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Eurozone trashed


One does not have to be a fan of Silvio Berlusconi's sordid, and now crumbling, regime in Italy to see the madness of austerity that is stripping away the sovereignty of states through the eurozone.

That comes in light of Italy's own madness that saw debt rise to some of the highest levels in Europe, standing at a staggering 120 per cent of GDP. But to call 12 November, as many Italian protesters have done, a 'liberation day' of sorts is to misunderstand what exactly has happened.

History tells us that states whose sovereign existence is curtailed by economic intrusions collapse, regroup and strike back, all in various forms.

Some of these reactions can have devastating consequences to regional security. When the German economy was made the target of occupation measures by the Allies after the First World War, sovereignty was circumscribed in a manner that provided ready political capital for extremist parties to support. It did not take long for the jackboot to start marching through the Ruhr.

The unravelling of the eurozone suggests the emergence of European states who will either be peripheral to the currency policy in the zone, or outside it. In being placed on the outer in such stark fashion, a new type of 'clipped' sovereignty is emerging. The elected parliamentarian is gradually becoming irrelevant, at the mercy of a new technocratic order inimical to democracy.

What we are seeing is another addition to the armoury of those who wish to see sovereignty further reduced, qualified and circumscribed. With the language of 'human security' comes the language of interference where human rights are deemed to have been abused. If a government abuses its own people, intervention can, and has taken place through the UN Security Council.

While the UN Charter acknowledges the core idea of state borders and sovereignty, it has been pecked away over the years. The financial crisis further handicaps state autonomy, pegging policy to an externally dictated austerity regime.

Writing for the Guardian, journalist Giuliano Ferrara made the point graphically and accurately that bond yields were being used 'like armoured cars' to strike at democracy. The League's interior minister Roberto Maroni saw the line from Brussels as being distinctly anti-democratic. 'I don't think there is a precedent for someone going to a sovereign state and telling people what they should do.'

The same points have been made in the Greek context. The spectacular and failed effort on the part of George Papandreou to take the bailout package to a referendum vote, only to have it quashed, shows that dynamic in action. Can rigid austerity exist alongside institutional transparency?

We can get a better sense of where these individuals are coming from if we go back to the various basic assumptions as to how that political concept works. The late Italian political theorist Norberto Bobbio sketched a few salient points on what he saw a working democracy consisting of: participation, liberty, equality, and individual responsibility.

It can be argued that virtually each of these concepts is being directly challenged by the internationalised austerity regime. To put it simply, we are making bankers and technocrats the officials who matter.

Therein lies Moroni's dilemma. Austerity measures and strict financial discipline are part of the baby food diet that poorly performing eurozone states must take to enable them to perform in economic solidarity with their neighbours. To implement them though will have enormous effects, assaulting the very core idea of welfare democracy, let alone sovereignty.

Cultural changes are also bound to take place. The Italian austerity package incorporates increases to the pension age, privatisation measures, and a program to invite more women and the young into the workforce.

There may well also be an argument to make that the Italian example is being misunderstood precisely because its economic performances are being assessed within the framework of the European Monetary Union.

As the economist Costas Lapavitsas explains, 'the economics of austerity makes no sense at all. Italian problems have originated in a stagnant economy, not in a profligate state.' One can always complain about emptying the cookie jar — but there has been very little in the jar to begin with.

The central bankers are starting to tighten the purses and push the policies of a politics that is unrepresentative and authoritarian, a state of affairs that should be troubling to policy makers themselves. If participation is deferred to a management class that is remote, not to mention unelected, as much of the Brussels and IMF machinery is, we may see not only sovereignty challenged at its core, but the democratic idea itself.

Binoy KampmarkBinoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. 

Topic tags: Binoy Kampmark, eurozone, austerity



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Existing comments

The Italian people must also bear a great deal of the blame. They voted in Berlusconi three times - even when he was up on corruption charges. Their attitude to the sex scandals whirling about him was 'what scandal?'. They admired him because he was rich,liked the ladies and played the game and got away with it. Avoiding paying taxes has been for years a national pastime in Italy. When I lived in Rome, one of my landladies, an eminent gynacologist, put two contracts in front of me as a potential tenant - one with the real rent and the other with an absurdly low rent for the tax authorities. Unless you wanted to be homeless, you were drawn into this web of corruption that is part of Italian society. It will need more than the ousting of Berlusconi to change it.

Duncan MacLaren | 16 November 2011  

Get rid of all Central Banks. Let the governments of all nations print their own money and provide their coinage, using their very own people and national resources as security.

The American Federal Reserve Bank shows the folly of letting these central banks use their fraudulent practices and manipulations to control America, when the government is required to print money by the articles of their own Constitution.

Some powerful people forcrd president Woodrow Wilsons to allow the Federal Reserveto be implenented and America has suffered for it ever since with depressions, recessions etc which have affected the whole world for the benefit of a very few who own and control the banks, the mainstream media and our daily lives in a very negative manner. These people can make or break presidents at will.

Trent | 16 November 2011  

It is one thing to borrow money for long term investment whether public or private. it is another thing to borrow money for every day expenses without the income to pay it back. The U.S.A. and European governments have been borrowing money recklessly and are now in trouble.

john ozanne | 16 November 2011  

The Italian people are corrupt, the Greeks lazy and the Irish impetuous. The 1% ers quite like these explanations. It takes the light off them. That is why we see these explanations in our newspapers largely controlled by the 1 %. We read these explanations over and over and then come to believe them. The world happenings are indeed a wake up call for democracy.It seems we can have our votes and a decent standard of living until the privileges of the 1% ers are shaken. But now there is no need to send in the armies. That's expensive and messy. It is far easier to tell the people they are not managing their economies properly. Workers and businesses are to bear the full brunt of the austerity measures. This means more taxes on their work which will not be used for health and education but be used to maintain the 1%. The 1 % need to pay their share of taxation and the only way that a nation can force this is to charge a levy on land and natural resources.This in turn makes it easier for people to find work etc. But have you noticed that this idea, even though effective, is not being considered. It seems the preferred option is to make the people feel responsible and make them suffer the pain.

Anne Schmid | 16 November 2011  

Ireland, Greece and Italy joined the Eurozone of their own free will. In exchange for the benefits of a common currency, they voluntarily accepted the constraints to sovereignty that went with it but have failed to live up to those commitments. That is entirely different to the way that post ww1 Germany's sovereignty was compromised. Whether the medicine now being prescribed for Ireland, Greece and Italy is helpful or otherwise is another issue.

Ginger Meggs | 16 November 2011  

What even makes less sense, is the urgency with which our current Government is trying to follow the Greek and Italian model of wealth to ruin economics. It seems our Government has nothing better in mind than finding ways to increase taxation. It has been estimated that about 85% of the new Bob Brown carbon tax will be used to create a new and massive public administration and to pay “compensation” to smaller polluters.

The Greens and their Labor party copycats admit that this tax will fail to produce any environmental benefits whatsoever. They claim that it will help “to increase the awareness of global warming as an environmental issue”. It maybe similar to the French Revolution in which the Guillotine “helped to increase the awareness that the neck is an important part of the human body”.

Beat Odermatt | 16 November 2011  

This article claims to draw on what "hitsory tells
us" but the solitary example is entirely irrelevant: the German situation post-world War I has no relation to the present "Eurozone" situation.

As one respondent has pointed out, the members of the EU and the "Eurozone" are there of their own volition and, in some cases at least, have blatantly flouted the conditions of the treaty which they signed.
It is true that, in accepting the euro as their currency they lost the opportunity to set the value of their own currency [including devaluation, with its attendant risks]; it is also true that those treaties are flawed in leaving other aspects of economic policy-setting too much at the political whim of the member nations.
Kampmark's notion that "states whose sovereign existence is curtailed by economic intrusions collapse, regroup and strike back" is, frankly, not supported by history. The constituent states of the USA and Australia have not suffered or behaved in this way: the point is that [unlike the current state of the EU] those federations included the appropriate political limits on the constituent states.

Much of the commentary on the EU, which emanates from the anglophone countries, simply do not understand the determination -- especially by France and Germany -- that Europe should never again suffer the appalling consequences of the wars which had ravaged them for the previous century. without that understanding, must of the commentary is superficial or vindictive and should, therefore, be disregarded.

John Carmody | 16 November 2011  

The reality is that countries came into the Euro zone knowing that there were expectations about borrowing, deficits etc....and they were not adhered to, because the countries involved had no history of effective governance, and because the central authority had no teeth because of concerns over usurping local democracy! The crisis can only be resolved by tough action, on a sort of effective war-time footing: in the future stronger central control will be needed but certainly with more responsible and grown-up democratic processes put in place both at local and central level. But people generally need to start behaving like adults and take responsibilty for their personal and national behaviour

Eugene | 16 November 2011  

As an analysis from someone who lauds Marxist economists (Lapavitsas)I was somewhat pleasantly surprised. There is at least a healthy scepticism here of control via the EMU and the IMF.

Alas, the mantra-like condemnation of "austerity" gives the game away.

Friend, if the Greeks (for example) had abandoned their ridiculous bloated welfare state mentality years ago, and adhered to balanced budgets, low taxes, and a tiny public sector compared to a wealth producing private sector, just how would they be in the position they are today? I mean, you do realize a heck of a lot of Greeks live in Melbourne(It used to be the second largest Greek city in the world - have no idea if that's so today). Now Melbourne, for all the stupid governmental regulations it is saddled with, is a haven of free enterprise compared to Greece. Are the Greeks here staring into an economic abyss in the face like their relatives in the motherland? Or the Italians? Why so manifestly not? Because, as Friedman once put it so well: they know "There's no such thing as a free lunch" more keenly here than there. Austerity. Saving. Hard work. Enterprise. Risk. These are key concepts for the common weal. We abandon them at our peril.

HH | 16 November 2011  

I do not agree at all with your point of view.

When you say that a working democracy is consisting of: participation, liberty, equality, and individual responsibility - well, where have all these issues been during Berlusconis's government? The peoples elected this idot twice! Participation, responsibility of the peoples??? Where were they, also in Greece? Not there, not visible. The only thing, to be on strike and to be against every everything.
You write:
The Italian austerity package incorporates increases to the pension age, privatisation measures, and a program to invite more women and the young into the workforce.
What is wrong with that?
Why can countries like Sweden, The Netherlands, Germany or small Estonia estblish these necessary changes including reducing bureaucracy and corruption without strikes but with more daily efficiency?

There is the European parliament and it will have to be strengthened, to get more power.
The technocrats now cannot be much worse than the rubbish politicial parties gambling for votes, and, by doing so, sacrificing their countries and peoples.

Allex, Austria | 18 November 2011  

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