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VIDEO: Germany, the Troika and the EU: Who Rules Europe?
Who Rules Europe?
By: Andrew Gavin Marshall
22 July 2015
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Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe
Global Power Project: Bilderberg Group and Europe's Technocrat Titans
Global Power Project: Bilderberg Group and Europe's Technocrat Titans
By: Andrew Gavin Marshall
10 February 2015
Originally posted at Occupy.com
This is the tenth installment in a series examining the activities and individuals behind the Bilderberg Group. Read the first, second, third, fourth, fifth, sixth, seventh, eighth and ninth parts in the series.
I previously examined the functions of the Bilderberg meetings; the composition and concentration of financial markets and the Mafiocracy that rules them; the nature of technocracy, and the role of finance ministers, central banks and the IMF in managing the European debt crisis. This installment takes a closer look at the top technocrats of the European Council and the European Commission.
The "Troika" of the European Central Bank (ECB), International Monetary Fund (IMF) and European Commission (EC) was largely tasked with managing the response to the debt crisis, organizing bailouts, imposing austerity and saving the banks at the expense of the populations of Europe. The Troika reported to the Eurogroup of 17 finance ministers who represented all of the countries that used the euro as their single common currency.
The European Union project evolved and expanded over decades since the end of World War II, and always with an elite-driven, technocratic structure. As the E.U. moves through the debt crisis, its solutions and actions invariably delegate more authority to both existing and new technocratic institutions that wield immense power over nation-states within the E.U. Sovereignty is increasingly transferred from the nation and its democratically elected leaders to the supra-national technocratic structure of the E.U., and the top bureaucrats and technicians who run it.
The European Council and the European Commission are the major centers of power within the E.U.'s political structure. The European Central Bank is equally if not more powerful, but it doesn't answer to any political authority since it's considered to be "independent" (aka exclusively in the service of private interests). The European Council groups together the heads of state (presidents and prime ministers) of all E.U. nations, comprising the supreme governing authority of the E.U. The Council is presided over by a permanent president. Over the course of the European debt crisis, that president was Herman Van Rompuy.
Herman Van Rompuy
Herman Van Rompuy was a prominent Belgian technocrat and politician. Trained as an economist, Van Rompuy worked for Belgium's central bank from 1972 to 1975, thereafter going into politics where he rose through the ranks to become a budget minister in the 1990s. When Van Rompuy was asked by Belgian King Albert to form a coalition government in December of 2008, Van Rompuy became Belgium's Prime Minister, described by Reuters at the time as "a budgetary hardliner."
As European leaders were attempting to negotiate and horse-trade to fill key appointments in the EU apparatus in late 2009, Van Rompuy was considered a "dark horse" to occupy the first-ever permanent president of the European Council. Van Rompuy was relatively unknown outside Belgium and had only been the country's Prime Minister for 11 months when he got the top job in the E.U.
Roughly a week before European leaders announced him as their selection, Van Rompuy attended a private dinner with members of the Bilderberg steering committee on Nov. 12, 2009. Van Rompuy was invited to the dinner by then-chairman of the Bilderberg meetings, Etienne Davignon, a former top E.U. technocrat, in order "to promote his candidacy" for the top job. At the dinner, which was attended by top industrialists, financiers and even war criminals like Henry Kissinger, Van Rompuy was able to impress the group with a speech and engage in "off-the-record" talks with the unelected oligarchs. At the dinner meeting, Van Rompuy reportedly raised the issue of E.U. financing, suggesting that a continental E.U. tax could even be envisioned.
Seven days later, Van Rompuy was announced as the final choice for president of the European Council. According to The New York Times, Van Rompuy's selection was seen as the "result of backroom negotiations among [E.U.] leaders jockeying for future and more important economic portfolios that could be more powerful in the enlarged European Union" – in some ways a similar method as how the Chinese choose who sits in the top political positions of authority within the Communist Party and State.
The Financial Times celebrated the appointment of Van Rompuy to the top spot, noting that "the art of Belgian political leadership consists of bringing consensus to a broad and fractious coalition," which is "exactly what the president of the European Council will have to do." As the prime minister of Belgium, the paper wrote, Van Rompuy had "demonstrated an ability to bring a laser-sharp focus to a complicated political process."
Together with the President of the European Commission, the ECB and the Eurogroup of finance ministers, Van Rompuy indeed played an important role in the management of Europe's debt crisis. After attending the Bilderberg steering committee meeting in 2009, just prior to getting Europe's top job, he later attended a Bilderberg meeting in 2011 while sitting as president of the European Council.
José Manuel Barroso
José Manuel Barroso finished his second term as President of the European Commission in late 2014, after serving in that post for the previous ten years. Prior to that, he served as prime minister of Portugal from 2002 to 2004. Barroso has attended numerous Bilderberg meetings: in 1994, 2003, 2005 and 2013. On top of that, Barroso has attended meetings of the Trilateral Commission, including the one that took place in Portugal in 2003 while Barroso was prime minister. He also attended the Commission's annual meeting in 2007 that took place in Brussels while he was the European Commission president.
Barroso courted controversy in 2003 when he became one of only a few European heads of state to support George W. Bush's "with us or against us" war on Iraq. His position put him in good standing with the U.K. and Italy, yet he also managed to maintain good ties with France and Germany, making him an effective choice to head the EC. Barroso was at the same time, however, "unpopular at home," noted the BBC, because he implemented "an austerity program to reduce the country's budget deficit." But for European leaders, the fact that Barroso was able to hold together a political coalition of opposing parties "while driving through the unpopular reforms" made him an ideal candidate to function as "a consensus politician."
The Economist reflected on Barroso's short time as prime minister, noting the austerity program and commenting that he "has done a good job of running Portugal." Barroso was chosen for one of the top spots in the E.U., overseeing the vast bureaucracy of the European Commission, through a series of "backroom deals, in which various other juicy EU jobs that are up for grabs are shared around." Those who backed Barroso were doing so under the presumption that he would "hold his liberal economic line."
A few months into his first term, in early 2005, the Financial Times reported that Barroso had "laid out pro-business plans to revive Europe's economy," which Britain's E.U. Trade Commissioner Peter Madelson described as "proposing a program for Europe that we would describe as 'New Labour' in Britain," and adding that "we are seeing the best chance in a decade to restore authority to the European Commission." Apart from not giving business interests everything they wanted, the FT conceded that in many areas, "Barroso's agenda is unashamedly pro-business," including "a new drive for lighter regulation."
Barroso's program "put pressure on countries to make labour markets more flexible and cut back on welfare spending," noted The New York Times. As people across Europe expressed fear that Barroso was "about to pursue an excessively liberal economic agenda," Barroso began attempting to please his critics, speaking to trade unionists and declaring his intention to "fight against poverty," stating that Europe would "maintain and reform our European social model." That public relations campaign in turn worried business and financial interests, so the Commission president launched "a concerted campaign to attempt to show he remains firmly committed to pro-business economic reforms."
A couple of weeks later, Barroso delivered a speech at the Spring meeting of the Institute of International Finance (IIF), whose membership is composed of top executives from hundreds of the world's largest banks and financial institutions. Barroso began his speech noting that "your association has achieved a lot in the last two decades," and continued:
"It has acted as an important market place for ideas [and] has provided a clear and influential voice for change in the fields of finance, economics and governance." The world's "stable financial order" was, Barroso declared, "in no small part thanks to the contribution of this institute."
Barroso explained his understanding of the global economy to his esteemed audience, noting that the rapid growth in "emerging markets" was increasing global wealth, but also increasing competition for that wealth with countries like China and India able to better exploit cheap labor while the U.S. with its high-tech boom was leaving Europe behind.
"The status quo is no longer an option for the E.U.," Barroso continued. The E.U. must change "in order for Europe to fully reap the benefits of ongoing globalization," and the continent had to "increase the flexibility of markets" and strengthen its "productivity." Translation: deregulate all markets, dismantle labor rights and protections, reduce living standards so as to create a cheaper labor force capable of competing with Asia, and increase finance for research and development to spur high-tech growth. Among the major "priorities" were making workers "more adaptable and labour markets more flexible." No doubt, Barroso's audience of bankers and financiers agreed with him.
It should be noted that the top leadership of the IIF are frequently Bilderberg members and participants, and that other speakers invited to the IIF's Spring meeting included "senior government officials from Brazil, Chile, China, Slovakia, Spain and the U.K.," as well as "leading international economists," the managing director of the IMF, and the former president of Mexico.
In 2007, Barroso publicly commented on the unique nature of the European Union, referring to it as "the first non-imperial empire," and explaining: "We are a very special construction unique in the history of mankind… Sometimes I like to compare the E.U. as a creation to the organization of empire. We have the dimension of empire."
Barroso became a globally influential official in the spring of 2009, as the world grappled with the repercussions of the financial crisis and the heads of central banks, finance ministries, international organizations and leaders of the Group of 20 met to reshape the global financial and economic order. The focus at the 2009 meeting was to design "the future of financial regulation." The Telegraph noted at the meeting that "Barroso and his team have had a quiet but immensely influential role in the whole process," as many of the words and phrases adopted in the G20's final communiqué were drafted in Barroso's Commission office, which had drafted an earlier report on the subject. Barroso declared that "we need open, competitive, market economies… with effective regulation and supervision." To accomplish this, "strong international institutions" (like his) were needed as well as "corporate governance," a global reflection of today's "economic culture of Europe."
The next and final installment in the series examines Barroso's continued role, and the role of the European Commission, from 2009 onwards.
Large Corporations Seek U.S.–European 'Free Trade Agreement' to Further Global Dominance
Large Corporations Seek U.S.–European 'Free Trade Agreement' to Further Global Dominance
The Transatlantic Trade and Investment Partnership is the latest plan of conglomerates to strengthen their grip over the planet.
By: Andrew Gavin Marshall
Originally posted at: AlterNet
The Transatlantic Trade and Investment Partnership (TTIP) is the latest corporate-driven agenda in what is commonly called a "free trade agreement," but which really amounts to 'cosmopolitical corporate consolidation': large corporations dictating and directing the policies of states – both nationally and internationally – into constructing structures which facilitate regional and global consolidation of financial, economic, and political power into the hands of relatively few large corporations.
Such agreements have little to do with actual 'trade,' and everything to do with expanding the rights and powers of large corporations. Corporations have become powerful economic and political entities – competing in size and wealth with the world's largest national economies – and thus have taken on a distinctly 'cosmopolitical' nature. Acting through industry associations, lobby groups, think tanks and foundations, cosmopolitical corporations are engineering large projects aimed at transnational economic and political consolidation of power… into their hands. With the construction of "a European-American free-trade zone" as "an ambitious project," we are witnessing the advancement of a new and unprecedented global project of transatlantic corporate colonization.
The Atlantic Fortress as "Grand Strategy"
In a 2006 article for Der Spiegel, Gabor Steingart suggested that, "to combat the rise of China and Asia," the "role NATO played in an age of military threat could be played by a trans-Atlantic free-trade zone in today's age of economic confrontation." With the possible "addition of Canada," the US and EU "could stem the dwindling of Western market power by joining forces… [which] would inevitably lead to a convergence of the two economic systems." In a process that would likely take decades, "a mega-merger of markets" would send a "new message" to the East, to "serve as a fortress."
During the worst of the initial financial and economic crisis in January of 2009, Henry Kissinger wrote an article for the New York Times in which he noted that America's "prescription for a world financial order has generally been unchallenged," though the crisis had changed this, as "disillusionment" became "widespread." Nations now wanted to protect themselves from the global markets and thus, become more independent. Kissinger warned against this, proclaiming: "An international order will emerge if a system of compatible priorities comes into being. It will fragment disastrously if the various priorities cannot be reconciled… The alternative to a new international order is chaos."
Kissinger noted that the economic world was "globalized," yet the political world was not, and in the midst of "political crises around the world" accelerated by "instantaneous communication," the political and economic systems had to become "harmonized in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units." President Obama's election victory was an "opportunity" in "shaping a new world order." But that opportunity had to become "a policy" as manifested through "a grand strategy." A central facet to that grand strategy would include the strengthening of the "Atlantic partnership," which "will depend much more on common policies."
Some four years later, former U.S. National Security Advisor Zbigniew Brzezinski praised the "enormous promise" in the new transatlantic agreement, "It can shape a new balance between the Pacific and the Atlantic oceanic regions, while at the same time generating in the West a new vitality, more security and greater cohesion." Not worth mentioning, apparently, was that this was all about "cohesion" of power interests. In the same speech where Brzezinski endorsed "greater cohesion" between the U.S. and the European Union, he criticized the EU for being "a Europe more of banks than of people, more of commercial convenience than an emotional commitment of the European peoples."
It's the type of "cohesion" that only bankers, corporations, and "grand strategists" like Kissinger and Brzezinski could like. So naturally, such an agreement has a great deal of support, encouragement, and organized planning. While the idea of 'transatlantic integration' has long been on the lips and in the documents of grand strategists and corporate-financed think tanks, it kept its distance from formal policy. In 2007, the EU-US summit meeting of leaders – US President Bush, German Chancellor Angela Merkel, and European Commission President José Manuel Barroso – established the Transatlantic Economic Council (TEC) to promote economic cooperation between the two regions.
The economic crisis itself delayed any progress from taking place, as countries focused on rescuing their banks and imposing austerity measures in order to punish their populations into poverty, privatize society, and create the conditions ripe for unhindered plundering of resources and exploitation of labour. This is called "structural reform." But structural reforms only show "success" when corporations begin profiting from them. That's called an "economic recovery." There is an entire language to the European debt crisis – and to political economy in general – which, when translated, helps to elucidate the rationality of policy choices.
Political Language: Words or Weapons?
As George Orwell once wrote: "Political language… is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind."
In a world undergoing radical transformations in political, economic, and social structures and relations – from the Arab Spring, the global economic crisis, food crisis and land grabs, to the global spread of protest movements – political language becomes weaponized. Hiding behind seemingly meaningless words, obscured by over-used rhetoric and abstract, undefined terms and concepts, political and economic language function by preventing the population from understanding the true meaning and implications of the policies pursued.
Take, for example, the word 'austerity.' It has been used endlessly – in rhetoric and policies – as the 'solution' to the economic, financial, and debt crises, but it's meaning is obscured as an abstract notion of cutting public spending in order to decrease the debt, and thus, increase investor confidence in the country. This is supposed to lead to an economic "recovery." The problem is that it doesn't: it leads to a very deep depression. Yet, the policies continue to be promoted and pursued.
What can one deduct from this? If the rhetoric promotes specific policies for a desired effect, and the desired effect is never met, yet the rhetoric and policies continue to be promoted, we can assume one of two things: either, as Einstein defined it, the world's decision-makers are all insane ("doing the same thing over again, expecting different results"); or, they are simply speaking a different language, and we lack an understanding of it. In such circumstances, it is helpful to attempt translating this language.
The policies of 'austerity' include firing public sector workers, cutting spending on health care, education, welfare, social services, pensions, increasing the retirement age, increasing taxes and decreasing wages. The results, inevitably, is impoverishment of the general population, increased unemployment, the elimination of health and social services when needed most, increased cost of living and decreased standards of living. Thus, we can loosely translate 'austerity' as impoverishment, since that is what the actual effects of the policies have.
In March 2010, the OECD (Organisation for Economic Co-operation and Development) suggested Europe undertake a program of austerity lasting for no less than six years from 2011 to 2017, which the Financial Times referred to as "highly sensible." In April of 2010, the Bank for International Settlements (BIS) – the central bank to the world's central banks – called for European nations to begin implementing austerity measures. In June of 2010, the G20 finance ministers agreed: it was time to enter the age of austerity! German Chancellor Angela Merkel, the European midwife of austerity, set an example for the EU by imposing austerity measures at home in Germany. The G20 leaders met and agreed that the time for stimulus had come to an end, and the time for austerity poverty was at hand. This was of course endorsed by the unelected technocratic president of the European Commission, José Manuel Barroso.
The unelected president of the European Council, Herman Van Rompuy, also agreed, explaining in his unrelenting economic wisdom that austerity "has no real effect on economic growth." Jean-Claude Trichet, president of the European Central Bank (ECB), also hopped on the austerity train, writing in the Financial Times that, "now is the time to restore fiscal sustainability." Jaime Caruana, General Manager of the Bank for International Settlements (BIS) stated in June of 2011 that the need for austerity was "more urgent" than ever, while BIS chairman, Christian Noyer, also the governor of the Bank of France (and board member of the ECB), stated that apart from austerity, "there's no solution possible" for Greece.
But of course, austerity is not complete without its sister-program of 'structural reform' (or 'structural adjustment'), which includes policies aimed at privatizing all state-owned assets, resources, and services, the dismantling of labour and environmental protections and regulations, the opening of new 'markets,' and enormous subsidies and protections for multinational banks and corporations.
Why is this done? To promote investment, competition, and growth. Privatizing everything in sight – including airports, land, water management, roads and resources – encourages investment because corporations can come in and purchase national assets for pennies on the dollars. Indeed, most privatization programs include enormous subsidies and protections for corporations in order to provide an incentive for them to invest. And competition is best promoted by allowing just a handful of transnational conglomerates to cheaply acquire a nation's wealth and resources, and then by promoting what's called "labour flexibility." These 'reforms' mean that workers' rights are to be dismantled, cutting wages, benefits, protections, the ability to unionize and make demands, to make the labour force flexible to the demand of big business, who demand little more than a cheap labour force (as well as absolute control of the global economy). Thus, across markets – Europe for the EU, North America for NAFTA – and indeed, across the world, labour forces are put into competition with one another in a race to the bottom of who can be the best, and therefore, cheapest labour available – in order to attract investment and jobs.
Thus, the effect of 'structural reforms' is to facilitate the exploitation of resources and people and to consolidate economic and political power into corporate hands. Austerity thus serves the purpose of impoverishing the population to make them ready and willing to accept the structural reforms (or "adjustment") which adjust them to a situation of social devastation by making them into an employable – and cheap – labour force. Unhindered corporate plundering is facilitated by dismantling all "barriers" to investment, and thus, control of the entire economy. Austerity and structural reform create the conditions for investment, competition, and growth. Investment essentially means subsidized acquisition/control over the economy by corporations, competition implies protection for corporate interests, and growth means that corporations are making massive profits. The effect of all these policies and programs is to consolidate regional and global economic and political power into the hands of cosmopolitical corporations.
Austerity is impoverishment for populations.
Structural reform is exploitation of people/resources, and consolidation of political power in corporate hands.
Investment is corporate control of the economy.
Competition is protectionism for corporations.
Growth is corporate profits.
Mario Draghi is the president of the European Central Bank (ECB) – one of the three institutions of the 'Troika' with the European Commission and IMF – imposing austerity and structural reform measures across Europe in return for bailing out bankers. In February of 2012, he gave an interview with the Wall Street Journalin which he explained that, "there was no alternative to fiscal consolidation," meaning austerity, and that Europe's social contract was "obsolete" and the social model was "already gone." However, Draghi explained, it was now necessary to promote "growth," adding, "and that's why structural reforms are so important."
In addition to austerity and structural reforms, new markets are required, and thus, "free trade" must be promoted. This is all part of the road to 'recovery.' Free trade also has a technical definition: its policies dismantle environmental, labour, and other social protections, increase privatization, deregulation, and include large subsidies and protections for corporations. And today's 'free trade' agreements grant unprecedented rights to corporations to sue governments directly for having laws or regulations which corporations view as "barriers to investment." Free trade thus promotes competition between populations – in a race to the bottom – and protection for the powerful, for corporations and banks. What we call free trade agreements essentially function as a process of corporate colonialism: the regional and global consolidation of financial, economic, political and social power into relatively few corporate hands.
With the onset of the global economic crisis in 2008, countries turned to bailouts to rescue the large banks that destroyed their economies. In doing this, they accumulated large debts, handing the bill to the populations. The people pay for the debts through austerity, and thus, poverty, which in turn necessitates structural reform, and thus, exploitation. Free trade agreements like the Trans-Pacific Partnership (TPP), being negotiated between 12 Pacific-rim countries, facilitate transnational corporate colonialism.
A new corporate world is emerging, and the transatlantic partnership is a centerpiece in constructing this 'new world order.' While the crisis had initially stalled the process, it was revived at the EU-US summit meeting in November of 2011, when political leaders ordered the Transatlantic Economic Council (TEC) to create a High-Level Working Group on Jobs and Growth, led by U.S. Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht, "tasked to identify policies and measures to increase U.S.-E.U. trade and investment to support mutually beneficial job creation, economic growth, and international competitiveness," by working closely with both public and private sector/corporate groups.
The Transatlantic Corporate Complex
The impetus for the Transatlantic Trade and Investment Partnership was provided by a plethora of corporate-dominated think tanks and big business organizations, including the Atlantic Council, Brookings Institution, the German Marshall Fund, BusinessEurope, the Business Roundtable, the U.S. Chamber of Commerce, and the European Round Table of Industrialists, among several others. These institutions collectively form a transatlantic corporate complex, uniting elites from major corporations, banks, think tanks, foundations, academia and policy circles in order to establish consensus on elite agendas and to provide the strategies and objectives to be implemented.
The Atlantic Council was founded in 1961 by former U.S. Secretary of State Dean Acheson and several other prominent citizens in the United States in order to help consolidate support for the 'Atlantic Alliance.' The Atlantic Council's first published volume, Building the American-European Market: Planning for the 1970s, was published in 1967, and the Council continued to publish policy papers, books, monographs and other reports throughout the 1970s.
The Atlantic Council's leadership and direction is provided by the members of its boards, consisting of the foreign policy elite of the United States as well as major cosmopolitical corporations, including the likes of Henry Kissinger, Zbigniew Brzezinski and Madeleine Albright along with executives from corporations such as Deutsche Bank, BAE, and Lockheed Martin. [For a look at some of the other names of directors and advisors, see Appendix 1]
The Atlantic Council thus represents the interests of trans-Atlantic corporate and financial interests and the foreign policy elite within the United States. Thus, what issues and agendas they promote tend to wield significant influence behind them, with extensive access to policy-makers and processes. Back in 2004, the Atlantic Council published a report, The Transatlantic Economy in 2020: A Partnership for the Future? in which they recommended increasing integration between the two economies and regions, the joint management of the world economy, and more "transgovernmental cooperation."
The German Marshall Fund of the United States was founded in 1972 with a donation from the German government to Harvard University, where 25-years prior U.S. Secretary of State George Marshall announced the Marshall Plan for Europe's economic recovery after World War II. The German Marshall Fund (GMF) "is dedicated to the promotion of greater understanding and common action between Europe and the United States," and includes a number of corporate executives, news commentators and other elites on its leadership boards [See Appendix 2].
The Business Roundtable (BRT) is an organization of CEOs from major U.S. corporations "with more than $7.3 trillion in annual revenues," according to its website. The BRT was founded in 1972 "on the belief that… businesses should play an active and effective role in the formation of public policy." The Chairman of the Executive Committee of the BRT is W. James McNerney, the president and CEO of Boeing. The Executive Committee includes the CEOs of a number of other major cosmopolitical corporations [see Appendix 3].
The European Round Table of Industrialists (ERT), founded in 1983, is an organization of several dozens CEOs of major European corporations. As Bastiaan van Apeldoorn wrote in the journal New Political Economy(Vol. 5, No. 2, 2000), the ERT "developed into an elite platform for an emergent European transnational capitalist class from which it can formulate a common strategy and – on the basis of that strategy – seek to shape European socioeconomic governance through its privileged access to the European institutions." Wisse Dekker, former Chairman of the ERT, once stated: "I would consider the Round Table to be more than a lobby group as it helps to shape policies. The Round Table's relationship with Brussels [the EU] is one of strong co-operation. It is a dialogue which often begins at a very early stage in the development of policies and directives."
The ERT was a central institution in the re-launching of European integration from the 1980s onward, and as former European Commissioner (and former ERT member) Peter Sutherland stated, "one can argue that the whole completion of the internal market project was initiated not by governments but by the Round Table, and by members of it… And I think it played a fairly consistent role subsequently in dialoguing with the Commission on practical steps to implement market liberalization." Sutherland also explained that the ERT and its members "have to be at the highest levels of companies and virtually all of them have unimpeded access to government leaders because of the position of their companies… So, by definition, each member of the ERT has access at the highest level to government." [For a list of other corporations represented on the board of the ERT, see Appendix 4]
BusinessEurope is Europe's main business group, representing 41 business federations in 35 countries with its "main task" – according to its website – being "to ensure that companies' interests are represented and defended vis-à-vis the European institutions with the principal aim of preserving and strengthening corporate competitiveness." [For a look at some of the companies that made up the Corporate Advisory and Support Group, see Appendix 5]
The U.S. Chamber of Commerce was founded in 1912 as an umbrella organization representing the voice of business throughout the United States. According to its website, the Chamber "works with more than 1,500 volunteers from member corporations, organizations, and the academic community who serve on committees, subcommittees, task forces, and councils to develop and implement policy on major issues affecting business." Their "overarching mission" is "to strengthen the competitiveness of the U.S. economy." [For a look at some of the companies represented on the board of directors of the Chamber, see Appendix 6]
The Transatlantic Business Dialogue (TABD) was formed in 1995 by the U.S. Department of Commerce and the European Commission in an effort to "serve as the official dialogue between American and European business leaders and U.S. cabinet secretaries and EU commissioners," composed of CEOs of U.S. and European transnational corporations.
Transatlantic Corporate Colonialism in Action: Shaping the Agenda
As with any "free trade" agreement (read: cosmopolitical corporate consolidation agreement), corporations must be consulted throughout the entire process to allow them to shape the agenda and encourage specific policies, to ensure that their interests are met. Think tanks employ academics and foreign policy elites to undertake studies and produce reports which advocate policies beneficial to western political and economic domination of the world. Big business groups organize the corporate community around agendas and provide a direct "voice" to the corporate world. The boards of think tanks are dominated by political and corporate elites, and once think tanks begin to establish consensus on agendas, academics and other officials from the organizations write articles or are interviewed frequently in the media (which is owned by the same corporations), to ensure that what little is said in public about such agreements is indeed, positive and encouraging.
When the Transatlantic Economic Council (TEC) created the High-Level Working Group on Jobs and Growth in November of 2011, it announced its intent to 'consult' with private sector organizations on the process of transatlantic integration.
The Transatlantic Business Dialogue (TABD) was one of the first major corporate organizations to support the announcement of the High-Level Working Group. In January of 2012, the TABD met with high level EU and US officials at the annual World Economic Forum meeting in Davos, Switzerland. They released a report, Vision for the Future of EU-US Economic Relations, which established a consensus "to press for urgent action on an visionary and ambitious agenda," as well as for the creation of a "CEO Task Force" which would "provide direct input and support the High Level Working Group."
The meeting was attended not only by the 21 members of the executive board of the TABD (all corporate executives), but officials representing the Atlantic Council, the Canadian Council of Chief Executives (CCCE), the US Chamber of Commerce, World Trade Organization Director-General Pascal Lamy, US Trade Representative Ron Kirk, European Commissioner for Trade Karel De Gucht, European Commissioner for Competition, Joaquin Almunia; Jon Leibowitz, chairman of the Federal Trade Commission, and Michael Froman, Obama's Deputy National Security Advisor for International Economic Affairs.
That same month, the TABD and the Business Roundtable (BRT) released a joint statement outlining their "vision" of a Transatlantic Partnership (TAP) – modeled along similar lines as the Trans-Pacific Partnership (TPP) – which would require a further "opening" of the trans-Atlantic market, being able to "compete" with other major economies (such as China), and "deepening the multilateral commitment to open markets." As major CEOs and executives, the statement wrote, "we need nothing less" than a "strategic vision and structure [which] will need to serve as a global template."
In February of 2012, the German Marshall Fund released a report from the Transatlantic Task Force on Trade and Investment entitled, A New Era for Transatlantic Trade Leadership. The task force was co-chaired by Ewa Bjorling, the Swedish Minister for Trade, and Jim Kolbe, a former U.S. Congressman and Senior Transatlantic Fellow at the GMF. [For other members of the Task Force, see Appendix 7] The Task Force was launched as a cooperative effort between the German Marshall Fund and the European Centre for International Political Economy (ECIPE) in May of 2011.
The report called for the EU and US to pursue "deeper transatlantic economic integration" as "essential for recovery from the current economic crisis." The report called for "high-level commitment from political leaders on both sides of the Atlantic" and "it will require active involvement of private sector stakeholders," or in other words, corporations.
In March of 2012, BusinessEurope released a report to contribute to the EU-US High Level Working Group entitled, Jobs and Growth: Through a Transatlantic Economic and Trade Partnership, in which it was recommended to eliminate tariffs and barriers, to trade in services, ensure access and protection for investments, "opening markets," to establish "global standards" for intellectual property rights, and to build on the Transatlantic Economic Council (TEC) for regulatory cooperation.
That same month, the U.S. Chamber of Commerce sent a letter to Congress in which the U.S. Chamber, BusinessEurope, American Chamber of Commerce to the European Union, the Business Roundtable, European-American Business Council, the Trans-Atlantic Business Dialogue, and several other big business associations called upon political leaders "to move swiftly to deepen the transatlantic economic and commercial relationship through ambitious trade, investment, and regulatory policy initiatives." Thus, in the midst of an economic and social crisis created by the very corporations and banks these associations represent, and with the emergence of new economic giants like China and India, "we believe now is the time to create a barrier-free transatlantic market to drive the job creation and growth" that Europe and America "urgently need."
The High Level Working Group – chaired by USTR Ron Kirk and EU Trade Commissioner Karel De Gucht – should have a "far-reaching" agenda, the statement wrote, which would cover: "tariff and non-tariff barriers to trade in goods and services, investment, regulatory cooperation, intellectual property protection and innovation, public procurement, cross-border data flows, and business mobility." The statement noted that they had received "support" from Angela Merkel, David Cameron, and then-President of France Nicolas Sarkozy, as well as from the European Council (presided over by Herman van Rompuy). From the American side, support was given by Hillary Clinton.
In May of 2012, the Business Roundtable, European Round Table of Industrialists and the Trans Atlantic Business Dialogue sent a joint letter to President Obama, French President Francois Hollande, German Chancellor Merkel, Italian PM Mario Monti, UK prime minister David Cameron, European Commission president José Manuel Barroso, European Council president Herman Van Rompuy, EU Trade Commissioner De Gucht and USTR Ron Kirk. The letter noted that the three organizations of corporate executives from across the Atlantic "have come together to lay out a strategic vision for a new Transatlantic Partnership (TAP)," and they together produced the report, Forging a Transatlantic Partnership for the 21st Century, to do just that. The report called for US and EU officials to launch "ambitious and comprehensive transatlantic trade, investment and regulatory negotiations by the end of this year."
That same month, just to press the message, the presidents of the US Chamber of Commerce, the Business Roundtable, and the National Association of Manufacturers sent a joint letter to Obama urging him to launch negotiations to "trail blaze a true 21st century trade, investment, and regulatory cooperation initiative," which apart from further integrating the economies, would also "have important benefits for defense and military cooperation as well."
In June of 2012, Obama's Export Council sent him a letter applauding the president for establishing the High Level Working Group the previous year, but urged him to "take the critical next step, in consultation with the private sector, to move forward quickly to define and launch a comprehensive and ambitious Transatlantic Partnership (TAP) negotiation." They recommended the usual protections for intellectual property rights, liberalization of services, "elimination of industrial and agricultural goods tariffs," among many things. The letter was signed by Export Council chairman Jim McNerney, the president and CEO of the Boeing Company.
The U.S. President's Export Council (PEC) "is the principal national advisory committee on international trade," founded in 1973, consisting of 28 private sector members, as well as Congress members and cabinet secretaries. The PEC reports to the president through the U.S. Secretary of Commerce. [For a list of corporations represented by the PEC, see Appendix 8]
Not wasting any time, the High Level Working Group on Jobs and Growth released their interim report to their leaders in June of 2012 from the co-chairs, De Gucht and Kirk. Among other things, they recommended the "elimination" of "barriers to trade" in goods, services, and investment. They recommended a "comprehensive agreement" which "could promote a forward-looking agenda for multilateral trade liberalization." The "aim" of the negotiations, they wrote, would be to "bind" the EU and US "at the highest level of liberalization" and "achieve new market access." They were taking the recommendations from corporate groups seriously, and pushing those words into policies.
Paula Dobriansky, a prominent academic at the Atlantic Institute, co-authored an article for the Wall Street Journal in which she called for "a trans-Atlantic free-trade agreement" between the EU and US in order to "strengthen American and European leadership for decades to come." Frances Burwell, Atlantic Council vice president and director of the Program on Transatlantic Relations published an article for US News & World Report in November of 2012 in which she wrote that "creating a single transatlantic market… makes a great deal of sense."
In November of 2012, then-Secretary of State Hillary Clinton gave a speech to the Brookings Institution entitled, U.S. and Europe: A Revitalized Global Partnership, in which she noted: "we have to realize the untapped potential of the transatlantic market… is as much a strategic imperative as an economic one." Informing the audience that the Obama administration was "discussing possible negotiations" with the EU on such an agreement, Clinton said it "would shore up our global competitiveness for the next century."
Also in November, Atlantic Council board member James L. Jones (former U.S. National Security Advisor to Barack Obama) and Thomas J. Donohue (President and CEO of the US Chamber of Commerce) co-authored an article for Investor's Business Dailyin which they suggested that the simultaneous economic crises in Europe and the U.S. – which they defined as "flagging competitiveness, unsustainable entitlement spending, and the ticking time bomb of oversize sovereign debt" – were a threat to the future of NATO's ability to "tackle urgent security threats" and that this poses "the greatest challenge to the future of the trans-Atlantic community since the Cold War."
Sustainable growth, they wrote, "only comes from one place – the private sector." Governments have a "responsibility… to create conditions in which the private sector can drive economic expansion, investment and job creation." An "ambitious trans-Atlantic economic and trade pact" would certainly fit this prescription of increasing "growth" and "competitiveness." It was time, they wrote, "to move decisively to the next level of trans-Atlantic economic integration."
Within days of Obama winning his re-election, European leaders such as David Cameron and Angela Merkel urged him to move forward with the agreement, and the New York Times even noted that "corporations and business groups on both sides of the Atlantic are also pushing hard for a pact." Former deputy U.S. trade representative and current vice president at General Electric, Karan Bhatia, noted: "This could be the biggest, most valuable free-trade agreement by far, even if it produces only a marginal increase in trade."
The Financial Times said that a "transatlantic partnership" would yield "geostrategic benefits," since the EU and US account for half the world's economy, and thus, they will "possess the leverage to set the global standards that others, including China, are likely to follow." Since "both the EU and US are desperate for new growth," wrote Edward Luce, the "only realistic route is via higher productivity," implying cheaper costs and larger profits for corporations. It would be "an ambitious agenda for transatlantic market integration" including harmonizing regulations and product standards. In other words, wrote Luce: "if a drug were approved by the European Medicines Agency, the Food and Drug Administration would accept it too." The same would apply for "financial regulation" (or lack thereof), as well as agricultural (GMO) standards, a key issue, since the EU has a ban on such products. The EU had recently shown its enthusiasm for change when it "dropped its objections to imports of US meat from abattoirs [slaughterhouses] decontaminated with lactic acid." In the EU, "the climate of austerity ought to work in their favour" for reducing protections to do with agriculture.
In January of 2013, the Brookings Institution sent a 'memorandum to the president' to Barack Obama entitled, Free Trade Game Changer, in which the authors recommended pursuing both the Trans Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA) as "the most realistic way to reclaim U.S. economic leadership." The agreements have "deep strategic implications" since they would provide the US with a leading "role in setting the global rules of the road." While the TPP "would help define the standard for economic integration in Asia," the TAFTA "would give American and European businesses an edge in setting industrial standards for tomorrow's global economy." While "the erosion of support for FTAs [free trade agreements] in Congress and among the public is likely to hamper this effort," the memo reminded Obama that public opinion must be disregarded in the corporate interest: "the time has come to launch new initiatives in these spheres."
In early 2013, the Trans-Atlantic Business Dialogue merged with the European-American Business Council to become the Transatlantic Business Council (TBC), a group consisting of corporate executives who hold "semi-annual meetings with U.S. Cabinet Secretaries and European Commissioners (in Davos and elsewhere)," acting as the "business advisor to the Transatlantic Economic Council (TEC)." It represents some 70 major corporations, including: AIG, AT&T, BASF, BP, Deutsche Bank, EADS, ENI, Ford, GE, IBM, Intel, Merck, Pfizer, Siemens, TOTAL, Verizon, and Xerox, among others.
In January of 2013, the Transatlantic Business Council (TBC) met in Davos, Switzerland during the annual World Economic Forum, holding a meeting with high level officials in the U.S. and E.U. Michael Froman, President Obama's Deputy National Security Advisor for International Economic Affairs, spoke at the TBC meeting, declaring that "the transatlantic economy is to become the global benchmark for standards in a globalized world." Froman and the leaders of the TBC "agreed that support from corporations operating on both sides of the Atlantic is crucial to advance transatlantic trade."
Tim Bennett, the Director General of the TBC, stated that the structure of the TBC "allows for a combination of strong business message to policy makers as well as substantive input through working groups," referring to high level meetings in Washington and Brussels. Other participants at the TBC meeting included the Secretary General of the OECD, Angel Gurria, Irish Prime Minister Enda Kenny, European Commission Director-General for Trade, Jean-Luc Demarty, European Commission for Trade official, Marc Vanheukelen, and a former Citigroup executive.
On the Transnational Business Council (TBC)'s website, they promote specific think tanks as providing "resources": the Atlantic Council, Bertelsmann Foundation, Brookings Institution, Center for Transatlantic Relations, Chatham House, the German Marshall Fund, and the Peterson Institute for International Relations.
The Final Report: Time to Do What the Corporations Demand!
On February 11, 2013, the U.S.-EU High Level Working Group (HLWG) on Jobs and Growth released their final report in which they predictably recommended harmonizing standards and regulations in "a comprehensive trade and investment agreement." The report recommended "a further deepening of economic integration… to achieve a market access package that goes beyond what the United States and the EU have achieve in previous agreements." The report further recommended increasing "government procurement," a euphemism for privatization and state subsidies for corporations, noting: "the goal of negotiations should be to enhance business opportunities through substantially improved access to government procurement opportunities at all levels of government."
Two days following the publication of this report, on 13 February 2013, a joint statement was issued by Barack Obama, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso, stating: "We, the Leaders of the United States and the European Union, are pleased to announce that… the United States and the European Union will each initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership."
With the announcement of the TTIP in February, then-U.S. Trade representative Ron Kirk stated that, "[f]or us, everything is on the table, across all sectors, including across the agricultural sector, whether it is GMOs or other issues." He explained that "we should be ambitious and we should deal with all of these issues." João Vale de Almeida, the European Union ambassador to the United States, wrote in an article that "an ambitious economic agreement between us would send a powerful message to the rest of the world about our leadership in shaping global economic governance in line with our values," which is to say, corporate "values."
The German media – and government officials – erupted in admiration of the potential for this "economic NATO" in creating "the world's largest free trade zone." One German publication noted that "a new economic alliance" between NATO powers was appropriate, since "the old industrialized nations fear they are falling behind the emerging economic power of China." Another German publication noted that not only would a "trans-Atlantic free-trade zone" have major economic "benefits" and implications, "but it also makes clear that only an ever-closer West can succeed in decisively helping to determine global policy."
The corporate world expressed immediate admiration for the announced negotiations, with the chairman and CEO of Caterpillar "commending" US and EU leaders and the High-Level Working Group "for promoting much needed economic growth and job creation." The president of the Business Roundtable (BRT), John Engler, noted that the Roundtable itself "was an early advocate" for such an agreement, and that "negotiations should launch as soon as possible."
C. Boyden Gray, a member of the Atlantic Council's board of directors and former U.S. ambassador to the European Union, published a report for the Atlantic Council in February of 2013 entitled, An Economic NATO: A New Alliance for a New Global Order. Gray warned that unless the Atlantic powers "rise to the challenge… of the post-recession era together… they risk ceding to rising powers their economic and political influence." This must not be simply a "free trade agreement," but rather, the US and EU "must put economic cooperation on the same robust footing as military security… we need to create an 'economic NATO'."
The Wall Street Journal noted that the announcement "represents a nod to business interests by Mr. Obama," noting that it was less about 'trade' and more about establishing global standards. European Commission president Barroso expressed as much when he said, "this is going to be the biggest free-trade agreement ever done, [and] it will certainly have an impact on global standards." Obama's international economic policy adviser Michael Froman noted that the agreement would "further integrate our economies and help set global rules." EU trade commissioner Karel de Gucht added: "What we want to do is make an internal market between the US and EU."
The Financial Times noted that while it was "commonplace" to imagine that the future belonged to the emerging economies, "the old economic powers can still pack a punch." The agreement "promises a prize whose political value is even greater than its considerable economic benefits." Hence, we must understand these "free trade agreements" as, in actuality, cosmopolitical corporate consolidation agreements.
While U.S. Secretary of State John Kerry traveled to Berlin in late February, he endorsed the agreement, suggesting that it "can lift the economy of Europe, strengthen our economy, create jobs for Americans, for Germans, for all Europeans and create one of the largest allied markets in the world."
The German press warned that Internet activists, environmental, labour and consumer groups were "preparing to fight the treaty with all means at their disposal," as they feared that "bad compromises will be made at the expense of consumers in secret negotiations between the European Commission and the Obama administration." Enforcing equal standards for food products worries many in the EU regarding American-produced genetically engineered food products, such as corn, soybeans and beets; while intellectual property rights issues increasingly threaten the freedom of the Internet for the benefit of corporate and financial interests, such as through the failed Anti-Counterfeiting Trade Agreement (ACTA), which was overcome by a large Internet campaign and protests against it. One of the organizers for the anti-ACTA movement, Jérémie Zimmermann, stated: "Millions of citizens can be mobilized if their freedoms are threatened." Still, despite the growing unease and opposition to such an agreement, which would be based primarily around these highly contentious issues as opposed to actual "trade" or tariffs, German Chancellor Angela Merkel declared the deal as "by far our most important project for the future."
Max Baucus, the chairman of the U.S. Senate finance committee, wrote an article for the Financial Times in which he stated that the agreement was "a deal that must be done, it must be done now, and it must be done right… As chairman of the committee overseeing US trade, I will support a deal only if it gives America's producers the opportunity to compete in the world's biggest market."
Speaking at Harvard in early March, Karel de Gucht referred to the agreement as "the cheapest stimulus package you can imagine," adding that it was "a policy laboratory for the new trade rules we need – on issues like regulatory barriers, competition policy, localization requirements, raw materials and energy."
Barack Obama stated that he was "modestly optimistic" about the agreement, as the US was moving "aggressively" while the EU was "hungrier for a deal than they have been in the past." Speaking to the President's Export Council, composed of executives from major corporations acting as 'advisors,' Obama reaffirmed that, "we want our Fortune 500 companies to be selling as much as possible." John Kerry told a group of French business leaders that, "if we move rapidly… [the agreement] can have a profound impact on the rest of the world."
Robert Zoellick, former president of the World Bank, strongly endorsed the agreement, noting that it could "set a precedent" in setting standards for the global economy, adding: "We need to create a new structure for the global system." However, he warned, agriculture was "going to be one of the most difficult issues," due to the concern over genetically modified organisms. Barroso warned that, "the EU will only go so far." Lori Wallach, the director of Public Citizen's Global Trade Watch observed: "This whole negotiation is about eliminating 'trade irritants' but in the US consumer movement we envy and admire and seek to emulate the European food safety standards, while industry is seeking to kill them."
In April of 2013, a "coalition" was launched to promote the Transatlantic Trade and Investment Partnership called the Business Coalition for Transatlantic Trade (BCTT), which "seeks to promote growth, jobs, and competitiveness on both sides of the Atlantic through an ambitious, comprehensive and high-standard trade and investment agreement." The Steering Committee for the BCTT consists of a number of multinational corporations and business associations, and the secretariat is the U.S. Chamber of Commerce. The corporate co-chairs for the coalition include Amway, Chrysler, Citi, Dow, FedEx, Ford, GE, IBM, Intel, Johnson & Johnson, Lilly, MetLife, UPS, and JPMorgan Chase. Partner associations of the BCTT include the Business Roundtable, Coalition of Service Industries, the Emergency Committee for American Trade, the National Association of Manufacturers, the National Foreign Trade Council, the Transatlantic Business Council (TBC), the U.S. Chamber of Commerce and the U.S. Council for International Business. The initial objective of the BCTT was to urge the formal launching of negotiations by June or July of 2013, as well as "sustaining broad bipartisan support and on providing detailed inputs once negotiations are underway."
At the launch of the BCTT, the U.S. Chamber of Commerce's vice president and head of international affairs, Myron Brilliant, noted that there was "vast support" for the agreement "both in the government and the private sector." The business community, he explained, "is committed to assisting with the negotiation of a transatlantic agreement… and we will continue our efforts to encourage both governments to get this deal done quickly." The Business Roundtable, a member of the BCTT, endorsed the new coalition in a statement from John Engler, who explained, "we look forward to working with Congress and the Administration to ensure a comprehensive and ambitious agreement." While speaking to an American business group, the British ambassador to the United States said that financial services would also be "covered by these negotiations," noting that the U.S. and U.K. are home to "the two most significant international financial centres, on either side of the Atlantic," on Wall Street and the City of London.
According to an Obama administration official involved in the talks, the agreement "would grant corporations new political power to challenge an array of regulations both at home and abroad." Environmental, consumer, and other interest groups fear that the agreement "will lead to a rollback of important rules and put multinational companies on the same political plane as sovereign nations." This would be facilitated by an "investor-state dispute resolution" mechanism, which means that corporations could directly sue governments over what they perceive as "barriers to investment" – possibly through an international tribunal (perhaps even through the World Bank). Such a tribunal "would be given authority to impose economic sanctions against any country that violated its verdict."
Such provisions, noted a trade specialist with the Sierra Club, "elevate corporations to the level of nation states and allow them to sue governments over nearly any law or policy which reduces their future profits." These mechanisms are "terribly risky for communities, the environment, and our climate." The "dirty little secret," noted Public Citizen's Lori Wallach, "is that it is not mainly about trade, but rather would target for elimination the strongest consumer, health, safety, privacy, environmental and other public interest policies on either side of the Atlantic."
Thomas Donohue, the president of the US Chamber of Commerce, couldn't be happier. "If they made a deal tomorrow," he said in April of 2013, "US and European companies are sitting on a boatload of cash and they'd be moving this thing up as fast as they can move." Corporations would be able to make a profit faster than anticipated, he noted: "You open a door and say there's money on the other side, there's opportunity to expand, to export, to sell their products, to make partnerships… You think they're going to wait around till 2027? They'll be through the door before you know it." Donohue encouraged negotiations to begin as soon as possible, "they must, they need to," adding: "We don't need to take our time."
A Transatlantic Agenda for Austerity, Exploitation and Corporate Consolidation
On April 22, 2013, there was a conference hosted at the Federal Reserve Bank of New York in co-operation with the European Commission's Directorate General for Economic and Financial Affairs, "bring[ing] together US-and Europe-based policy makers, regulators, market analysts and academics." The aim of the conference was to "evaluate the prospects for sustainable economic growth and financial stability, and discuss challenges to transatlantic economic relations posed by the recent episodes of the economic crisis." Speakers included New York Fed president William Dudley and Vice President of the European Commission, Olli Rehn. [For a list of other participants, see Appendix 9]
William Dudley has been president of the New York Fed since 2009, when the previous president – Timothy Geithner – became Obama's Treasury Secretary. Prior to his new position, Dudley was a partner and managing director at Goldman Sachs; and currently he also serves as chairman of the Committee on the Global Financial System at the Bank for International Settlements (BIS), and is vice chairman of the Economic Club of New York.
Dudley opened the 'invitation only' event by suggesting, "in a global economy with a global financial system… regulation and supervision have a decidedly national orientation." Thus, he explained, "we [must] seek to balance our domestic needs against the benefits from having a harmonized and integrated global system." What is needed, said Dudley, is "growth." But there was "good news" in the U.S., the housing sector was re-inflating – what's called "recovering," the middle class "household sector" was struggling under a heavy debt burden (called "deleveraging"), but the banking sector was "healthier" (meaning more profitable), and "the corporate sector is highly profitable and awash in cash." That's the "good news."
A Bloomberg article from 2010 referred to the Federal Reserve Bank of New York as "a black-ops outfit for the nation's central bank," noting that it was in fact a "quasi-governmental institution," whose leadership is appointed by the major banks of Wall Street to represent their interests, and was "the preferred vehicle for many of the Fed's bailout programs." The New York Fed is actually a private bank with a great deal of public authority, and is subject to a "culture of secrecy" which was described as "pervasive." On the board of directors of the New York Fed is Jamie Dimon, the CEO of JPMorgan Chase, as well as several other bankers.
In his speech, Dudley explained that he has guided the New York Fed to purchase long-term U.S. Treasuries (U.S. government debt) and mortgage-backed securities (the same purchases which helped create the previous housing bubble) to the tune of $85 billion "each month." Noting that the United States has begun down the path of national austerity – "fiscal consolidation" – and must continue deeper, there was a "tug of war" between having a good economy and having austerity, which is a delicate way of saying that the austerity measures will destroy the economy (something the Europeans already know very well). Thus, as Dudley explained, with immense corporate and bank profits, an asset bubble, and a coming austerity-driven economic nose-dive, "the level of uncertainty about the near-term outlook in the United States remains quite high." But the United States was not geared "toward a growth path" based upon "business investment" and "trade," instead having only focused on debt-based consumption.
In Europe, however, the outlook was "less bright." But again, there was "good news," since the "peripheral countries" such as Greece, Spain, Italy, Portugal, Ireland, and others, were successfully imposing harsh austerity measures, despite resistance from the population being impoverished. This, Dudley calls, "substantial efforts to bring down their structural budget deficits." There was also progress on improving their "international competitiveness," which is to say they are opening up to exploitation and plundering, though there was still "an opportunity for further structural reforms in labor and product markets." Though of course this shouldn't be done "just in the periphery," that type of "opportunity" exists everywhere, in order to bring efficiency in exploitation, and thus, more profits: "to increase productivity and strengthen long term growth prospects."
Sadly, noted Dudley, there was also "bad news" in the EU, since the economy was "still in a recession" – or what could more accurately be described as a deep depression in the so-called "periphery" countries – where it was becoming harder to impose austerity measures and impoverish populations: "the political support for further rounds of budget-tightening has clearly lessened." Without "growth" – meaning, without corporate and financial profits – "then the political support for continued fiscal and structural adjustment could further erode." Europe also needed to pursue "deeper integration" at the governance level, and the development of a "pan-European banking union with the ECB [European Central Bank] as the primary overseer" was a "critically important next step." This will of course demand each country in the EU "to give up a small amount of sovereignty with respect to banking oversight," and hand it to the ECB, which is unaccountable and remains a driving force behind the austerity and adjustment programs. Dudley referred to this as the "one money, one market" concept.
Olli Rehn, European Commission Vice President and Commissioner for Economic and Monetary Affairs – a major driving force behind the austerity and adjustment programs – gave the keynote speech at the New York Fed conference. He began by welcoming the newly announced Transatlantic Trade and Investment Partnership, explaining that they must work hard to make it "a reality." Europe, however, is "deleveraging" – which is to say the continent is being crushed by a heavy debt burden whose owners demand 'austerity' and 'adjustment' in addition to bailouts – and this "deleveraging process is going to take time, and we need to find new sources of growth to ease the burden of adjustment." Thus, Rehn explained, "opening up global trade opportunities is so very important." While many EU countries were continuing with harsh austerity measures, "structural reforms" – which facilitate exploitation of labour and resources – "are the key to raising the growth potential of the European economy."
He finished his speech, stating: "we must stay the reform course. We need to deliver in terms of free trade, financial sector reform, structural reforms that boost growth potential, and consistent consolidation of public finances. We must do so in order to create the foundations for sustainable growth and job creation. Facing these challenges, we are indeed partners on both sides of the Atlantic."
A Call for Trans-Atlantic Resistance to Corporate Tyranny
Europe is eating itself through austerity, plunging its population into poverty while simultaneously undertaking "structural reforms" designed to facilitate the unhindered exploitation of resources, markets and labour by transnational corporations. The United States has also been implementing austerity measures, though opting instead to create fallacious 'debt dramas' involving the pompous parading of meaningless words – 'fiscal cliff' and 'sequester' – to avoid the blatant promotion of 'austerity,' which might encourage people to correctly think of Greece as an example.
So-called "free trade" agreements function as transnational austerity and 'structural reform' treaties: they grant corporations unlimited access to markets, protect them from competition, heavily subsidize them, privatize anything and everything, deregulate as much as possible, destroy the environment, and facilitate the unimpeded plundering of resources and exploitation of labour.
Make no mistake: the Transatlantic Trade and Investment Partnership (TTIP) is little more than a transatlantic corporate coup. Corporations created the demand for the agreement, lobbied and promoted the agenda with political elites, and direct the entire process, ensuring that their interests are met.
It would seem, then, that it is time for activists, intellectuals, and communities and organizations of people to reach out across the Atlantic in an effort to create an organized resistance to transatlantic corporate tyranny, consolidation and colonization.
Corporations are undertaking unprecedented drives for the accumulation of profit and power, promoting agendas and projects which re-shape the world in their image, treating governments as toys, the environment as an enemy, and impoverishing populations around the world. We are witnessing a transnational social engineering project, driven by large corporations, aimed at facilitating economic, financial, political and social consolidation into their hands.
Welcome to the era of Cosmopolitical Corporate Consolidation and Colonization.
Will you accept that as legitimate? Will you accept such an agreement? Who agreed to it? Did you? Were you consulted? Have you even heard of it before?
The real question is: will we sit passively as we are led to Extinction Inc., or will we actually stand up, organize, and do something about it?
Appendix 1: Leadership of the Atlantic Council
Among the leadership on the board of directors of the Atlantic Council are Brent Scowcroft, former U.S. National Security Adviser (to presidents Ford and Bush, Sr.), Richard Armitage, James E. Cartwright, Wesley Clark, Paula Dobriansky, Christopher Dodd, Stephen Hadley, Michael Hayden, James L. Jones, Henry Kissinger, Thomas Pickering, Anne-Marie Slaughter, James Steinberg, John C. Whitehead, and with a group of honorary directors including: Madeleine Albright, James Baker, Harold Brown, Frank Carlucci, Robert Gates, Michael Mullen, William Perry, Colin Powell, Condoleezza Rice, James Schlesinger, George Shultz, and John Warner, among others.
On the Business and Economics Advisors Group to the Atlantic Council, there are executives and management from the following companies and institutions: Deutsche Bank, Institute of International Finance, Center for Global Development, AIG, BNP-Paribas, Rock Creek Global Advisors, the Stern Group, Harvard, and the Peterson Institute for International Economics. The International Advisory Board of the Atlantic Council includes Josef Ackermann (Chairman of Zurich Insurance), Shaukat Aziz (former prime minister of Pakistan), Jose Maria Aznar (former PM of Spain), Zbigniew Brzezinski (former US National Security Advisor), and with top executives from: Occidental Petroleum, SAIC, the Coca-Cola Company, PwC, News Corporation, Royal Bank of Canada, BAE Systems, the Blackstone Group, Thomson Reuters, Lockheed Martin, Bertelsmann, Novartis, and Investor AB, among others.
Appendix 2: Leadership of the German Marshall Fund
The board of trustees of the GMF includes a host of corporate executives and news commentators, and their funding also comes from a coterie of governments, major foundations, and multinational corporations including: Bank of America Foundation, BP, Daimler, Eli Lilly & Company, General Dynamics, IBM, NATO, Rockefeller Brothers Fund, and USAID, among many others.
Appendix 3: Leadership of the Business Roundtable
Other members of the executive committee include the CEOs of Honeywell, Dow Chemical, Procter & Gamble, MasterCard, Xerox, American Express, Eaton, JPMorgan Chase, Wal-Mart, General Electric, Caesars Entertainment, Caterpillar, McGraw-Hill, State Farm Insurance, AT&T, Frontier Communications, and ExxonMobil.
Appendix 4: Leadership of the ERT
As of 2013, members of the ERT included the CEOs of Ericsson, Siemens, Telecom Italia, BASF, Nestlé, Repsol, ThyssenKrupp, TOTAL, Rio Tinto, Fiat, Nokia, EADS, ABB, Lafarge, GDF SUEZ, BMW, Eni, BP, Royal Dutch Shell and Investor AB, among many others.
Appendix 5: Corporate Partners of BusinessEurope
BusinessEurope counts among its "partner companies," notable multinational conglomerates that make up the Corporate Advisory and Support Group who "enjoy an important status within BUSINESSEUROPE," including: Accenture, Alcoa, BASF, Bayer, BMW, BP, Caterpillar, Diamler, DuPont, ExxonMobil, GDF Suez, GE, IBM, Microsoft, Pfizer, Shell, Siemens, Total, and Unilever, among many others.
Appendix 6: Companies Represented on the Board of the US Chamber of Commerce
The board of directors of the Chamber includes top executives and representatives from the following institutions and corporations: Accenture, Allianz of America, AT&T, Pfizer, FedEx, The Charles Schwab Corporation, Xerox, Rolls-Royce North America, Dow Chemical, Alcoa, UPS, Caterpillar, New York Life Insurance Company, Deloitte, the Carlyle Group, 3M, Duke Energy, Siemens, Verizon, IBM, and Allstate Insurance, among many others.
Appendix 7: Task Force Members
Other task force members represented such institutions as: Tufts University, Foreign Policy magazine, Standard Chartered Bank, the Business and Industry Advisory Committee to the OECD, Facebook, a former EU Ambassador to the US, a former senior VP of the World Bank, Deloitte Touche, and Susan Schwab, a former United States Trade Representative.
Appendix 8: Corporate Representatives on the PEC
Obama's PEC includes CEOs and executives from Boeing, Xerox, Dow Chemical, UPS, Walt Disney Company, Warburg Pincus, Caesars Entertainment, Ford, Verizon, JPMorgan Chase, Ernst & Young, and Archer Daniels Midland, among others.
Appendix 9: Participants in New York Fed Conference
The program for the event was to include opening remarks from the president of the New York Fed, William Dudley, and would also include the EU's ambassador to the United States, Joao Vale de Almdeida; the European Commission's director-general for Economic and Financial Affairs, Marco Buti; and individuals from Columbia University, Johns Hopkins School of Advanced International Studies, MIT, the Brookings Institution, University of Cambridge, the EU-based think tank Bruegel, Morgan Stanley, European Banking Authority, former Federal Reserve Chairman Paul Volcker was chair of the panel on 'Transatlantic Dimensions of Financial Reform,' and with Olli Rehn, Vice President of the European Commission and Commissioner for Economic and Monetary Affairs (a central figure of the 'austerity' hierarchy) as the 'keynote' speaker.
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Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada. He is Project Manager of The People's Book Project, head of the Geopolitics Division of the Hampton Institute, Research Director for Occupy.com's Global Power Project and hosts a weekly podcast show at BoilingFrogsPost.
Austerity, Adjustment, and Social Genocide: Political Language and the European Debt Crisis
Austerity, Adjustment, and Social Genocide: Political Language and the European Debt Crisis
By: Andrew Gavin Marshall
The following is a sample analysis from my upcoming book on the global economic crisis and global resistance movements. Please consider donating to The People's Book Project to help support the effort to finish this book.
Political language… is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.
– George Orwell, "Politics and the English Language," 1946
Political language functions through euphemism, by employing soft-sounding or simply meaningless words to describe otherwise monstrous and vicious policies and objectives. In the European debt crisis, political language employed by politicians, economists, technocrats and bankers is designed to make policies which create poverty and exploitation appear to be logical and reasonable. The language employed includes the words and phrases: fiscal austerity/consolidation, structural adjustment/reform, labour flexibility, competitiveness, and growth. To understand political language, one must translate it. This requires four steps: first, you look at the rhetoric itself as inherently meaningless; second, you examine the policies that are taken; third, you look at the effects of the policies. Finally, if the effects do not match the rhetoric, yet the same policies are pursued time and time again, one must translate the effects as the true meaning of the rhetoric. Thus, the rhetoric has meaning, but not at face value.
The debt crisis followed the 2007-2009 financial crisis, erupting first with Greece, then Ireland, Portugal, Italy and Spain, and threatens even to spread elsewhere. Of those mentioned, only Italy has not received a bailout. Though whether "bailed out" or not, Europe's people are being forced to undergo "austerity measures," a political-economic euphemism for cutting social spending, welfare, social services, public sector jobs, and increased taxes. The aim, they are told, is to get their "fiscal house in order." The people protest, and go out into the streets. The state responds by meeting the people with riot police, batons, tear gas, pepper spray, and rubber bullets. This is called "restoring order."
The effects of austerity are to increase poverty, unemployment, and misery. People are fired from the public sector, welfare and social benefits are reduced or lost, retirement ages are increased to keep people in the work force and off the pension system, which is also cut. Cuts to health care and education take a social and physical toll; as poverty increases the need for better health care, that very system is dismantled when it is needed most. Taxes are increased, and wages are decreased. People are deeper in debt, and destined for destitution. The objective, we are told, is to reduce public spending so that the government can reduce its deficit (the yearly debt).
In Europe, austerity has been the siren call of all the agencies, organizations, and individuals who represent the interests of elite financial control. In March 2010, the OECD (Organisation for Economic Co-operation and Development) suggested Europe undertake a program of austerity lasting for no less than six years from 2011 to 2017, which the Financial Times referred to as "highly sensible." In April of 2010, the Bank for International Settlements (BIS) – the central bank to the world's central banks – called for European nations to begin implementing austerity measures. In June of 2010, the G20 finance ministers agreed: it was time to enter the age of austerity! German Chancellor Angela Merkel, the European midwife of austerity, set an example for the EU by imposing austerity measures at home in Germany. The G20 leaders met and agreed that the time for stimulus had come to an end, and the time for austerity poverty was at hand. This was of course endorsed by the unelected technocratic president of the European Commission, José Manuel Barroso. The unelected president of the European Council, Herman Van Rompuy, also agreed, explaining in his unrelenting economic wisdom that austerity "has no real effect on economic growth." Jean-Claude Trichet, president of the European Central Bank (ECB), also hopped on the austerity train, writing in the Financial Times that, "now is the time to restore fiscal sustainability." Jaime Caruana, General Manager of the Bank for International Settlements (BIS) stated in June of 2011 that the need for austerity was "more urgent" than ever, while BIS chairman, Christian Noyer, also the governor of the Bank of France (and board member of the ECB), stated that apart from austerity, "there's no solution possible" for Greece.
In April of 2011, the two president of the EU – Barroso and Van Rompuy – felt it was necessary to clarify (just in case people were getting the wrong idea), that: "Some people fear this work is about dismantling the welfare states and social protection… Not at all … It is to save these fundamental aspects of the European model… We want to make sure that our economies are competitive enough to create jobs and to sustain the welfare of all our citizens and that's what our work is about." However, the following year, the new European Central Bank president, Mario Draghi (former governor of the Bank of Italy), stated in an interview with the Wall Street Journal that, "there was no alternative to fiscal consolidation," meaning austerity, and that Europe's social contract was "obsolete" and the social model was "already gone." However, Draghi explained, it was now necessary to promote "growth," adding, "and that's why structural reforms are so important."
Thus, "austerity packages" will then prepare the state and economy for the next phase, which, we are told, would make the country "competitive" and create "growth." This is how the country would pay off its total debt, which deficits merely add to. This process is called "structural adjustment" (or "structural reform") and it requires "competitiveness" to facilitate "growth."
As we can loosely translate "austerity" into poverty, we may translate "structural adjustment" into exploitation. After all, nothing goes better with poverty than exploitation! How does "structural adjustment" become exploitation? Well through competitiveness and growth, of course! Structural adjustment means that the state liberalizes the economy, so everything is deregulated, all state-owned assets are privatized, like roads, hospitals, airports, rivers, water systems, minerals, resources, state-owned companies, services, etc. This, as the story goes, will encourage "investment" in the country when it "needs it most." This idea suggests that foreign banks and corporations will enter the "market" and purchase all these wonderful things, explaining that they work better when they are "competitive" in the "free market," and then with their new investments, they will create new industries, employ local people, revive the economy, and with the "trickle down" from the most productive and profitable, all of society will rise in living standards and opportunity.
But first, other "structural adjustment" measures must be simultaneously employed. One of the most important ones is called "labour flexibility." This means that if you have protected wages, hours, benefits, pensions… well, now you don't! If you are a member of a union, or engage in collective bargaining (which has at its disposal the threat of a strike), soon you won't. This is done because, as the story goes, wages must be decreased to increase the competitiveness of the labour force. Simply put, if less money goes into labour during the process of production, what is ultimately being produced will be cheaper on "the market," and thus, will become more attractive to potential buyers. Thus, with lower wages comes greater profits. ECB president Mario Draghi himself emphasized that the "structural reforms" which Europe needs are, "the product and services market reform," and then "the labour market reform which takes different shapes in different countries." He added that the point was "to make labour markets more flexible and also fairer than they are today." Isn't that nice? He wants to make labour markets "fairer." What this means is that, since some countries have protections for various workers, this is unfair to the workers who have no protections, because, as Draghi explained, "in these countries there is a dual labour market: highly flexible for the young part of the population… [and] highly inflexible for the protected part of the population." Thus, "labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population." So to make the labour markets "fair," everyone should be equally exploitable, and thus, equally flexible.
Labour flexibility will then help "specialize" your country in producing one or a few select goods, which you can produce better, cheaper, and more of than anywhere else. Then your economy will have success and the lives of all will prosper and grow… just not their wages. That is left to the "trickle down" from those whose wages are increased, the corporate, banking, and government executives and managers. That is because they take all the risk (remember, you are not risking anything when you passively accept your wages and standards of living to be rapidly decreased), and thus, they should get all of the reward. And because their rewards are so huge, large scraps will fall off of their table and onto the floor, which the wage-slaves below can fight over. By the laws of what I can only assume is "magic," this will eventually lift the downtrodden from a life of poverty and labour and all will enjoy the fruits of being in a modern, technological, democratic-Capitalist paradise! Or so the fable goes.
The actual, predictable, and proven results of "structural adjustment" aimed at achieving "growth" through "competitiveness" is exploitation. The privatization of the economy allows foreign banks and corporations to come in and buy the entire economy, resources, commodities, infrastructure and wealth. Because the country is always in crisis when it does this, everything is sold very cheaply, pennies on the dollar kind of cheap. That is because the corporations and banks are doing the government and people a favour by investing in a country which is a large risk. The money the state gets from these sales is recorded as "revenue," and helps reduce the yearly debt (deficit). The result for the people, however, is that mass layoffs take place, commodity prices increase, service costs increase, and thus, poverty increases. But privatization has benefits, remember; it encourages "competitiveness." If everything was privatized, everyone would compete with each other to produce the best goods for the lowest costs, and everyone can subsequently prosper together in a society of abundance.
What actually takes place is that multinational corporations and banks, which already own most of the world's resources, now own yours, too. This is not competitive, because they are ultimately all cartels, and collude together in exploiting vast resources and goods from around the world. They do compete in the sense of seeing which one can exploit, produce, and control more than the other. But at the bottom of this system, everyone else gets poorer. This is called "competitiveness," but what it actually means is control. So if the economy needs to become more competitive, what is really being said is that it needs to come under more control, and of course, in private corporate and financial hands.
State owned industries are simply closed down, employees fired, and the product or resource which that industry was responsible for producing is then imported from another country/corporation. A corporation takes over that domestic good/resource and then extracts/produces it for itself. But this requires labour. It's a good thing that the labour force has had its back broken through austerity and adjustment, because now there are no protected jobs, wages, hours, unions, or workers' rights in general. Thus, the population is free to be exploited for long hours and minimal wages. This makes what they are producing to be cheaper, and thus, more "competitive." This can become extremely profitable for corporations and banks which took all the risk in this entire process (remember: you don't count; you had very little to begin with, so you lost very little. They have a lot, and thus, a lot more to lose. That's what risk means). If workers attempt to form unions or organize and demand higher wages, the corporation can simply threaten to close down the plant, and move the jobs to somewhere else with a more "flexible" labour force. Or, the corporation could simply hire local immigrant populations (or ship in others) and pay them less for more hours, and leave you without any jobs. This is called "labour flexibility." Labour flexibility translates as cheap labour: to bring everyone down to an equally low level of worker standards, and thus, to encourage "utilization," which means exploitation.
In the 'Third World,' this has been best achieved through what are called "Export Processing Zones (EPZs)," a term used to describe a designated area outside of state control in which corporations may establish factories to freely exploit labour as they choose. Commodities are shipped in, goods are produced in the EPZs, from where they are then exported abroad, free of pesky national taxation and regulation. Ultimately, EPZs are mini corporate colonies. In late May of 2012, it was reported that Germany was looking for "alternatives" to its exclusive focus on austerity, and subsequently came up with a six-point plan for "growth." One of the most notable points from Berlin was to establish "special economic zones to be created in crisis-plagued countries at the periphery of the euro zone," as "foreign investors could be attracted to those zones through tax incentives and looser regulations." Essentially, they are EPZs for the eurozone. The plan also calls for establishing trusts which would organize the sell-off of state assets in massive privatization schemes. Further, what is needed, according to Berlin, was to establish a "dual education system, which combines a standardized practical education at a vocational school with an apprenticeship in the same field at a company in order to combat high youth unemployment." In other words, no more academic or intellectual education for youth, but rather "vocational" or labour-oriented education, to not allow the expectations of the youth to rise too far, and to simply prepare them for a life of 'work' by attaining the necessary vocational skills. And of course, the plan for "growth" from Germany also includes more efforts at establishing "labour flexibility," which would include "a loosening of provisions that make it difficult to fire permanent employees and to create employment relationships with lower tax burdens and social security contributions." In other words: make it easy to fire workers, have lower wages, and eliminate benefits.
Economists and politicians often talk about the need to "utilize labour flexibility to increase competitiveness and achieve growth." What they are really saying is that they need to exploit cheap labour to increase control and achieve profits and power. Lucas Papademos was installed (unelected) as the "Technocratic" prime minister of Greece in November of 2011, in order to "help" Greece undertake the mandatory "reforms." Papademos was the perfect candidate for the job: he was an economist educated in the U.S., served on the board of the Federal Reserve Bank of Boston, was chief economist at the Bank of Greece, he became Governor of the bank in 1994, where he oversaw the conversion of Greece into the euro, and in 2002, he joined the European Central Bank board, where he became a Vice President under Jean-Claude Trichet.
In a 2005 interview with the Financial Times while he was Vice President at the European Central Bank (ECB), Lucas Papademos said that European "growth" potential was looking good, but added: "There is a risk that, unless there are changes in policies – more reforms in labour and product markets – as well as in the behaviour of private economic agents, this [growth] range may have to be revised downwards." He explained: "the main way that potential growth could increase is through policies that boost productivity growth and raise labour utilization by increasing the average hours worked and the participation rate in the labour market and by making this market more flexible and adaptable." In May of 2010, Bank of England governor Mervyn King stated that the eurozone needed "structural reforms, changes in wages and prices in the countries that need to regain competitiveness." Former ECB president Jean-Claude Trichet had also emphasized that what was needed was a program of fiscal austerity, "accompanied by structural reforms to promote long-term growth." In other words, what was needed was impoverishment, accompanied by exploitation to promote long-term profits.
The European Financial Stability Facility (EFSF), the Euro-area bailout fund, was headed by a man named Klaus Regling. In an article he wrote for The Banker, Regling emphasized that funds from the EFSF would come with conditions, including of course, austerity measures, but also, "structural reforms, such as modernizing public administrations, improving labour market performance and enhancing the tax systems, with the aim of increasing a country's competitiveness and growth potential." In other words, the conditions imposed on countries receiving a bailout would amount to an impoverishment program ("austerity"), combined with increased exploitation ("structural reforms"), through privatization of state industries and assets ("modernizing public administration"), creating a cheap labour force ("improving labour market performance"), extracting all remaining domestic wealth ("enhancing the tax systems"), designed to increase control ("competitiveness") and profits ("growth").
Mario Draghi, as president of the ECB, called for a "growth pact" (or a "profit pact") for Europe, to go alongside the "fiscal pact" (or "poverty pact"). This received quick endorsements from France's new president Francois Hollande, Angela Merkel, and José Manuel Barroso. Merkel was sure to emphasize, however, that growth would be "in the form of structural reforms."
The combination of "fiscal austerity" and "structural adjustment" are generally referred to as a "comprehensive structural adjustment program" or a "restructuring of the economy." This language is important to understand because "restructuring" as a word is used to describe two processes: one, is that it is what is needed to prevent a country from defaulting on its debt and to return the country to a period of growth; and, on the other hand, "restructuring" is used to describe what takes place after a country defaults. The words in both situations are the same, and so are the policies, though in a default they are inflicted more severely. The very process we are told we must undergo to prevent a default, is the very same process that we undergo after a default. Thus, the combination of fiscal austerity and structural adjustment is, in actuality, a slow and painful default.
This combination of austerity and adjustment amounts to a program and effect of social devastation. Thus, the words "structural adjustment program," "restructuring," and "default" in actuality translate into social genocide. These three terms provide further insight into their use: the class system is what is being restructured, as middle classes are wiped out and pushed into poverty, the poor are made destitute, and the elite become concentrated and in total control; the political and economic system is being adjusted to fit this restructuring; and the promise that people everywhere were told, that their leaders and society exists to serve their interests, is what is being defaulted on. The state does not default; it is the 'social contract' that is defaulted. Just as Mario Draghi told the Wall Street Journal, "the European social model has already gone… Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms." Thus, social genocide.
As George Orwell wrote in his 1946 essay, "political language has to consist largely of euphemism,
question-begging and sheer cloudy vagueness." But there remains intent and meaning behind the words that are used. When we translate the political language of the European debt crisis, it reveals a monstrous agenda of impoverishment and exploitation. Thus, we also see the necessity of political language for those who use it: one cannot argue openly for programs of impoverishment and exploitation for obvious reasons, so words like "fiscal consolidation" and "structural reform" are used, because they are vague and obscure.
Ultimately, one can get away with saying, "we need a comprehensive austerity package augmented by structural reforms, such as labour flexibility, designed to increase competitiveness and facilitate growth," as opposed to: "We need to rapidly impoverish our populations, whom we will then exploit to the fullest, such as by creating a cheap labour force, which would increase elite control and generate private profits." Such honesty and bluntness would lead to revolt, so, political language is used instead. In Europe, political language is part of a 'power dialectic' which supports policies and agendas that aim to take more for those who already have the most, and to take from all the rest; to impoverish, exploit and oppress; to plunder, profit and punish.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People's Book Project. He also hosts a weekly podcast show, "Empire, Power, and People," on BoilingFrogsPost.com.
Please donate to The People's Book Project to help this book be finished by the end of summer:
Italy in Crisis: The Decline of the Roman Democracy and Rise of the 'Super Mario' Technocracy
Italy in Crisis: The Decline of the Roman Democracy and Rise of the 'Super Mario' Technocracy
Part 1 of "Italy in Crisis", a series of excerpts from a chapter in an upcoming book.
By: Andrew Gavin Marshall
The European debt crisis continues into its third year, with four government bailouts – of Greece, Ireland, Portugal, and Spain – and having imposed harsh austerity measures upon the people of Europe, forcing them to pay – through reduced standards of living and increased poverty – for the excesses of their political and financial rulers. Italy, as Europe's third largest economy, with one of the largest debt-to-GDP ratios, plays a central role in the unfolding debt crisis across Europe. Part 1 of this excerpt from a chapter on the economic crisis in my upcoming book covers the "suspension" of democracy in Italy and the imposition of a 'Technocracy' – an unelected government led by academics and bankers – with a mandate to punish the people, facilitate the financial elite, and serve the interests of the supranational, unelected, technocratic European Union. Power centralized, power globalizes, power plunders and profits on the punishment and impoverishment of people everywhere. This is the story of Italy's debt crisis.
This is an unedited, rough draft excerpt from my upcoming book – the Preface to the People's Book Project – which is due to be finished by the end of the summer, and covers the following subjects: the origins, evolution, and consequences of the global economic crisis; the expansion and effects of global imperialism and war; the elite-driven social engineering project of establishing an institutional structure of 'global governance'; and the rising resistance of people around the world to this system, as well as the attempts of the imperial powers to co-opt, control, or destroy these socio-political movements – the embodiment of the 'Global Political Awakening' – from the Arab Spring, to the anti-austerity movements across Europe, the Indignados in Spain, the Occupy Movement, the Chilean Winter and the Maple Spring in Quebec, among others. This project needs your support: I am attempting to raise $2,500 in donations to support the efforts to finish this book by the end of the summer, with $530 raised so far, and $1,970 left to go. Please donate today!
Bilderberg, Berlusconi, and Italian Austerity
The Italian Finance Minister, Giulio Tremonti had attended the Bilderberg meeting in early June of 2011, alongside other notable Italian participants, including Franco Bernabe, CEO of Telecom Italia (and Vice Chairman of Rothschild Europe); John Elkann, the Chairman of Fiat; Mario Monti, the president of Bocconi university and a former EU Commissioner; and Paolo Scaroni, the CEO of Eni, an oil and gas company and Italy's largest industrial corporation. The Bilderberg meeting for 2011 took place from June 9-12 in Switzerland, and of course was attended by a host of other major European elites, including: Josef Ackermann, Chairman and CEO of Deutsche Bank; Marcus Agius, Chairman of Barclays Bank; the Swedish Ministers for Foreign Affairs and Trade; Luc Coene, the Governor of the National Bank of Belgium; Frans van Daele, Chief of Staff to the President of the European Council; Werner Faymann, the Federal Chancellor of Austria; Douglas J. Flint, Group Chairman of HSBC Holdings; Neelie Kroes, Vice President of the European Commission; Bernardino Leon Gross, Secretary General of the Spanish Presidency; George Papaconstantinou, the Greek Minister of Finance; Herman Van Rompuy, President of the European Council; and Jean-Claude Trichet, President of the European Central Bank, among many others.[1]
In July of 2011, Silvio Berlusconi's government announced a package of austerity measures hoping to calm markets, seeking to reduce the deficit by 40 billion euros. The package, largely designed by finance minister Giulio Tremonti, only attempted to address Italy's debt, but markets were also concerned about the country's "ultra-low-growth," which has been consistent since Berlusconi returned to office in 2001. Once the austerity measures would be signed into law, several opposition politicians were suggesting the formation of a cross-party "technical government" without Berlusconi in office.[2] The Finance Minister Tremonti announced a wave of privatizations. Apparently, the privatizations and various liberalizations were urged into the austerity package by the main opposition party, the Democratic Party (PD), not Berlusconi's Freedom People Party. The central bank governor of Italy, Mario Draghi, who was poised to become the next President of the European Central Bank (ECB) following the end of the term of Jean-Claude Trichet, warned the Italian government that "it would have to raise taxes or make further spending cuts" if it wanted to calm markets.[3] By July 14, the Italian Senate approved an increased austerity package worth 70 billion euros (or $99 billion), "aimed at convincing investors that the eurozone's third-largest economy won't be swept into the debt crisis." Italy's bonds (government debt) saw its borrowing rates (interest) hit record highs as investors were not calmed by the proposed austerity measures.[4]
Even as the austerity measures were being passed, market confidence was still lacking, which was largely credited to the fact that a rift emerged between Berlusconi and his Finance Minister Tremonti, who as a Bilderberg attendee, no doubt has the confidence of markets. Berlusconi reportedly viewed Tremonti as a "rival" and has "repeatedly attacked [Tremonti] as a traitor in newspapers owned by the Berlusconi family."[5] After Tremonti, who was facing his own corruption charges, was caught on camera calling a colleague a "cretin," Berlusconi told an Italian newspaper, "You know, he thinks he's a genius and that everyone else is stupid… I put up with him because I've known him for a long time and one has to accept the way he is. But he's the only one who is not a team player." It was opined, then, that markets reacted to this rift between the Prime Minister and the Finance Minister, as articulated by an official at F&C Investments, who stated that markets view Tremonti as the "steady counterweight to the unpredictable and capricious" Berlusconi.[6]
In July of 2011, Nichi Vendola, a popular leftist opposition political figure in Italy, wrote an article for the Guardian, in which he critiqued the austerity measures imposed by the Berlusconi government. Vendola wrote that, "Italy will not survive this crisis by listening to the very people who got us into it, especially not when they demand that the middle class and poor foot the bill for their failures." Vendola also put blame on the European managing of the crisis, as "governments now have an obsessive fixation on employing tighter control of budget deficits to satisfy the European stability pact." Vendola referred to Tremonti's austerity package as a "social catastrophe," and that instead, he suggested, what Italy must do "is turn this policy on its head," noting that, "Italy's problem is as much about growth as it is debt." To do this, Vendola wrote, it "will require a new government," and that, "Italy needs elections, because only a completely new governing class can achieve the political consensus to design and implement a plan to tackle the crisis." He suggested that the European stability pact would need to be re-negotiated, and concluded: "It does us little good to please the out-of-touch elite of our capitals while the people have to tighten their belts and our youth are robbed of their future."[7]
Mario Monti, President of Bocconi University and a former European Commissioner, also agreed that Italy needed a new government, though for different reasons (and a different type of government). He wrote an article in a major Italian paper in August of 2011 in which he advocated – as a solution to Italy's problems – the formation of a "supranational technical government" which would make all the major decisions in order to "remove the structural constraints to growth," and opined that "an Italy respected and authoritative… would be of great help to Europe."[8] Vendola wanted a new government to help the people, and Monti wanted a new government to help "Europe" (read: banks and elites). Guess who became the next leader of Italy!?
Berlusconi Bows Down to the Bankers and Punishes the People
In August, Silvio Berlusconi had to approve a new austerity package, the second in less than a month. In a letter which was leaked to the Italian press, it was revealed that Jean-Claude Trichet, the President of the European Central Bank, and Mario Draghi, the President of the Italian Central bank (from 2006 to 2011, who was set to secede Trichet at the ECB in October of 2011), put pressure on Berlusconi to "implement significant austerity measures." The letter, written by the two central bankers, demanded "pressing action… to restore the confidence of investors." Dated August 5, 2011, it was issued just days before the ECB announced its new programme to buy Italian bonds (debt), designed to reduce the country's borrowing costs (interest on future debt). One of the measures mentioned in the letter instructed Berlusconi to take "immediate and bold measures to ensuring the sustainability of public finances," to achieve a balanced budget in 2013. This was adopted in the subsequent austerity package put forward by Berlusconi in August. The letter also stated that, "it is possible to intervene further in the pension system, making more stringent the eligibility criteria for seniority pensions and rapidly aligning the retirement age of women in the private sector to that established for public employees." Further, the "borrowing, including commercial debt and expenditures of regional and local governments should be placed under tight control, in line with the principles of the ongoing reform of intergovernmental fiscal relations."[9]
In economic-speak, the letter asked for privatizations of public services: "Key challenges are to increase competition, particularly in services to improve the quality of public services and to design regulatory and fiscal systems better suited to support firms' competitiveness and efficiency of the labour market." This would require three key actions, the first of which was that, "a comprehensive, far-reaching and credible reform strategy, including the full liberalization of local public services and of professional services is needed," and that, "this should apply particularly to the provision of local services through large-scale privatizations." The second major step was "a need to further reform the collective wage bargaining system [meaning: undermine unions] allowing firm-level agreements to tailor wages and working conditions to firms' specific needs and increasing their relevance with respect to other layers of negotiations." In other words, destroy the unions so that companies can exploit labour to whatever degree they choose. And thirdly, according to Trichet and Draghi, what was needed was a "thorough review of the rules regulating the hiring and dismissal of employees [which] should be adopted in conjunction with the establishment of an unemployment insurance system and a set of active labour market policies capable of easing the reallocation of resources towards the more competitive firms and sectors."[10]
In other words, labour rights and laws and the rights of workers need to be dismantled so that companies can do as they please. It's not simply the unions that need to be destroyed, but the laws for worker security in general. Of course, no advice from central bankers would be complete if it didn't advocate that the government "immediately take measures to ensure a major overhaul of the public administration in order to improve administrative efficiency and business friendliness." Trichet and Draghi wrote that it was "crucial" that the government take these actions "as soon as possible with decree-laws, followed by parliamentary ratification," or, in other words: skip the democratic process because it takes too long, rule by decree, something Italy has a "proud" history of. All of this was demanded to be done before the end of September 2011. In an interview with an Italian paper, Trichet admitted that this was not the first time the ECB had sent such letters to governments (such as Greece), saying, "We have sent messages and we do that on a permanent basis, through various means, addressed to individual governments. We do not make them public."[11]
Indeed, the European Central Bank had demanded austerity measures be implemented by the governments of Greece, Ireland, Portugal, and Italy, and when Berlusconi submitted to the mandate from the central bankers, he complained that it made his administration look like "an occupied government." A leading liberal MP in Italy, Antonio Di Pietro, said that, "Italy is under the tutelage of the EU, and a country under tutelage is not a free and democratic one." An Irish MEP (Member of the European Parliament), Paul Murphy, stated that there had been a "massive shift away from democratic accountability since the start of the crisis," and that: "There needs to be a check on the enormous power of the ECB, which is unelected, and has basically held a government to ransom." Europe's largest trade union federation, the European Public Sector Union, "accused the ECB of directing Italian fiscal and labour policy in secret," which is, of course, true. The Deputy General Secretary of the federation, Jan Willem Goudriaan, said, "Europe cannot be governed through secret letters of bankers, officials or an unaccountable body." EU officials, from Angela Merkel, Nicolas Sarkozy, to Herman Van Rompuy and Jean-Claude Trichet, have been increasing their calls for an "economic government" of Europe, tightening and deepening fiscal integration and proposing the creation of new council's and organizations to impose sanctions on countries and "police the austerity measures of governments," and even the creation of a European finance ministry. Paul Murphy stated that, "All these proposals, discussions about economic government, are about undermining democracy in order to impose a European shock doctrine… EU elites need to remove points of pressure that can be mounted on governments. If the mass of people are opposed to austerity, they can mount pressure on governments to hold that in check. So the only way it can then be imposed s undemocratically." The head of a Belgian pro-transparency group stated that, "European powers [are] distancing themselves from voters while at the same time [there is] a growing tendency towards building closer relationships with corporate and specifically financial lobbies… These two trends are explosive and can only lead to a loss of legitimacy for the EU institutions."[12]
Shortly after, on August 12, the Berlusconi government was meeting to approve the new austerity package to meet the ultimatum from the ECB, amounting to a package of "fiscal adjustments" (i.e., spending cuts) of 20 billion euros in 2012 and 25 billion euros in 2013, with the spending cuts and tax increases to be "enacted immediately by decree, but subject to approval by parliament later," just as Draghi and Trichet instructed. The rapid tax increases did much to damage even long-time supporters of Berlusconi who had promised that he would "never put their hands in the pockets of the Italian people." Fiscal federalism was the policy of giving the various regions in Italy more control over their finances. With the new austerity package, the governor of Lombardy, Roberto Formigoni, stated, "It seems clear [fiscal] federalism has vanished."[13]
In mid-September, Berlusconi won final parliamentary approval for the 54 billion euro ($74 billion) austerity package, while police outside the parliament in Rome had to disperse protesters with tear gas. The German Economy Minister Phillip Roesler told a news briefing in Rome that, "The approval of the austerity package sends a signal of stability… I have respect for what Italy has done with its budget adjustment as this will benefit the whole euro area." The legislation simply made legal the measures that Berlusconi's government enacted through un-democratic decree the month before, and were formalized in exchange for the European Central Bank bond purchases which helped to reduce Italy's borrowing costs. Silvio Peruzzo, an economist at the Royal Bank of Scotland, stated that the plan's passage is a "very welcome step," but that the slowing global economy still cast doubts on whether Italy could "meet its fiscal targets and will also render additional corrective measures [austerity packages] very likely." Even with the endorsement and backing of the ECB, said Peruzzo, Italy's debt remained "under pressure, which is indicative of a well-rooted lack of confidence in Italy and in the European policies to tackle the crisis." One the plan was approved, said Italian Finance Minister Tremonti on September 10, "If there are things to change in our growth measures we will, and if there are things to add, we will."[14]
The Economist reported on the new austerity package, noting that while Berlusconi had approved the austerity package in Italy, designed to cut roughly 45.5 billion euros from the deficit by the end of 2013, he almost immediately back-peddled on 7 billion euros worth of spending cuts and tax increases, "notably a tax on high earners that would have hurt his natural supporters," meaning, rich people. Thus, even as the package went to the Senate in early September, Berlusconi was fine-tuning the details. Thus, noted the Economist, "the markets [were] again registering alarm," and at the same time, Italy's largest and most militant trade union federation, the CGIL, called for a one-day strike in opposition to the austerity package, "protesting over a clause making it easier to dismiss workers and, more generally, over a budget that the CGIL's leader, Susanna Camusso," referred to as "unjust because it attacks the weakest." This further worried "the market" and "investors." The Economist wrote that: "Mr. Berlusconi had consistently failed to react unless bullied. His first emergency budget in July followed a telephone call from the German chancellor, Angela Merkel," while the second was of course at the prompting of the ECB.[15]
By October of 2011, the austerity measures in Italy had been wreaking havoc, as non-profit organizations lose their funding and had major bureaucratic obstacles put in their way for community projects, such as the Associazione Obiettivo Napoli, which ran two programs working with children in difficulty in Naples since 1998, helping them clean up local communities and provide counseling. As central government funding to town halls had been cut, organizations like Obiettivo Napoli, "which sit uneasily somewhere between education, welfare and rehabilitation budgets, have been the first to suffer." Pietro Varriale, who works with the organization, commented on further obstacles put in their way: "They're saying we need a second degree in education science to be able to do this work… It's crazy. I have 15 years experience in this field, most of the team likewise, and we all have first degrees. A second degree is going to cost people a fortune, really a lot of money, and there's no help or grant for that kind of thing. We've been given till 2013 to conform." To add to that, the city of Naples simply stopped paying the bills for the organization, which had to then borrow money from a bank, forcing the employees such as Pietro to have to take on jobs working at bars, waiting tables, picking tomatoes and other piecemeal projects while they continue to work with the association being unpaid: "You keep going because of the kids, the relationships you build up."[16]
Giancarlo Di Maio, a 23-year old university graduate in Naples working at a secondhand bookshop told the Guardian that, "University here is like a car park. You stay there as long as you can, because there'll be nothing to do when you come out," referring to the lack of jobs for youth. As he was employed, he explained: "Every morning, I wake up with a smile… How fortunate am I? Because otherwise, the only other work around here is black. The black economy is a huge, monumental issue for Italy." His friends might make 30 euros for 10 hours working in a bar, or 20 euros for a night waiting tables in a restaurant. Di Maio, who works at a bookshop owned by his father, said that, "I know plenty of people in their 30s, even some in their 40s, still living with their parents… That's not normal. For me, that's one of the biggest problem [sic] in Italy – opportunities, any kind of prospects for young people." When asked about Italian politics, he replied, "We have the worst political class in Europe, no question… Twenty years of Berlusconi, and not a single reform, nothing for the unemployed, nothing to address the economic crisis. Instead we talk about his sex life… we have a political class who do nothing. They don't have solutions, and even if they did they wouldn't try to do anything. They just speak air, it's all they can do. Posturing." Expressing some hope at the Occupy movement, though lamenting how it turned to violence in Italy, he explained that people were "finally starting to get angry. They are beginning to see that really, we can't carry on like this. Italy really is sick. We can't pretend to be the doctor any more; we need curing ourselves."[17]
The Technocratic Coup
By early October 2011, it was clear that the "markets" were not satisfied with Berlusconi's efforts at implementing a program of social genocide (fiscal austerity) which was to their liking. Thus, on October 5, the international ratings agency Moody's cut Italy's credit rating for the first time in two decades, adding to the downgrading from Standard & Poor's two weeks prior. The Italian government responded that the actions of the ratings agencies were "politically motivated." Even Moody's acknowledged that the political situation within Italy played a part in its decision, including Berlusconi's sex scandals, and the growing protests against the austerity measures.[18]
The effect of the downgrades is to make Italian bonds (government debt) less attractive to buy (as it is a riskier investment), and thus, Italy would have to pay higher interest rates. As a result of that, as we have seen with Greece, this makes the country's overall debt larger (as it amounts to borrowing money to pay back borrowed money), except with the higher yields (interest rates), the future payments will be even more costly, likely to create potential for a bailout (again, just taking more debt to pay interest on older debts). All the while, the overall debt to GDP ratio increases, and austerity measures become the "conditions" for receiving bailouts, and the country is essentially taken over by the IMF, the ECB, and the EC (named the "Troika"), as occurred in Greece. This creates a permanent spiral of expanded debt, economic crisis, and social genocide. This is what is often called "market discipline."
In mid-October, opposition to Berlusconi's harsh austerity measures from within Italy was increasing, just as "market pressure" and EU-opposition from outside Italy was building against Berlusconi for his austerity measures being perceived as 'too little, too late.' Nine members of Berlusconi's own coalition said the austerity package "unfairly targets the middle class and fails to tackle Italy's massive tax evasion problem." Susanna Camusso, the head of Italy's largest and most militant labour federation, CGIL, said that a strike is the only way to "change the inequity of this package."[19] During a global "day of rage" partly inspired by the Occupy Wall Street movement in the United States and the Indignados movement in Spain, October 15 saw various Occupy and other protests erupt around the world, in 950 cities in 80 different countries. In Italy, Rome saw roughly 200,000 protesters come out into the streets, protesting against the austerity measures, the government, the EU, the ECB and the IMF. The protests erupted into violence as hundreds of those assembled began fighting with riot police, who were using tear gas and water cannons against the protesters, and several hundred erupted in urban rebellion (what is often called "riots") in which banks were destroyed, they set cars and garbage bins on fire, hurled rocks, bottles, and fireworks at the police who continually charged the crowd. Roughly two dozen demonstrators were injured, with one reported to be put in critical condition, and at least 30 riot police were injured.[20]
As Berlusconi's own government began to fracture in the face of the austerity package, disagreeing on what and how and if to cut, one of Berlusconi's main coalition partners, the center-right Northern League, hinted that new elections were a possibility. Considering the popularity of the anti-austerity leftist leader Nichi Vendola, this was perhaps too much to bear. European leaders Angela Merkel and Nicolas Sarkozy lost their patience, and in late October, demanded that Berlusconi move forward with the austerity package. In a series of EU summits in late October on handling the economic crisis, discussing specifically the plan to boost the funds of the European Financial Stability Facility (EFSF), there was concern, reported Der Spiegel, "that the current size of the (recently expanded) fund isn't sufficient should additional countries, particularly Spain and Italy, be infected with debt contagion."[21]
Following these meetings, it was made "abundantly clear" to the Italians that their "leadership is no longer taken seriously." Italian papers and TV shows were overwhelmed with covering the "condescending smile" of Angela Merkel to Berlusconi, and comments made by Sarkozy. Merkel and Sarkozy and other EU leaders told Berlusconi in the talks that he had to present a plan within three days "for reducing Italian debt more quickly than current plans call for." European Council President Herman Van Rompuy said that Berlusconi had "promised to do so." The following evening, Berlusconi stated, "No one is in a position to be giving lessons to their partners." European leaders were frustrated that even the austerity package passed earlier in the summer had not been fully implemented, and the government's stability was continually threatened over debating each new measure. The European Commissioner for Economic and Monetary Affairs, Olli Rhen, said that all the details of the new plan were "unclear." With the EU summits proposing increasing the EFSF bailout fund from 440 billion euros to 1 trillion, a central feature to the demands of the EU leaders was that countries like Italy impose more stringent austerity measures. As Der Spiegel reported, "A clear Italian commitment to austerity is a key component of that plan." There was then a good deal of conjecture over the possible departure of Berlusconi. The Italian paper Corriere della Serra reported that Angela Merkel called the Italian President Giorgio Napolitano the previous week "to discuss concerns about Italy's political leadership."[22]
In fact, Angela Merkel did make such a phone call to Italy's president Napolitano in October, violating "an unwritten rule" for Europe's leaders "not to intervene in one another's domestic politics." But this is a new, changing EU, one in which democracy – even the withering façade Western governments maintain – simply no longer matters. Merkel was "gently prodding Italy to change its prime minister, if the incumbent – Silvio Berlusconi – couldn't change Italy." The Wall Street Journal reported on the events that led to this incident, explaining that at the annual meeting of the IMF in September, China, Brazil, and the U.S. "berated" Europe for its small bailout fund, and told Europe to borrow "hundreds of billions of euros from the ECB," something Merkel had long been against, and which was refused by Jens Weidmann of the German central bank, explaining that the bailout fund "was an arm of the governments… and lending to governments was against the ECB's charter." On October 19, Sarkozy left his wife who was in labor at a clinic in Paris to fly to Frankfurt to confront Jean-Claude Trichet at a party being held for the President of the ECB to honour him as he prepared to leave the ECB at the end of the month (to be replaced by the president of the Central Bank of Italy, Mario Draghi). Sarkozy argued that the ECB needed to intervene in the bond markets (buying government debt), stating that, "Everything else is too small." Trichet said that it wasn't "the ECB's job to finance governments."[23]
The ECB had engaged already in certain bond purchases, which "had caused a political backlash in Germany," and as Trichet said, "I did a bit, and I was massively criticized in Germany." Merkel, who was present during the shouting match between Trichet and Sarkozy, was frustrated at Sarkozy's pressure on Trichet, as she had always opposed the ECB printing money to handle the crisis, telling Trichet, "You're a friend of Germany." It was the following day, on October 20, that Merkel made her "confidential" phone call to the Italian President in Rome, "the man with authority to name a new prime minister if the incumbent were to lose parliament's support." President Napolitano informed Merkel that it was "not reassuring" that Berlusconi had only "recently survived a parliamentary vote of confidence by just one vote." Merkel then thanked Napolitano for doing what was "within your powers" in promoting reform. Within days, Napolitano began "sounding out Italy's political parties to test the support for a new government if Mr. Berlusconi couldn't satisfy Europe and the markets."[24] It no doubt did not help Berlusconi when he wrote in an Italian paper in late October that the word austerity "isn't in my vocabulary."[25]
In early November, at a G20 meeting in Cannes, President Obama and other leaders were "effectively ordering Silvio Berlusconi to accept surveillance of Italy's austerity measures by the International Monetary Fund," reported the Guardian. Berlusconi was advised by Merkel, Sarkozy, Herman Van Rompuy and other EU leaders the previous week to come to the G20 with "a specific austerity package," but due to divisions within his cabinet, Berlusconi "arrived empty-handed." It was reported that Berlusconi would likely not survive a vote of confidence in the Italian parliament set for the following week. The ECB had been purchasing Italian bonds since August in order to push the yields lower, which dropped to below 5%, but by early November they had been driven up to 6.5%, "levels that make it difficult to pay back debt." Italian President Napolitano had been holding meetings with party leaders to discuss the possibility of "constructing an interim government if Berlusconi's collapses." The G20, which was discussing the possibility of adding $300 billion to the IMF's bailout fund of $950 billion, and G20 leaders pressured Italy "to sign up to a more specific austerity package or else the US and other countries would not put extra funds into the IMF."[26]
Just prior to heading to the G20 meeting, Berlusconi had attempted to issue a decree which would pass various austerity measures, "thus bypassing the parliament," but, reported the EUobserver, he "was held back by [President] Giorgio Napolitano," as well as the Finance Minister Giulio Tremonti. Instead, Berlusconi was pressured to attempt an amendment to a "law for stability" to be approved the following week, at which time he would likely face a vote of confidence. Enrico Letta, the deputy general secretary of the center-left Democratic Party (PD), the main opposition party, said that, "We think that next week will be a week in parliament where we try to force the situation if Berlusconi does not resign before."[27]
As Jean-Claude Trichet retired from the ECB at the end of October, and Mario Draghi left the Bank of Italy to take up his new job as President of the ECB, the newly-appointed governor of the Bank of Italy, Ignazio Vasco, said that Italy "needed to take urgent action to boost confidence in the economy and initiate structural reforms," insisting that the commitments already given to the EU in a "letter of intent" in late October (following Berlusconi being castigated by Merkel and Sarkozy), "must be honoured quickly and consistently."[28] At the G20 conference, Berlusconi agreed under pressure to have the IMF oversee Italy's implementation of austerity measures, following late-night talks with G20 leaders. Jose Manuel Barroso, President of the European Commission (EC), said that, "Italy had decided on its own initiative to ask the IMF to monitor. I see this as evidence of how important Italy's commitment to reform is." The EC would also monitor Italy's progress, and was set to visit Italy the following week to undertake a more detailed study. One EU source told the Telegraph that, "We need to make sure there is credibility with Italy's targets – that it is going to meet them. We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that." The chief financial officer of Commerzbank, Eric Strutz, said that, "The whole stability of Europe depends on whether Italy gets its act together."[29]
On November 8, Berlusconi suffered a party revolt in parliament which failed to deliver him a majority, and would likely lead to a vote of non-confidence a few days later. Upon this defeat, Berlusconi announced that he would resign as Prime Minister "as soon as parliament passed urgent budget reforms demanded by European leaders." President Napolitano announced that he would begin consultations on the formation of a new government, and stated that he would prefer a "technocrat or national unity government." At the same time, the "markets" had pushed Italy's bond yields (debt interest) to nearly 7%, figures that saw Greece, Ireland, and Portugal getting bailouts. The leader of the main opposition Democratic Party (PD), Pier Luigi Bersani, said, "I ask you, Mr. Prime Minister, with all my strength, to finally take account of the situation… and resign." Berlusconi and some of his close allies, however, warned that appointing a technocratic government, the option which was said to be favoured by "markets," would amount to an "undemocratic coup."[30] Naturally, that's just what happened.
Writing for the Guardian, John Hooper suggested that one of four scenarios would take place upon the event of Berlusconi's resignation: one envisions Berlusconi leaving but the right gaining a broader majority, specifically under Umberto Bossi's Northern League, who was in Berlusconi's coalition but had advised him to resign, and was pushing for him to be replaced with the next in command in Berlusconi's party, Angelino Alfano; another scenario envisioned a "grand coalition," or a "government of national emergency or salvation," bringing together all the parties; a third scenario had Italy calling an election, urged by both Berlusconi and Bossi; or the fourth option, "a cabinet of technocrats," which Hooper wrote was "favoured by the markets and the Italian centre left," which would consist of "a government filled with specialists who could pass the unpalatable legislation needed to revive Italy's flagging economy without having to worry about re-election." This happened before in Italy, when Berlusconi's government fell in 1994, at which time he was replaced by Lamberto Dini, a central banker, who headed a government of "professors, generals and judges." In this scenario, suggested Hooper, the likely prime minister would be Mario Monti.[31]
Upon Berlusconi's failure to achieve a minority during the budget vote on November 8, many officials from the financial community began making their observations, such as Jan Randolph, the head of sovereign risk analysis at HIS Global Insight, who said that, "Berlusconi has effectively lost political capital to carry the country through a period of austerity and structural reform," and that, "Berlusconi will have to resign." He went on to suggest that it was possible "that a broad National Unity government headed by a respected technocrat like ex-EU commissioner Mario Monti could be formed."[32]
As Berlusconi officially resigned on the night of November 12, 2011, he left the president's palace through a side door as a crowd of over 1,000 people outside yelled, "buffoon," "Mafioso," and for him to "face trial." A poll from early November reported that 71% of Italians favoured his resignation, and upon hearing of his official resignation, the crowd erupted in roars of "Halleluja."[33]
On November 16 of 2011, Mario Monti was appointed as Prime Minister of Italy. Monti accepted the mandate to form a new government, and was expected to appoint technical experts as opposed to politicians to his cabinet. President Napolitano told Italian politicians that, "it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work." Berlusconi's political party, the People of Liberty, said it would accept a Monti government for a short while before elections would have to be scheduled, and Berlusconi referred to his resignation as "an act of generosity."[34]
Mario Monti is an economist and academic who served as European Commissioner for the Internal Market, Services, Customs and Taxation from 1995 to 1999, and European Commissioner for Competition from 1999 to 2004. Monti is founder and Honorary President of Bruegel, a European think tank he launched in 2005, based in Belgium, and which represents the interests of key European elites. Monti has also been a member of the advisory board of the Coca-Cola Company, and was an international advisor to Goldman Sachs, was a former member of the Steering Committee of the Bilderberg Group, having previously attended the meeting in Switzerland in June of 2011, and was European Chairman of the Trilateral Commission until he resigned when he became Prime Minister of Italy.
Monti's think tank, Bruegel, represents key elite European interests. The Chairman of the Board of Bruegel is Jean-Claude Trichet, the former President of the European Central Bank (ECB) from 2003 to 2011, who is also a member of the board of directors of the Bank for International Settlements (BIS), and has joined the boards of a number of major corporations, including EADS. Other board members of Bruegel include: Jose Manuel Campa Fernandez, who was the Spanish Secretary of State for Economic Affairs at the Ministry of Economy and Finance from 2009 to 2011, and has been a consultant for the European Commission, the Bank of Spain, the Bank for International Settlements (BIS), the Federal Reserve Bank of New York, the Inter-American Development Bank, the International Monetary Fund and the World Bank; Anna Ekström, the president of the Swedish Confederation of Professional Associations, Saco, and formerly the Swedish State Secretary for the Ministry of Industry, Employment and Communication; Jan Fisher, Vice President of the European Bank for Reconstruction and Development (EBRD), former Prime Minister of the Czech Republic; Vittorio Grilli, the Deputy Minister of the Ministry of Economy and Finance of Italy (whom Monti appointed to his technocratic government in November of 2011), and a former Managing Director at Credit Suisse First Boston; Wolfgang Kopf, Vice President at Deutsche Telekom AG; Rainer Münz, head of Research and Development at Erste Group and Senior Fellow at the Hamburg Institute of International Economics (HWWI), former consultant to the European Commission, the OECD, and the World Bank; Jim O'Neill, Chairman of Goldman Sachs Asset Management; Lars-Hendrik Röller, the Director General of the Economic and Financial Policy Division of the German Federal Chancellery, and is President of the German Economic Association; Dariusz Rosati, former consultant economist at Citibank, former Minister of Foreign Affairs for Poland, former adviser to the President of the European Commission, and was a member of the European Parliament from 2004 to 2009; and Helen Wallace, a British academic expert on European integration.
In October of 2009, Mario Monti was asked by the President of the European Commission Manuel Barroso to draw up a report on how the EU should re-launch its single market. Barroso advised that the report, "should address the growing tide of economic nationalism and outline measures to complete the EU's currently patchy single market." Mario Monti was President of the Bocconi University at the time he was asked to write the report.[35] In May of 2010, Monti produced the report and officially handed it in to European Commission President Barroso. The report recommended ways to fight the potential of economic nationalism and to preserve and protect the regional bloc and to advance the process of integration, with Monti arguing that, "There is now a window of opportunity to bring back the political focus of the single market."[36] The report eventually became the EU's Single Market Act of 2011.[37]
After becoming the technocratic and unelected Prime Minister of Italy, Monti quickly appointed his new cabinet, of which more than a third of the 17-member cabinet consisted of professors and other technocrats. The cabinet position of Minister of Economic Development, Infrastructure and Transport was given to Corrado Passera, the chief executive of Italy's largest bank, Intesa Sanpaolo. Passera told the Financial Times upon his appointment as "superminister" that, "If you want to build the wide consensus that is needed, we have to share sacrifices and benefits among all the segments of society with a balanced set of actions and with the right mix of austerity and development programmes." British hedge fund manager Davide Serra stated, "Monti and Passera are the right guys for the job. They are the dream team."[38] Upon appointing his new technocratic government, Monti declared: "We feel sure of what we have done and we have received many signals of encouragement from our European partners and the international world. All this will, I trust, translate into a calming of that part of the market difficulty which concerns our country." On the lack of party representatives in his cabinet, Monti commented, "The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement."[39]
A former ambassador who worked with Monti when he was an EU Commissioner recalled Mario's style of governance, stating, "He didn't have a very Italian way of going about things… His nickname in those days was 'The Italian Prussian'." An article in Reuters described Monti as "a convinced free marketeer with close connections to the European and global policy making elite, Monti has always backed a more closely integrated euro zone," and went on to mention his leadership positions within the Bilderberg Group of "business leaders" and "leading citizens" and the Trilateral Commission, which "brings together the power elites of the United States, Europe and Japan." Monti's government would be given roughly 18 months to push through "reforms" and austerity measures, as another election would not be due until 2013. However, as one outgoing minister commented in November of 2011, "The decisions which Monti will take must pass in parliament and I think that with such a heterogeneous majority he will have many problems. I believe this solution will lead to many problems."[40]
Monti of course received abundant praise from Europe's leaders on becoming the new unelected technocratic Prime Minister of Italy. An article by Tony Barber in the Financial Times explained that Italian party politics was simply too problematic, as: "Even a centre-left government with a mandate from the voters would find it hard to maintain the unity and resolution required to implement the unpopular austerity measures and structural economic reforms demanded by Germany, France, the European Commission, the European Central Bank and the International Monetary Fund." And with the prospect of labour resistance from workers and pensioners, "it is easy to see why Europe's leaders were eager for Mr Monti to inherit the premiership." Thus, wrote Barber, "technocracy has an irresistible appeal."[41] Mario Monti himself had acknowledged that "irresistible appeal" in August of 2011, when he wrote an article in a major Italian paper advocating the formation of a "supranational technical government" which would make all the major decisions in order to "remove the structural constraints to growth," and opined that "an Italy respected and authoritative… would be of great help to Europe."[42] And as it turned out, a great help to Monti.
In early December of 2011, after forming his cabinet and being approved by Italy's lower chamber of Parliament with a rare majority, Mario Monti received the endorsement of Angela Merkel and Nicolas Sarkozy, declaring their "absolute trust" in Monti and in "his structural changes" to his governing of Italy. Monti, upon assuming power, warned Italians in a speech that, "It is not going to be easy, sacrifice will be required." As Monti's "technocratic government" is full of appointments from the ruling class, including bankers and other executives, many in Italy were raising concerns that this suggested an inherent conflict of interest in his government, as those who helped create the crisis are brought in to solve it, a highly political government, despite all the claims of an apolitical 'technocracy' (technocracies are always political entities, but instead of pushing party ideologies, they push ultra-elite ideologies in the management and maintenance of society). Monti replied that, "There is no conflict of interests… The fact that many of us have played a role in the institutions before doesn't mean that we will not be totally transparent." And with that note, Monti appointed Carlo Malinconic as undersecretary for publishing affairs, after having previously served as president of the Italian Federation of Publishing and Newspapers.[43]
Writing in the journal of the Council on Foreign Relations, Foreign Affairs, Jonathan Hopkin, a professor of comparative politics at the London School of Economics, commented that the replacement of Berlusconi with Monti "marks a new stage in the European financial crisis," in which "the crisis now seems to be wiping out democratically elected governments." Largely under pressure from bond markets, "Italian politicians have opted to hand power to technocrats, expecting that they will somehow enjoy greater legitimacy as they impose painful measures on an angry population." Hopkin stated: "This will not work."[44]
In early November, as democratically-elected governments in Greece and Italy were replaced with unelected and unaccountable technocratic governments, essentially run by and for the European Union and global banks, Tony Barber, writing in the Financial Times, suggested that this is but one of several responses to the economic crisis. Specifically, this response "involves the surgical removal of elected leaders in Greece and Italy and their replacement with technocratic experts, trusted within the EU to pass economic reforms deemed appropriate by policymakers in Berlin, the bloc's top paymaster, and at EU headquarters in Brussels." Barber referred to the "sidelining of elected politicians in the continent that exported democracy to the world" as a "momentous development." In short, "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." Thus, these policymakers "have ruled that European unity, a project more than 50 years in the making, is of such overriding importance that politicians accountable to the people must give way to unelected experts who can keep the show on the road." In Greece, the government was put under the technocratic leadership of Lucas Papademos, a former vice president of the European Central Bank, and upon accepting his appointment, stated: "I am confident that the country's participation in the eurozone is a guarantee of monetary stability." In Italy, Mario Monti came to power, a technocrat who "is revered in Brussels as one of the most effective commissioners for competition and the internal market that the EU has known." One prominent Italian banker commented: "We need a strong national unity government for one to one and a half years to do what the politicians haven't had the courage to do."[45]
Running the ECB can be such a 'Draghi'
In late October of 2011, at a gala event to mark the end of Jean-Claude Trichet's eight years as president of the European Central Bank, Mario Draghi, the governor of the Bank of Italy, who was selected to take over for Trichet at the start of November, was "working the room" of high-powered European elites, including Angeal Merkel, and IMF Managing Director Christine Lagarde. Between 1984 and 1990, Draghi was the Italian Executive Director at the World Bank, and in 1991, he became the director general of the Italian Treasury until 2001. Between 2002 and 2005, Draghi was the Vice Chairman and Managing Director of Goldman Sachs International, thereafter becoming the governor of the Bank of Italy from 2006 until 2011, also putting him on the Governing Board of the European Central Bank and the Bank for International Settlements (BIS). Draghi is not simply one of the individuals who has been most responsible for handling and managing the economic crisis, but he also played an important role in causing it. As Vice Chairman of Goldman Sachs, and in Italy at the Treasury and the central bank, "Draghi was a proponent of nations and other institutions like pension funds using derivatives to more efficiently manage their liabilities." This means that Draghi advised that governments should essentially hide their debts in the derivatives market, where they would not be viewed as liabilities, but rather, transactions. These "transactions" were very popular in Greece and Italy, and had a great deal to do with accumulating and hiding the massive debts of these countries.[46]
When Draghi led the Italian Treasury in the 1990s, he "oversaw one of the largest European privatization efforts ever and paved the way for Italy's entry into the euro," earning him the nickname, "Super Mario." Italy liberalized its financial markets, allowing for massive speculation, derivatives, and other banking excesses, and he privatized roughly 15% of Italy's economy. While Italian governments came and went during this period, Draghi always remained. While both Draghi and Goldman Sachs said that "Super Mario" did not have anything to do with the especially controversial Greece-Goldman Sachs transactions, one Goldman Sachs executive in Europe, "who was not authorized to speak publicly," told the New York Times that, "Mr. Draghi had discussed similar initiatives with other European governments." When asked about his involvement at Goldman Sachs, Draghi once replied, "I was not in charge of selling stuff to the governments… In fact, I worked in the private sector even though Goldman Sachs expected me to work in the public sector when I was hired." However, in a paper which Draghi wrote in 2002 just a couple months after being hired by Goldman Sachs, at which his job description was "to win investment banking business from European governments," Draghi argued in favour of governments using derivatives "to stabilize tax revenue and avoid the sudden accumulation of debt," which the New York Times politely described as "faithful to the spirit" of the Goldman-Greece deal.[47]
In an interview with the Financial Times in December of 2011, European Central Bank president Mario Draghi reflected upon the financial crisis and the actions taken to manage it. He explained that the ECB's long-term refinancing operation (a half-trillion euro bank bailout) was not designed to give banks an incentive to buy government bonds from the "periphery" nations, but rather, that, "the objective is to ease the funding pressures that banks are experiencing," and that the banks "will then decide what the best use of these funds is." Draghi stated that, "we don't know exactly" what banks were doing with the money, but that, "the important thing was to relax the funding pressures." Draghi reiterated that the banks "will decide in total independence what they want to do."[48]
It's interesting to note that when governments get bailouts, they are told what and how to spend the money, and are forced to impose austerity measures that destroy the social fabric and punish the populations of their countries, and then, of course, have to pay back the money at exorbitant interest rates; but when banks get a half-trillion euro bailout, the banks will "decide what the best use" of the money is, and where it goes is not important, it's only important to "relax" the pressure on the banks, who will repay the debt over a long-term period (3 years) with extremely low interest (averaging 1%). So people get pressure, and banks get pressure "relaxed."
Draghi told the Financial Times that what is needed most is to "restore confidence," and for this, there are four answers. The first one "lies with national economic policies, because this crisis and this loss of confidence started from budgets that had got completely out of control." The second answer, explained Draghi, "is that we have to restore fiscal discipline to the euro area," which means to impose austerity, "and this is in a sense what last week's EU summit started [in mid-December 2011], with the redesign of the fiscal compact." The third answer "is to have a firewall in place which is fully equipped and operational," meaning a massive bailout fund, which "was meant to be provided by the EFSF." The fourth answer, according to Draghi, is for countries "to undergo significant structural reforms that would revamp growth," implying things like liberalization, privatization, and further deregulaiton. When Draghi was asked about the critics of the fiscal compact who suggest that it amounts to a "stagnation and austerity union," Draghi replied that, "they are right and wrong at the same time." Draghi repeated the mantra of pro-austerity voices, who always suggest with no historical evidence to support, that there is "no trade-off between fiscal austerity, and growth and competitiveness." However, Draghi contended, "I would not dispute that fiscal consolidation [austerity] leads to a contraction in the short run." The correspondent with the Financial Times asked: "But these austerity programmes are very harsh. Don't [you] think that some countries are really in effect in a debtor's prison?" Draghi replied: "Do you see any alternative?"[49]
In an interview with the Wall Street Journal in February, Mario Draghi warned European countries "that there is no escape from tough austerity measures and that the continent's traditional social contract is obsolete." Draghi said that Europe's social model was "already gone," and that the only way to return to "long-term prosperity" was "continuing economic shocks [that] would force countries into structural changes in labor markets and other aspects of the economy." As European people were suffering through the increased austerity measures, Draghi warned that, "Backtracking on fiscal targets would elicit an immediate reaction by the market." This of course implies that the market has the 'right' to determine the fate of Europe's people. For Draghi, "austerity, coupled with structural change, is the only option for economic renewal." The European Commission, headed by Jose Manuel Barroso, agreed with Draghi, stating that despite forecasting a deepened recession brought on by austerity measures, governments "should be ready to meet budgetary targets." Simon Johnson, the former chief economist of the IMF, said that Draghi was "just sugarcoating the message." Johnson explained: "A lot of this structural reform talk is illusory at best in the short run… but it's a better story than saying you're going to have a terrible 10 years."[50]
In the interview, Draghi commented on the "positive changes" which had been taking place in the previous few months: "There is greater stability in financial markets. Many government shave taken decisions on both fiscal consolidation and structural reforms. We have a fiscal compact where the European governments are starting to release national sovereignty for the common intent of being together." When Draghi was asked what his view was "of these austerity policies in the larger strategy right now, forcing austerity at all costs," Draghi replied: "There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term." Then, he added, it was necessary to promote growth, "and that's why structural reforms are so important." The interviewer asked Draghi what the "most important structural reforms" were for Europe at that time. Draghi replied:
In Europe first is the product and services market reform. And the second is the labour market reform which takes different shapes in different countries. In some of them one has to make labour markets more flexible and also fairer than they are today [in other words: more easily exploited]. In these countries there is a dual labour market: highly flexible for the young part of the population where labour contracts are three-month, six-month contracts that may be renewed for years. The same market is highly inflexible for the protected part of the popuation where salaries follows seniority rather than productivity. In a sense labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.[51]
When central bankers and politicians and others talk about "labour flexibility," what they really mean is "worker insecurity." This was bluntly stated by Alan Greenspan back when he was Governor of the Board of the Federal Reserve System, when in testimony before the US Senate in 1997, he discussed how America's "favorable" economy was constructed. Greenspan discussed how wage increases for workers did not keep pace with inflation, which was, he explained, "mainly the consequence of greater worker insecurity." He elaborated: "the willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented." Greenspan credited the creation of "worker insecurity" with technological changes, corporate restructuring and downsizing, as well as "domestic deregulation."[52] The New York Times reported on this, stating that Greenspan described "job insecurity" as "a powerful recent force in the American economy," and that Greenspan, "clearly elevated this insecurity to major status in central bank policy." How does worker insecurity influence central bank policy? The article explained: "Workers have been too worried about keeping their jobs to push for higher wages… and this has been sufficient to hold down inflation without the added restraint of higher interest rates." However, Greenspan warned that even though job insecurity continues to rise, once "workers become accustomed to their new level of uncertainty, their confidence may revive and the upward pressure on wages resume."[53]
In his interview with the Wall Street Journal, Mario Draghi was asked if "Europe will become less of the social model that has defined it," to which Draghi replied: "The European social model has already gone." Draghi, repeating the mantra of so many in power, stated that, "there is no feasible trade-off between" austerity and growth: "Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms. Backtracking on fiscal targets would elicit an immediate reaction by the market." In terms of "progress" – as Draghi defines it – throughout the crisis, he praised the fiscal compact treaty as "a major political achievement because it's the first step towards a fiscal union. It's a treaty whereby countries release national sovereignty in order to accept common fiscal rules that are especially binding, and accept monitoring and accept to have these rules in their primary legislation so they are not easy to change. So that's a beginning."[54]
In further testimony in 2000, Alan Greenspan again addressed the issue of "worker insecurity," which he stipulated was the "consequence of rapid economic and technological change," which in turn created a "fear of potential job skill obsolescence." Greenspan stated that, "more workers currently report they are fearful of losing their jobs than similar surveys found in 1991 at the bottom of the last recession," and that, "greater workers insecurities are creating political pressures to reduce fierce global competition that has emerged in the wake of our 1990s technology boom." While Greenspan admitted that "protectionist policies" would "temporarily reduce some worker anxieties," he felt this was a bad idea, as "over the longer run such actions would slow innovation and impede the rise in living standards." Greenspan elaborated:
Protectionism might enable a worker in a declining industry to hold onto his job longer. But would it not be better for that worker to seek a new career in a more viable industry at age 35 than hang on until age 50, when job opportunities would be far scarcer and when the lifetime benefits of additional education and training would be necessarily smaller?.. These years of extraordinary innovation are enhancing the standard of living for a large majority of Americans. We should be thankful for that and persevere in policies that enlarge the scope for competition and innovation and thereby foster greater opportunities for everyone.[55]
This is called "labour market flexibility." Of course, as Greenspan was full of praise for the fact that "job insecurity" is a necessary factor in "enhancing the standard of living for a large majority of Americans," which "fosters greater opportunities for everyone," what he really meant was that it benefits a tiny minority and creates better opportunities for exploitation. Ironically, this wonderful "boom" in the economy turned out to be a bubble, and it popped within a year of his giving this speech, and then of course, he resorted to building up the housing bubble thereafter… and we know how that went: more worker insecurity, more labour market flexibility, and thus, more benefits to a tiny minority and more opportunities for exploitation and profits. Isn't the "free market" wonderful?
In April of 2012, Mario Draghi advised the eurozone to adopt a "growth compact" in order to boost economic prospects as he "scaled back his hopes for an early economic rebound," stating that the eurozone bloc was "probably in the most difficult phases" in which the austerity measures were "starting to reverberate its contractionary effects," he told the European Parliament. Austerity had, according to Draghi, "taken a larger than expected toll." A "growth pact" was promoted by the front-runner in the French presidential elections, Francois Hollande, who would go on to win the May 6 elections against Sarkozy. Hollande had called for a "new Europe" stressing "solidarity, progress and protection," warning against a North-South split in the EU countries. Angela Merkel also approved of Draghi's call for a "growth pact," agreeing that austerity was not "the whole answer" to the crisis, but insisted that growth would be "in the form of structural reforms," which implies liberalization and privatization. She added: "We need growth in the form of sustainable initiatives, not simply economic stimulus programmes that just increase government debt." While acknowledging the "economic weakness" created by the austerity packages across Europe, Draghi continued to say that, "Europe's leaders should stay the course on fiscal consolidation."[56]
European leaders were quick to endorse the calls from Draghi for a "growth pact" for Europe, including Angela Merkel in Germany, and France's new Socialist president, Fancois Hollande, as well as EC President José Manuel Barroso. Following Draghi's suggestion, Barroso stated that, "Growth is the key, growth is the answer." Francois Hollande commented in references to Draghi's proposal, "He doesn't necessarily have the same measures in mind as me to foster growth," as Draghi's position was closer to that of Angela Merkel, who viewed the pact as consisting of "structural reforms," not a stimulus which would "again increase national debt." An analyst at the Cutch bank ING said: "For the ECB, a growth compact does not mean more fiscal stimulus," which is, of course, only reserved for banks, not people. Instead, stated the analyst, Carsten Brzeski, it entails "structural reforms with a vision."[57]
In May, this vision was publicly endorsed by Jorg Asmussen, the governor of the Bundesbank (the German central bank), and a member of the Executive Board of the European Central Bank, and was just previously the deputy finance minister of Germany. In a speech on May 21, Asmussen stated that, "we need both" austerity and growth, but that: "Talking about more growth does not mean moving away from the fiscal policy strategy pursued so far. It is not a matter of boosting growth over the next one to two quarters with credit-financed spending programmes, but of increasing potential growth. No one is against growth. The crucial and rather difficult question to answer is how, in ageing societies, to increase potential growth." As to the question of 'how', Asmussen suggested three main components: product market reforms, labour market reforms, and financing of reforms. Product market reforms could include, according to Asmussen, "the completion of the internal market for services… [as] 70% of the EU's GDP comes from services, but only 20% of services are provided on a cross-border basis." As for labour market reforms, Asmussen suggested they should be "inspired by the Agenda 2010 programme in Germany," and that, ultimately: "labour mobility needs to be increased in the euro area (the theory says, we remember, that an optimal currency area requires full mobility of labour). Mobility could be increased through broader recognition of qualifications within Europe, greater portability of pension rights, language courses and a European network of job centres."[58] The Agenda 2010 programme was, explained Der Spiegel, "a series of labor market and social welfare reforms introduced by former Chancellor Gerhard Schröder that completely restructured Germany's welfare state," which included, "easing job dismissal protections, lowering bureaucratic hurdles for starting businesses, setting a higher retirement age and lowering non-wage labor costs," all of which are "typical examples of structural reforms."[59]
The Crisis Continues…
And so the European debt crisis continues, and so the austerity measures continue to punish the populations of Europe, and so Italy remains at the forefront of a growing global power grab: a 'Technocratic Revolution' in which even the trappings of formal democracy are pushed aside in favour of a government subservient to unelected councils of supranational institutions and global financial interests. In Par 2 of this excerpt on the Italian debt crisis, we examine the austerity programs and structural adjustments undertaken by the technocratic government of Mario Monti.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People's Book Project. He also hosts a weekly podcast show, "Empire, Power, and People," on BoilingFrogsPost.com.
Please donate to The People's Book Project to help this book be finished by the end of summer:
[1] Bilderberg Meetings, Participants, 2011:
[2] John Hooper, "Italy's politicians rally round to prevent market's slide," The Guardian, 12 July 2011:
[3] Phillip Inman and John Hooper, "Italy hopes privatisations will calm markets," The Guardian, 13 July 2011:
[4] AP, "Italian Senate passes key austerity package," The Independent, 14 July 2011:
[5] Rachel Donadio, "Italy to Adopt Austerity Plan to Fend Off a Debt Crisis," The New York Times, 14 July 2011:
[6] Emma Rowley, "Silvio Berlusconi v. Giulio Tremonti: a clash that spooked the markets," The Telegraph, 14 July 2011:
[7] Nichi Vendola, "Italian debt: Austerity economics? That's dead wrong for us," The Guardian, 14 July 2011:
[8] Mario Monti, "Il podestà forestiero," Corriere della Sera, 7 August 2011, [original in Italian, translation provided by Google Translate]:
[9] Central Banking Newsdesk, "Leaked letter reveals ECB austerity demands on Italy," Central Banking, 29 September 2011:
[10] Ibid.
[11] Ibid.
[12] Leigh Phillips, "ECB austerity drive raises fears for democratic accountability in Europe," The Guardian, 22 August 2011:
[13] John Hooper, "Italy's government meets to approve new austerity package," The Guardian, 12 August 2011:
[14] Lorenzo Totaro, "Berlusconi's Austerity Package Wins Final Approval in Italian Parliament," Bloomberg, 14 September 2011:
[15] "Italy's Austerity Budget – Needed: A New Broom," The Economist, 10 September 2011:
[16] Jon Henley, "Austerity in Italy: cuts compound bureaucratic obstacles," The Guardian, 18 October 2011:
[17] Jon Henley, "Europe on the breadline: hopelessness and Berlusconi," The Guardian, 18 October 2011:
[18] Bruno Mascitelli, "As Moody's trashes Italy, voters can't count on Berlusconi," The Conversation, 5 October 2011:
[19] The Canadian Press, "Italy Debt Crisis: Berlusconi Austerity Package Sets Up Showdown With Labour," The Huffington Post, 14 October 2011:
[20] Reuters, "Violent protests in Italian capital," The Irish Times, 15 October 2011:
Antonio Padellaro, "Come previsto," Il Fatto Quotidiano, 16 October 2011, (original in Italian, translation courtesy of Google Translate):
"Rome counts cost of violence after global protests," BBC News, 16 October 2011:
Alessandra Rizzo and Meera Selva, "Rioters hijack Rome protests; police fire tear gas," The Denver Post, 16 October 2011:
[21] Spiegel Online, "German Parliament Expected To Hold Full Vote on EFSF," Der Spiegel, 24 October 2011:
[22] Hans-Jürgen Schlamp, "Berlusconi's Government Wobbles in Face of EU Pressure," Der Spiegel, 25 October 2011:
[23] MARCUS WALKER, CHARLES FORELLE, and STACY MEICHTRY, "Deepening Crisis Over Euro Pits Leader Against Leader," The Wall Street Journal, 30 December 2011:
[24] Ibid.
[25] Armorel Kenna, "Austerity 'Isn't in My Vocabulary,' Berlusconi Tells Il Foglio," Bloomberg, 29 October 2011:
[26] Patrick Wintour and Larry Elliott, "G20 leaders press Italy to accept IMF checks on cuts programme," The Guardian, 4 November 2011:
[27] Philip Ebels, "Berlusconi heads to G20 amid mutiny at home," EUObserver, 3 November 2011:
[28] Nick Squires, "Eurozone crisis: Italian coalition fails to reach austerity deal," The Telegraph, 3 November 2011:
[29] Emily Gosden, "Italian Prime Minister Silvio Berlusconi agrees to IMF oversight of austerity measures," The Telegraph, 4 November 2011:
[30] Barry Moody and James Mackenzie, "Berlusconi to resign after parliamentary setback," Reuters, 8 November 2011:
[31] John Hooper, "What happens if Berlusconi resigns?" The Guardian, 8 November 2011:
[32] Graeme Wearden and Alex Hawkes, "Eurozone debt crisis: Berlusconi to resign after austerity budget passed," The Guardian, 8 November 2011:
[33] "The end of Berlusconi: Hallelujah," The Economist, 13 November 2011:
[34] Rachel Donadino, "With Clock Ticking, an Economist Accepts a Mandate to Rescue Italy," The New York Times, 13 November 2011:
[35] Andrew Willis, "Mario Monti to draw up single market report," EUObserver, 21 October 2009:
[36] "EU must put single market 'back on stage', says Monti," EurActiv, 11 May 2010:
[37] "Twelve projects for the 2012 Single Market: together for new growth," The European Commission, 13 April 2011:
[38] Rachel Sanderson, "'Superminister' emerges from Italy's business elite," The Financial Times, 16 November 2011:
[39] John Hooper, "Mario Monti appoints technocrats to steer Italy out of economic crisis," The Guardian, 16 November 2011:
[40] James Mackenzie, ""Italian Prussian" Monti enters political storm," Reuters, 13 November 2011:
[41] Tony Barber, "Why Europe's leaders welcome Monti," The Financial Times, 23 November 2011:
[42] Mario Monti, "Il podestà forestiero," Corriere della Sera, 7 August 2011, [original in Italian, translation provided by Google Translate]:
[43] Viola Caon, "Mario Monti's Italian technocracy reveals its true political colours," The Guardian, 6 December 2011:
[44] Jonathan Hopkin, "How Italy's Democracy Leads to Financial Crisis," Foreign Affairs 21 November 2011:
[45] Tony Barber, "Eurozone turmoil: Enter the technocrats," The Financial Times, 11 November 2011:
[46] Landon Thomas Jr. and Jack Ewing, "Can Super Mario Save the Day for Europe?" The New York Times, 29 October 2011:
[47] Ibid.
[48] Lionel Barber and Ralph Atkins, "FT interview transcript: Mario Draghi," The Financial Times, 18 December 2011:
[49] Ibid.
[50] Brian Blackstone, Matthew Karnitsching and Robert Thomson, "Europe's Banker Talks Tough," The Wall Street Journal, 24 February 2012:
[51] Brian Blackstone, Matthew Karnitschnig and Robert Thomson, "Q&A: ECB President Mario Draghi," The Wall Street Journal, 23 February 2012:
[52] Alan Greenspan, "Testimony of Chairman Alan Greenspan: The Federal Reserve's semiannual monetary policy report," Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 26, 1997:
[53] Louis Uchitelle, "Job Insecurity of Workers Is a Big Factor in Fed Policy," The New York Times, 27 February 1997:
[54] Brian Blackstone, Matthew Karnitschnig and Robert Thomson, "Q&A: ECB President Mario Draghi," The Wall Street Journal, 23 February 2012:
[55] Alan Greenspan, "Remarks by Chairman Alan Greenspan: The revolution in information technology," Before the Boston College Conference on the New Economy, Boston, Massachusetts, March 6, 2000:
[56] Ralph Atkins, Hugh Carnegy, and Quentin Peel, "Draghi calls for Europe 'growth compact'," The Financial Times, 25 April 2012:
[57] Stefan Kaiser, "Austerity Backlash Unites European Leaders," Spiegel Online, 17 April 2012:
[58] Jörg Asmussen, "WELT-Währungskonferenz," Berlin, 21 May 2012:
[59] Stefan Kaiser, "Austerity Backlash Unites European Leaders," Spiegel Online, 17 April 2012: