major challenges each country now faces. All five countries share many common features of course, including the difficulty of keeping on track with deficit reduction targets in the context of no growth and truly awful unemployment figures. But the challenges discussed by authors are quite varied too: in Greece, for example, it’s governance problems that are highlighted; in Portugal and Italy, productive capacity and export performance; in Spain, problems over sustaining the revenue base of the state.

In Ireland’s case, we outline the ongoing problems involved in trying to reduce the large government deficit. We also note that the legacy of the financial crisis complicates Ireland’s recovery strategy. The government has staked a great deal on getting some relief on a portion of the deficit and debt issues that arise from recapitalizing the banks. What the government is looking for at the moment is not a debt restructuring or a default by this or any other name, but a rescheduling of a portion of the costs of unwinding the full liabilities of the now-defunct Anglo Irish Bank. From the Irish point of view, the ECB has given mixed signals on this: positive indications about the design of the ESM in June 2012, but in September, a statement that was construed by UCD Professor of Economics Karl Whelan as ‘Germany to Spain and Ireland: Drop Dead’.

Yet the backroom diplomacy continued, and the government certainly seemed to that that an agreement would be possible before the next critical deadline for Ireland of 31 March. Right now though, things are not looking so good. There are fears that, as in other areas of crisis management, there is a tendency for EU decision-makers to pull back from new commitments unless crisis is staring them straight in the face. ‘They are under-performing again’, a senior EU official said in December. Even as Germany reported a downturn in economic activity earlier this month, José Manuel Barroso said that ‘the existential threat against the euro has essentially been overcome’. Well, that’s alright then.

For all that, the game is not over yet in Ireland’s negotiations with the ECB. The Irish Congress of Trade Unions has taken up the case too. With the call to ‘Lift the Burden: Jobs not Debt‘, it’s calling for protests on 9 February. We’ll wait and see.

I thought I would follow up on Chris’ post, from a position of even less expertise, but focusing more on the consequences of a referendum vote in favor of a British exit (BReakout?) from the EU. I’ll start by thinking about two polar cases.

One is the Norway/Switzerland model. Initially, the only thing that changes is that Britain gives up its political membership of the EU and institutions like the European Parliament, Council and so on. Otherwise things go on as before – Britain pays into the EU Budget, is bound by current EU regulations and subsequent changes, keeps its optouts on things like Schengen, at least initially, and maintains its current access to EU markets, free movement and so on. This seems to work well enough for Norway and Switzerland, but doesn’t seem likely to satisfy UKIP or Tory Eurosceptics. And, of course, it depends heavily on the goodwill of the EU. Britain could seek to negotiate further exemptions from EU rules, but, the EU could scale back the existing British optouts over time.

At the other extreme, Britain could unilaterally abrogate all the existing arrangements and start over from the position of, say, Russia – a major EU trading partner without any special rights or obligations other than those agreed on a case by case basis. Prima facie, that would include applicability of the standard third-country tariffs in each direction, non-tariff restrictions applicable to goods not compliant with EU (or, in the opposite direction, UK) regulations, standard visa requirements for travel, residence and work, controls on capital flows and so on. It seems clear that this would be damaging for the EU, and disastrous for the UK. Still, it also seems clear that this is what the Eurosceptics have in mind, though typically with a liberal dose of wishful thinking about how easy it will be to negotiate FTAs, visa-free travel etc.

Is there an intermediate path? I can’t immediately see one. Presumably, there is a notion that Britain would stay in while the terms of exit were negotiated. But that could last many years, and would effectively amount to the Norway/Switzerland situation in the interim.

Update Tory MEP Daniel Hannan argues that the differences between Norway and Switzerland are important, and that the UK could cut a better deal than Switzerland (again here) This seems like it would be wishful thinking, even if the exit were amicable, which seems unlikely.

Most readers will know by now that the British Prime Minister, David Cameron, yesterday pledged an in-out referendum on the UK’s continued membership of the European Union, to be held in the event that the Conservatives win the next general election. Cameron says that he will try to negotiate better terms for UK membership and that he hopes that he’ll be able to recommend these to the British people in 2017 or thereabouts. I thought CT should have a post on this, but the remarks below are very much off-the-cuff and not written on the basis of any expertise re EU politics.
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I’ve a review in the new issue of The Nation of Harold James’ history of the euro (Powells, Amazon) which does the usual annoying-reviewer-trick of taking a book and using it to talk about things that the reviewer rather than the book’s author wants to talk about. I think this works better than it sometimes does, since the book has lots of juicy (for administrative history values of ‘juicy’) details about the arguments behind the creation of Economic and Monetary Union, which have obvious implications for politics today. Anyway, judge for yourselves if you’re interested …

In September, the European Central Bank announced that it had taken decisions on a “number of technical features regarding the Eurosystem’s outright transactions in secondary sovereign bond markets.” The ECB did all it could to make these decisions sound like a nonevent. It claimed that the new policy measures—which it gave the incomprehensible-seeming label Outright Monetary Transactions—had the dull but laudable aim of safeguarding “appropriate monetary policy transmission and the singleness of the monetary policy.” As it turns out, Outright Monetary Transactions are anything but simple “technical features.” They have scant relevance to monetary transmission or to conventional monetary policy. Instead, they allow the ECB to do something that it is not supposed to do: intervene in the market for government debt.

Today general elections (for parliament) are held in the Netherlands. These are politically exciting/nervous times, since the electorate has polarized quite significantly. Until a few weeks back, the polls showed two main contenders to win the elections – the SP (socialists—some believe that one could also describe them as oldfashioned social-democrats) and the VVD (nominally a liberal party, but it’s more accurate to describe it as a right-wing conservative party). Yet the SP has lost drastically in the polls in the last weeks, to the advantage of the PVDA, the social-democratic party. This is probably due to the strong performance of Diederik Samson, leader of the PVDA, and the rather weak impression made by Emile Roemer, leader of the SP. The center-liberal party D66 is doing fine, but the Christian-democrats (CDA) and the greens (Groen-Links) are expected to suffer major losses. PVV, the populist-rightwing party of Geert Wilders will keep its significant size. (For a bar chart of a recent poll, go here)

The elections are not just important for the Netherlands itself, but also for Europe and beyond—and not only because there are 12.500 people with voting rights in Bonaire, Saba, and Sint Eustatius. Until now the outgoing cabinet has been an ally of Germany in their response to the Euro-crisis; but with a changing coalition in power, this may change too. SP is strongly against Europe, as is the PVV (Wilders has shifted his focus from anti-islam to anti-Europe).

It’ll be interesting to see what will happen to Dutch political landscape once the election results are known. The local media are reporting that many voters are really at a loss in deciding for whom to vote (swing/floating voters). I know several people who have always voted either for the Greens or D66 who are now voting PVDA, since they care more about not having a coalition led by the VVD rather than the (ideological, practical and strategic) disagreements between their favorite party and the main non-conservative party (being PVDA). To be continued.

I don’t have much to say about the politics of the new ECB proposal that I haven’t said at greater length already. Matt Yglesias is right to see this as a power shift, but it’s one that’s been in the making for quite a while. The policy of ‘comply with our demands for austerity or we’ll pull the plug’ was executed through confidential letters rather than public announcements up to recently, but it was still the same policy. And I’m not sure that it’s a power grab as such – I don’t think the ECB has planned this, so much as been pulled into a vacuum created by the corrosive cross-national politics of conditionality and implicit or explicit transfers.

Which brings us to the Bundesbank’s public opposition to the deal – it describes the purchases as “tantamount to financing governments by printing banknotes.” There’s a relevant quote in Harold James’ excellent forthcoming history of European Monetary Union, which I don’t want to talk too much about, since I’ll be reviewing it elsewhere. One of the very interesting discoveries he has made is a non-public speech that Helmut Schmidt, then the German Chancellor, made to the Bundesbank at a somewhat similar juncture in the 1970s. Germany was being pushed to support the then-European Monetary System (a complicated class of a dirty float that was supposed to lead, somehow, someday, to proper monetary union), but the Bundesbank wanted a stipulation that Germany could opt out of unlimited intervention, if this threatened domestic price stability. Schmidt secretly agreed (the precondition was discovered later), albeit with some hesitation. From the speech (which James quotes in extenso – there is plenty more juicy stuff that I’m leaving out):

What interests me here is a part of the third point of your letter. I must say to you openly that I have quite severe misgivings about a written specification of this sort, a written specification of the possibility of an at least temporary release from the intervention. Let us first of all assume that it appeared tomorrow in a French or Italian newspaper. What accusations would the newspapers then make in editorials against their own Government who got them mixed up with such a dodgy promise with the Germans … In the matter itself I agree with you, gentlemen, but I deem it out of the question to write that down … there has been a beautiful saying in the world for two thousand years: ultra posse nemo obligatur. And where the ultra posse lies one decides for oneself. My suspicion is that, if it came to a real crisis, … the debtor countries clear out first and not the creditor countries. But it could perfectly well be the case that the creditor Federal Republic might one day have to clear out; it is all thinkable, only one cannot write such a thing down.

The Bundesbank’s ostentatious dissent from the ECB program is plausibly both a genuine statement of disagreement, and an implied statement that there are stark limits to what Germany will bear – that if the program does turn into unlimited support for weaker states, Germany will exercise its ultra posse and pull out of its obligations. This threat doesn’t have to be explicit to be understood. This in turn highlights the complexity of the expectations that the EU has to manage at the moment. On the one hand, the EU wants to convince financial markets that this is all going to work – that the ECB will do whatever is needed to keep EU going, in the hope that this calms down expectations, so that it doesn’t actually have to use the big bazooka. On the other, the EU (and in particular Germany) wants to convince countries such as Spain that ECB support is conditional on politically ruinous austerity measures. The Bundesbank’s public disavowal of ECB policy arguably makes the latter argument a little more credible, by signalling that this is the best deal that Spain is likely to get. However, by hinting at the limits of German support, it also suggests that the ECB’s ‘unlimited support’ may in practice be more limited than it sounds, generating the risk of market uncertainty.

Gene Wolfe writes in the Book of the New Sun of an executioner:

a certain Master Werenfrid of our guild who in olden times, being in grave need, accepted remuneration from the enemies of the condemned and from his friends as well; and who by stationing one party on the right of the block and the other on the left, by his great skill made it appear to each that the result was entirely satisfactory.

The EU will have to do its damnedest to emulate Master Werenfrid if it wants to pull this off.

A somewhat different take on matters Hayekian – Martin Höpner and Armin Schäfer’s article on Hayek and the EU has just come out in International Organization. It’s been in gestation for a while (an earlier working paper version can be found here), but the argument is pretty straightforward – if you look at it right, the European Union looks rather more Hayekian than Polanyian-social-democratic.

Instead of re-embedding markets, the EU is beginning to resemble Hayek’s blueprint of “interstate federalism,” where individual (economic and social) rights are located at the central level while the capacity for taxation and interpersonal redistribution remains entirely decentralized. What appears to be the nucleus of supranational social policy might turn out to be a recipe for less social protection and redistribution at the national level. … by granting non-nationals access to social transfers while being unable to oblige them to contribute financially puts pressure on the generosity given to all entitled persons. As economic liberals have aptly observed, divorcing rights from obligations limits the capacity for redistribution. … political initiatives to re-embed markets have become extremely difficult as EU members have grown ever more economically diverse. At the same time, integration through law (as opposed to political integration) continues apace and limits national governments’ ability to correct markets.

This article stems from a broader left-skepticism about the EU associated with people like Fritz Scharpf and Wolfgang Streeck (uncoincidentally the former director and director of the Max-Planck Institut where Höpner and Schäfer are based). Its argument is open to challenge but is also, at the least, highly plausible. Nonetheless, it’s the kind of argument that gets very little attention in the US, where, broadly speaking, leftists are in favor of the EU, and rightists (especially Hayekians and libertarians) against it. Much of this surely has to do with the tribalism that John Q. was talking about last week – a lot of US intellectual politics is based on affect. But it also suggests that the EU is a different kind of experiment than most Americans believe. If the EU manages to weather the tempest that still threatens to swamp it, and comes out the other end with a currency union, a banking union, and some kind of bond system, it will still look, as Höpner and Schäfer suggest, very Hayekian. Will it be politically sustainable over the longer term? I suspect not – increasing misery at the national level as a result of increased exposure to international exposure, combined with a withering of social protections will create the kind of political upheavals that Polanyi described (whether with happy, or unhappy consequences). Polanyi’s ideas suggest that Hayekian federal constitutionalism is almost necessarily self-undermining. But of course, Polanyi could be wrong …

It’s getting pretty exhausting living inside the Eurozone. We screw up our nerves for the next moment of crisis, which is narrowly averted, only to find that the same old problems lie in wait just around the corner; but worse this time, because they were’t properly sorted out the first time.

Last week’s worries were put to rest for a short while: Greece is still in the Eurozone, the Euro hasn’t imploded, the banks are still open. Spanish banks teetered; a fix was found for the time being. But it doesn’t mean anything has been solved, and the moments of respite get shorter and shorter.

It seems to me that we’re strung out on Dani Rodrik’s trilemma of global politics in an increasingly dangerous way. His contention is that you can only have two of these three things:

‘hyper-globalization’ (in the EU context, the free market in goods and services and mobility of capital and labour);

‘national sovereignty’ (in which national governments have realistic choices to make between options that may be ideologically quite distinct);

and ‘democratic politics’ (in which there is meaningful involvement by actors and electoral accountability for decisions made).

Kevin O’Rourke (whose work I’ve mentioned here before) pointed out that the odd design of the Eurozone was meant to avoid it getting definitively boxed into any two options in this triangle. Trans-national oversight of the currency was delegated to the ECB. Nation states were charged with making fiscal and financial policy within a loose-ish trans-national framework of rules. Democratic debate was expected to internalize the requirements of pooled sovereignty.

But the sharp ends of the trilemma are becoming more and more difficult to span. The fuzzy compromises are under growing strain, and the Eurozone is being pushed into classic trilemma trade-offs. It’s at growing risk of ripping apart entirely.

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I’ve blogged about this before, but the UK Coalition government’s proposals to restrict the immigration of spouses of British nationals just came a step closer to being enacted. Though packaged as a measure against forced marriage, this is a proposal that will drive into exile or separation many people whose personal income falls below the £25,700 threshold and who happen to have been unlucky enough to fall for a non-EU citizen. Sheer evil. The Guardian:

British citizens with foreign-born partners are to be given the choice of indefinite “exile” in countries including Yemen and Syria or face the breakup of their families if they want to remain in the UK, under radical immigration changes to be announced next week, MPs have been told. The home secretary, Theresa May, is expected to confirm that she will introduce a new minimum income requirement for a British “sponsor” without children of up to £25,700 a year, and a stringent English speaking test for foreign-born husbands, wives or partners of UK citizens applying to come to live in Britain on a family visa. Immigration welfare campaigners say that the move will exclude two-thirds of British people – those who have a minimum gross income of under £25,700 a year – from living in the UK as a couple if they marry a non-EU national. They estimate that between 45% and 60% of the 53,000 family visas currently issued each year could fall foul of the new rules.

It is hard to have any hope that the Liberal Democrats might decide this is a line they cannot cross, but they have to be put under pressure. People have to write to their MPs of whatever party and make their disgust known, as well as trying to get the Labour Party in the shape of Chris Bryant and Yvette Cooper to take a stand (rather than trying to be more nationalist than the Tories). I wonder also whether the academics who are members of the UK Border Agency’s Migration Advisory Committee shouldn’t be being asked tough questions by their academic colleagues and urged to resign.

Five years ago I linked to a Bill Emmott column on the impending election of Nicholas Sarkozy thusly:

This unashamed mash note from Bill Emmott, former editor of the Economist presents a class of a triple-distilled tincture of the prevailing globollocks on Sarkozy’s victory in France. You don’t need to read the actual column to get the gist; just the Pavlovian dinner-bell talking points that it strings together.

France … paralyzed by powerful interest groups … political elite … beholden … or … afraid … takes a brave outsider … precisely Sarkozy’s appeal … Reagan or a Thatcher … A “rupture” is what France needs … showing that his country is not doomed to decline … cadres of highly globalized managers … etc … etc

I don’t see the words “tough,” “clear-headed,” or “reform” anywhere, so it isn’t quite the full bob major, but it’s close.

Now, his successor as editor at the Economist plays the same tune again, but even more crudely, deploring Sarkozy’s probable successor.

France desperately needs reform .. .neighbours have been undergoing genuine reforms … deep anti-business attitude … proposing not to reform at all … refusal to countenance structural reform of any sort … resistance to change … hostile to change … Until recently, voters in the euro zone seemed to have accepted the idea of austerity and reform. … would undermine Europe’s willingness to pursue the painful reforms it must eventually embrace.

I’ve no idea what Hollande is going to be like (except that he’s certainly going to be disappointing). But I do know that this is one of the most exquisitely refined examples of globollocks that I’ve ever seen. It’s as beautifully resistant to the intellect as an Andropov era Pravda editorial. A few more years of this and the Economist won’t have to have any human editing at all. Even today, I imagine that someone with middling coding skills could patch together a passable Economist-editorial generator with a few days work. Mix in names of countries and people scraped from the political stories sections of Google News, with frequent exhortations for “Reform,” “toughminded reform,” “market-led reform,” “painful reform,” “change,” “serious change,” “rupture,” and 12-15 sentences worth of automagically generated word-salad content, and you’d be there.

I wonder whether even the writer of this editorial would be able to define ‘reform’ or ‘change’ if he were asked, beyond appealing to some sort of ‘social protection bad, market good’ quasi-autonomic reflex embedded deep in his lizard brain. I also wonder whether the people in there are as cynical about their product as Andropov-era journalists were, or whether they actually believe the pabulum they dish out.