A Plan for Europe: Decent_Europe_

This afternoon (Athens time) I shall be appearing at the TEDx Academy (Athens) to deliver my fifteen minutes worth of ideas about how to transform Europe. Here is what I plan to say:

1. Introduction

When Gandhi was asked what he thought of Western civilisation, he famously replied that: “…it would be a very good idea”. 

If asked what we think of the European Union today, we could do worse than remarking: “What a splendid idea! If only we could pull it off!”

United only in name, Europe is in a process of slow burning disintegration. The Euro Crisis is operating with the vicious determination of a termite colony eating into the foundations until nothing but an empty shell will be left of what, until recently, was hailed as the lofty ideal of a United Europe.

In every Agatha Christie novel, when a party of upper class people gather together is some chateau, the reader knows what to expect: a series of murders. These days, when we hear that our political leaders will gather together, we too know what to expect: A comedy of errors, wrapped up in triumphant rhetoric which, in a short few weeks, proves to have been nothing but harmful waffle. Serial errors that produce serial failures along the path of European disintegration.

To err is of course human. But to mess things up spectacularly, we need an elite (made up of Presidents, PMs, ministers, opinion makers, bureaucrats) who steadfastly refuse to treat a systemic crisis systematically. By now, enough evidence has been amassed to render their continued denial inexcusable.

Humanity does not surprise itself very often. It did once in 1929 and then once more in 2008. 1929 ought to have taught us two lessons that are current now: That the first victim of a systemic crisis is the common currency of the era – the Gold Standard then, the euro now. And that its second victim is truth and civility: Once such a Crisis begins, a Hobbesian war of all against all is unleashed blinding everyone to the causes of our collective woes – making hard for us to even recognise the systemic crisis in which we are embroiled, and for which we share a portion of the blame.

Thrillers usually feature a smart detective who removes one after the other the masks of the various characters. But good detective stories do not end with the unveiling of the perpetrator. They go beyond that, reaching their apotheosis at the moving moment when the hero inadvertently unmasks himself, ending up in puzzlement in front of a pitiless mirror. The same is happening in Europe today. We are all being unmasked by this Crisis: Unscrupulous bankers, amoral politicians, enthusiastic bureaucrats, uncritical citizens, cynical academics, conniving entrepreneurs. Trouble is, the more masks fall the greater our dejection while the human costs are mounting and can only be sensibly measured in terms of lost generations.

At no time has it been as crucial to transform and get transformed!

2. THE FALSE DILEMMA

It is only fairly recently, around a century ago, that doctors managed reliably to save more people than they killed. Till then, the disease was preferable to the proffered cure. Similarly with the Crisis of the Euro – a system that was never designed to withstand a Global Crisis like that of 2008.

For 18 months now Europe is trying to prop the euro system up by administering a poisonous remedy. It built a hopeless scaffold that put extra pressure on the collapsing edifice. It created the European Financial Stability Facility in the image of Lehman Brothers’ infamous derivatives: A toxic bailout fund by which to support a collapsing monetary system. A bit like tying together two heavy stones hoping that, together, they will float more readily.

Now that most can see the error of Europe’s ways, a new Jerusalem is being promised: The Federal Option. Many well meaning Europeans, and some friends from further afield, issue a roll call of ideas along Federalist lines:

Fiscal Union, Federal Treasury, a European Economic Czar, Centralised disposal of national assets, Loss  of National Sovereignty, Treaty Changes

The worst aspect of this Federal Option is that it is… self-defeating. Federalists beware: To canvass federal moves as an antidote to the present Crisis is to ensure that Federation will never happen!

Why? Because however fast we move toward federation, the crisis will outrun us, the euro will collapse before the Treaties are changed and, then, in the smouldering mess that will remain there will be nothing left to federate.

There is a second reason too: Federation is too important to be subsumed into a short-term struggle to save bankers and deal with public debt. A United States of Europe deserves more than institutions that were devised on the run and under pressure from Moody’s and Fitch. It will only be worth having:

  • when Europeans can begin to countenance an electoral system which asks of Germans and Greeks alike to vote among Greek and German candidates
  • when it is possible to discuss the dissolution of national armies and their merging into a single European Defence Force
  • when your views and mine are assessed on their pure merits and not on who you are, what accent you present them in, whether you are German or Greek – when, in other words, the lost virtue of Ancient Athenian Isigoria is revived Europe-wide
  • Symbolically, we shall know that we are ready for a decisive Federal Move when we can agree on what actual image to print on our euro notes, in place of abstract bridges and gates that exist nowhere in Europe, symbolising the lack of common symbols

 3. THE ALTERNATIVE: DECENT_EUROPE_

 So, if the current path leads to UNCONTROLLED DISINTEGRATION and AUTHORITARIAN FEDERALISM is not a cure, what next?

 I submit that before  answering the question we better agree on a number of principles that should govern our immediate future. Here are two such sets of seemingly opposed principles:

  •  An End to the Perfectly Partitioned Europe of Maastricht while
  • strengthening both National Sovereignty and National Responsibility
  •  No False Solidarity based on Pretend Bail Outs or Inane Austerity, and a great big NO to Pointless Debt Buyouts while
  • promoting Integrated Investment and Integrated Management of Public Debts and Bank Losses

 In short, Decentralised Europeanisation. Or, to coin an acronym, Decent_Europe_

 What does all this entail?

 It entails an Automated Integration of Three Spheres, that will take place at the Centre of  Europe. That is the meaning of Europeanisation. At the same time, it entails decentralisation of everything else. Thus, Decentralised Europeanisation.

What are the Three Spheres to be integrated – Europeanised?

A. EUROPEANISED MANAGEMENT of EXISTING PUBLIC DEBT

B. EUROPEANISED BANKING SECTOR

C. EUROPEANISED INVESTMENT POLICY

This is not the time or place to delve into how these Three Spheres will be Europeanised. You can find the details here: A Modest Proposal for Resolving the Euro Crisis.

BUT it is the time and the place to highlight two features of the proposed Europeanisation of the Three Spheres:

  • Each of these Three Spheres will be Europeanised by an existing institution, which means that there is no need for cumbersome Treaty Changes and the associated political bickering
  • Each of these three institutions can be given a clear, technical task to perform; a task that can be achieved with minimal discretionary power on behalf of bureaucrats or politicians.

 To give a flavour of how these three institutions will Europeanise our Three Spheres, 

  • Think of a Europe in which the European Investment Bank ensures that Europe’s surpluses are maintained by investing part of them into profitable enterprises in the deficit regions.
  • Imagine that the European Central Bank manages existing debt rationally. That it deflates the debt mountain not by buying debt or printing money but by mediating between international investors and member-states, effectively becoming the Debt Convertor of last resort.
  • Dream of a European Financial Stability Facility were to keep Europe’s banks under a leash while recapitalising them when necessary.

Once these Three Spheres are Europeanised, it will be possible to demand that each member-state runs a balanced budget within which it will find a new opportunity to exercise full national sovereignty in selecting its own path regarding income distribution and developmental priorities.

Decentralised Europeanisation promises to make possible that which is impossible today: For each nation to plan for a sustainable future within a Europe that is worth fighting for.

At the same time, Decentralised Europeanisation will guarantee that European integration becomes irreversible.

As this fact sinks in, Europeans will at long last have a sporting chance to forge, relieved from the angst of the Crisis, Europe’s continental consolidation. Then and  only then will we be in a position to talk sensibly about:

  • Transnational political representation 
  • A European Army and common foreign policy
  • Euro notes featuring non-fictional symbols
  • More generally, truly federal institutions that are more than mere copies of  American ones

 4. Conclusion

Myth has it that Sibyl of Cumae offered Tarquinius Superbus the nine books of wisdom. Tarquinius thought that the asking price was exorbitant and said NO.

Sibyl then started burning one  book after the other until Tarquinius relented, agreeing to buy the remaining  three at the original price which no longer seemed exorbitant to him.

The euro crisis is copying Sibyl’s strategy. But our leaders are allowing our common heritage to burn down in its entirety.

They keep saying NO while paying lip service to a Centralised, Authoritarian Federation that will never materialise and which, even if by some miracle were to materialise, it would simply add a democratic deficit to all the fiscal deficits and banking losses that we are drowning in.

We still have time to salvage our ‘three remaining books’. But not much!

Decentralised Europeanisation (Decent_Europe for short) can stem the Crisis now.

It can usher in a new era in which Europeans – Northern and Southern, Western and Eastern – can look into one another’s eyes and recognise a partner again.

If we miss this chance, Europe will only manage to drag the planet into a despicable mire for the third time in a century.

We have a duty, an overarching obligation, to prevent this.

20 Comments

    • All the evidence shows us, (certainly here in the UK, and surely also in Greece), that the electorate are deeply suspicious of anything to do with Europe. Why? For the very simple reason that we have not been listened to before now; with every chance to express our opinions blocked when the answer was “assumed” not to be the one sought; that for no other reason than precisely the points you have made in your speech.

      Yes, wonderful ideas; but as this inventor knows full well; taking an idea to fruition is another matter entirely. You face what are hundreds of decision makers with a new thought and you will get exactly the reaction you have given to my own; they will take time to think about it and come back ….. sometime indeterminate!

      And, no I am not bothered that it takes such time; that is living for real. Hope yes! Expectation; perhaps! That is life; absolutely so!

      Placing new thinking on the table for debate is a wonderful thing; showing leadership for the future. It is just that I do not believe that anyone in a position to actually DO something; will be able to bring all the divergent “others” to the required same point of view and make a positive decision.

      This is surely a classic Disaster Theory event where the “system” has to decline to the very bottom; sit there for long enough to get the idea in everyone’s head that we must find a new way forward; and THEN everyone will stop to listen. So from my viewpoint; we can only sit back and watch the system collapse. Yes, place our thinking out in front of everyone; but do not expect anyone to listen until circumstances are so dire that they have to.

      Right now; time is not on their side. Asking a large group of leaders, already up to full speed on a circus ride to hell; to stop and rationally discuss adding to their risk by jumping off to one side of the speeding rail car is a Herculean task, sadly, very unlikely to succeed.

    • heh, it’s good to get an excellent reply after reading an excellent article..

      seriously – it’s simply that ppl. can’t be bothered anymore with keeping the system in check and instead prefer to sit and expect Mars to come to the rescue..

      Both as voters and as consumers – and when you pick the path of least resistance, oh well, can’t expect a prize in the end(and yet ppl. do).

  • I don’t know if you post your speech to get comments or just keep us informed .

    Forgive three comments of mine .

    I think you are trying to say everything in 15 minutes . I don’t think it’s a convincing way .

    The bullet points may mean something to a reader of your blog , to a european politician or bureaucrat , but to a common viewer i think it is jargon . They may stand in a text but not in a speech . They are boring .

    Instead of famous quotes in the beginning , i would prefer to hear a more intimate incident in your life , with similar symbolism .

    These are my personal comments , i am entitled to the right to be mistaken !

    The Myth of Sibyl of Cumae is superb . I particularly like your epilogue .

  • Congratulations on your great article!
    But if none of this will happen/change, do you see Greece having the future of the Latin America countries where IMF had been (is) involved?
    This is the main concern of the 9 out of 10 Greek people at this period…

  • Excellent, more realistic and well thought approach to the insufficiencies of current European structure. It addresses almost all the existing obstacles put in the way for any solution.

    But… There is one thing that it is not taking into consideration: The absence of public will to move in this direction. I am referring to the total lack of trust, common visions, culture and shared responsibility, among the European people and nations. The Germans can only blame the Greeks, Portuguese and other “P.I.G.S.” citizens for their current condition. And in the same manner, Spanish and Italians are blaming the Austrians and Germans for their poor level of competitiveness in the last 15 years. The elected politicians are not aliens who have just landed on planet Europe. They represent the national – popular background in every country.

    The approach you presented, is the most realistic I have read in the last 3 years, but it cannot be applied in Europe just because this continent cannot think or move on as one entity even with this intermediate efficient path that you have highlighted.

    We have to think: This crisis is one of those that I call “history changing” moments. And as you say in every such occasion, in the past, there has to be a victim! This time the victim is going to be (as always) the weakest member of the chain, and obviously this is the Eurozone! Lets face it…in your text, it is obvious that even you do not believe that the remedy outlined here will be applied. Those who believe in Europe as a healthy institution are a small minority. Under these circumstances there is no way out!

  • Alas, the european elit (and zeitgeist) is more close a neoliberal talibanism…
    It will most probably be too late, at least for the euro, when people come to their senses.

    However these plans are absolutely necessary to show there are alternative ways, no matter how miniscule is the probability of their application.
    Plan is nothing, planning is everything…

  • Great stuff – and I wish Sarko and Merkel showed any signs of having considered the Modest Proposal. (At the moment, they’re playing a game of “we’ve got the Ace of Spades up our sleeve – honest we have, Scout’s honour!”).

    Regarding the Modest Proposal. Excuse my ignorance, but:

    1) How does the “tranche transfer” of debt to the ECB that you describe _not_ constitute central purchase of member-state bonds, which as you point out would be against existing European treaties? I think the answer is in something you said about the ECB _servicing_ the member-state debt rather than _buying it_ – but I’m still unclear what you mean by this.

    2) How would any bond issues by the ECB to finance this process attract investors (you mentioned Norway, China, sovereign wealth funds), when member-state bonds clearly do not at present (!) ? In other words, what security would an investor perceive in an ECB bond (allowing lower yields) that they don’t in individual Greek, Italian or Portuguese bonds? Surely the answer to this must be along the lines of “what is the collateral for ECB bonds”? The answer may be there in the ECB’s foundational charter (you emphasise that no treaty changes are needed for the Modest Proposal), but I’m no expert on that. Perhaps the answer here is that the attractiveness of ECB bonds would lie in their exposure only to the lowest-risk (last 60% of GDP) sovereign debt – so that e.g. the perceived risk of any nation defaulting on their additional [X% of GDP] of debt would not be a risk to the ECB?

    3) Doesn’t any good answer to (2) imply that the separability, or distinctness of European member-states’ debt ceases? You may be raising this point (though I’m not sure whether it’s a treaty problem or a political problem) in your remarks about Germany’s “exit option” here: http://trumanfactor.com/2011/varoufakis-interview/

    4) I think you _are_ advocating common European debt. Rather than the ECB acting as an opaque “packager” of higher- and lower-risk member-state debt (putting together even the first 60%/GDP of Germany, France, Portugal and Greece _still_ amounts to mixing higher and lower risks, doesn’t it?), in the way we’re all familiar with from the US housing finance crisis.

    I’m sure these questions betray my ignorance: the Modest Proposal is so intriguing that I’d love to read a clarification for non-professionals like myself!

  • Gandhi is often misquoted regarding what he thought of ‘Western civilisation’. In fact, what he was asked, as he arrived in England from colonial India, was what he thought of ‘English civilisation’, to which he replied ‘it would be a good idea’.

    More substantially, you seem to be arguing both for a diminution of national sovereignty – regarding defence and foreign policy, for example – and an increase of it in matters of economy. I don’t know if you can pick and choose like this, especially since defence priorities for Greece, for example, will often not coincide with those of the UK and so on. Do you want to do away with the concept of national interest and nation-states altogether? This is, forgive me, wishful thinking or, more kindly, utopian. I’m not even sure if you can talk, as you do talk, of a ‘common heritage’ in Europe, unless by ‘common’ you mean the centuries of wars and conflict Europeans have inflicted on one another. Indeed, if a common foreign and defence policy is far-fetched and economic powers are returned to the nation-state, then what there be left for the EU to do, other than regulate the size of bananas?

  • We have a duty, an overarching obligation, to prevent this.

    Yes….

    Yes?…

    HELL YES!

  • Yanis- Daxia, Erste; hasnt it begun ? Arent we talking weeks now until Greece defaults, certainly not beyond November ? (absent modets solution)

    How in the world will Merkl convince her electorate to send more money to Greece that will never be recovered, and also bail out French banks for bad loans they made to Greece ? and even if Slovack opposition finally caves or government loses vote of confidence , it seems they are so far away from actually doing something – how does france compromise their fear of losing AAA rating (and reliance upon ESEF as first backstop) and German insistance that 1) private funds (risible in this climate) and then 2) national funds be sued vefore ESEF is tapped ? this hardly seems to be sort the thing EU will be able to reach compromise on in months let alone weeks –

    is it simply that Merkzy feel they have months to dawdle , or that they need a real crisis before they can move their electorate to more active compromise ? GIven the beginning of bank insolvency that seems rather optimistic…..

    • How in the world will Merkl convince her electorate to send more money to Greece that will never be recovered, and also bail out French banks for bad loans they made to Greece ?

      It’s so nice to believe in bullshit…… smells nice in the morning I guess.

    • Today the Slovaks will show the EU who has the authority to decide over the money of the taxpayers. it is the sovereign country not a polit bureau from Brussels!

      They will do what we, the Finns, Germans and Austrians failed at!!! A good day for democracy in Europe!

  • Hi Yianni i’ve been following you online ever since I think you analyzed your “modest proposal” to an audience in Sparti. I was wondering if your speech at the TEDx Academy is online anyware ?

    Thank you

  • Don’ t you think that EU lost the game (and the real UNION) at the very moment it accepted the markets’ “globalization” thus abandoning the Unions’ products preferential treatment ?