Alarums and Excursions

Improvising Politics on the European Stage

Luuk van Middelaar

• Editorial: Agenda Publishing
• Año: 2020
• ISBN:
  9781788212144
• Categoría: Politik & Internationale Beziehungen
• Categoría: Europäische Politik

Crisis after crisis has beset the European Union in recent years – Greek sovereign debt, Russian annexation of Crimea, unprecedented levels of migration, and the turmoil created by Brexit. An organization originally designed to regulate and enforce rules about fishing rights, wheat quotas and product standards has found itself on the global stage forced to grapple with problems of identity, sovereignty and solidarity without a script or prompt. From Paris to Berlin, London to Athens, European leaders have had to improvise on issues that the Union was never set up to handle and which threaten to engulf this unique political entity. And they have had to do so in full view of an increasingly disenchanted and dissonant public audience.

In this candid and revealing portrayal of a Europe improvising its way through a politics of events and not rules, Luuk van Middelaar makes sense of the EU's political metamorphosis over its past ten years of crisis management. Forced into action by a tidal wave of emergencies, Van Middelaar shows how Europe has had to reinvent itself by casting off its legal straitjacket andconfronting hard issues of power, territorial borders and public authority.

Alarums and Excursions showcases the fascinating relationship between the Union and the European heads of government, and the stresses it must withstand in dealing with real world events. For anyone seeking to understand the inner power play and constitutional dynamics of this controversial, but no less remarkable, political institution, this book provides compelling reading.

PART I

Acts and scenes

To act, in its most general sense, means to take an initiative, to begin (as the Greek word archein, ‘to begin’, ‘to lead’, and eventually ‘to rule’ indicates), to set something into motion (which is the original meaning of the Latin agere). Because they are initium, newcomers and beginners by virtue of birth, men take initiative, are prompted into action.

Hannah Arendt¹

1

Improvising: the euro crisis

What theory of the duties of an orator is there which permits him to ignore such sudden issues? What will happen when he has to reply to his opponent? For often the expected arguments to which we have written a reply fail us and the whole aspect of the case undergoes a sudden change; consequently the variation to which cases are liable makes it as necessary for us to change our methods as it is for a pilot to change his course before the oncoming storm. […] I do not ask him to prefer to speak extempore, but merely that he should be able to do so.

Quintilian²

No toolkit

When the euro crisis hit, no one knew what to do. Given the chorus of commentators who claimed with hindsight to have predicted everything, it can do no harm to remember that. No one had contemplated a crisis spreading from one eurozone country to another, the risk that drove the subsequent financial turmoil.

What do you do when you find yourself in an emergency and existing habits, rules and agreements prove useless? You have to improvise. Improvising can have the negative connotation of a botched response or a lack of preparedness, but it can also suggest something positive and creative, as in jazz music or the debating chamber, where the best improviser is typically the hero of the hour. A host who serves unanticipated guests an “improvised meal” – certain ingredients not in the fridge, more diners than expected – is unlikely to venture to say beforehand how it will turn out. Here “improvisation” can be negative if you ought to have known better and have failed to prepare, ignoring experience. But if you are forced to act and think on your feet when an unexpected challenge arises, then the ability to improvise becomes a special quality, a gift.

A capacity to improvise is an essential part of decision-making in general. Every major choice in life involves uncertainties: what will you study at college, with whom will you share your life, whom do you trust? Of course, you can try to exclude uncertainty – by making preparations, feeling things out, calculating – but there will always be a crack through which unintended consequences, unexpected reactions or unforeseen developments can squeeze. Fortunately. The openness of the future is not a burden, not a banana skin, rather it provides space for freedom of action. It brings out the best in us. If everything is predetermined, we are nothing more than the puppets of fate.

Seven crucial decisions taken during the euro storm show how European political leaders operate in an emergency, when there is nothing to hold onto. Each of these episodes falls under the ambiguous moniker of improvisation. The situation was unprecedented. No solutions were available. Surprises came thick and fast. Of course from the start there were critics who believed the solution was perfectly simple, if the eurozone would only do this or that. But no expert had anticipated the risk of financial contagion, the crucial factor. No one had understood the degree to which eurozone member states were financially interwoven, as were the states and the banks. Monetary reports, from the Werner Plan (1970) to the Delors Report (1989), had made no mention of centralized banking supervision as part of a currency union; in the negotiations that led to its creation in 1990–91, the idea was discussed, but it was regarded as unnecessary, even as undesirable by some. The idea of a “banking union”, which proved decisive in controlling the crisis in 2012, did not arise until late 2011. It is important to realize this when judging political action during the euro crisis. It makes the difference between improvisation as art and as neglect.

Even more importantly, there were no instruments for jointly tackling a crisis in the currency union. In fact there was not even a toolkit. In Maastricht (1992) it had been solemnly decided that the new monetary union required rules alone and there was no need to anticipate joint action. In this respect the crisis forced a volte-face, reluctantly entered into in many cases. There was something else, too. In the chaos of the moment – and for want of collective instruments – national players fell back on old reflexes, based on their own financial interests, historical experiences, or beliefs about debt or inflation. Without a shared melody, if all the band members improvised at the same time on their own initiative, there would be mere cacophony.

Germany, the strongest player, was devoted to the founding contract and looked upon shifts in the monetary union with deep concern. It was France that in the historic weeks after the fall of the Berlin Wall (1989) successfully pushed for the creation of a European currency, but after that major concession, Germany was able to determine what it would look like – otherwise it would refuse to join. Bonn wanted a currency with the stability of the Deutschmark, with low inflation and without mutual financial liability, so it needed to be kept at a safe distance from political arbitrariness, laced up in a confidence-inspiring corset of rules. Hence the outsourcing of monetary policy to a competent and independent Central Bank; hence the embedding of budgetary policy in strict regulation; hence too the ban on financing each other’s debts. All this was designed to prevent national governments from indulging in extravagant spending and transferring their debts to the Union, or at least to the stronger economies (“moral hazard”). The German and Dutch preference for a depoliticized currency and price stability fitted wonderfully well with Brussels thinking. Reports presented the single currency as a technical “solution” to fluctuating exchange rates. For Brussels experts, monetary union was not an unprecedented historical and political leap but a logical next step in the successful economic integration of the European single market, which had included the free movement of capital for some years already. As a Commission report from 1990 succinctly puts it: “One market, one currency”. So the euro came into the world under the auspices of the old politics of rules. In an initiative that fell somewhere between visionary statesmanship and technocratic overreach, it was left to the future to determine who would shape euro-politics.

Member states with other ideas, such as France, resigned themselves in Maastricht to the German vision, because they had little choice and because they believed that through future treaty changes (and before then in everyday practice) they could steer things in the direction they desired. Paris made no secret of its wish for a “more political” euro: greater budgetary flexibility and discretionary decision-making power, political influence over the European Central Bank and overt guidance by unambiguously named “gouvernement économique” meetings of government leaders. Paris would also have liked an expansion of the European budget as a tool of political will. These French preferences arose in part out of a tendency towards political opportunism and a desire to be able to make exceptions for themselves at any moment, against which German aversion and suspicion continually had to be mobilized (lest Germany end up contributing even more money to the shared coffers than it already did). It also arose from the realization that at times of crisis you have to be inventive, flexible and in a position to act; a corset of rules can pinch too tightly. Nevertheless, the French did not succeed in reopening the debate on substantive matters after Maastricht. Germany kept that door firmly shut, and because the euro seemed to be functioning satisfactorily, reconsideration seemed superfluous. The three changes to the Union treaty after 1991 – the last of them signed by the heads of state and government in late 2007 in Lisbon – did not provide a toolkit for managing the currency union.

The test was already approaching. The financial crisis that erupted in the summer of 2007 was the overture to the euro crisis. In substance, the former lay at the origins of the downward spiral of weak banks and weak state finances that were to bring the monetary union close to collapse. In form, it demonstrated the power of national reflexes in emergency situations, especially when there are neither forums nor frameworks for joint engagement in events-politics.

For America and Europe the banking crisis was the most profound economic shock since the Great Depression of the 1930s. The collapse of Lehman Brothers in September 2008 was like an infarction, stopping the blood flow of Western economies. The states had to rescue their banks with taxpayers’ money and stimulate their economies with additional spending. While the US government rapidly intervened with such measures, European governments did not manage to draw themselves up in battle array. There was a “coordinated” stimulus package (many governments were perfectly happy to be able to spend more than EU rules allowed) and the European Central Bank injected billions into the banking system, but when it came to failing banks, everything fell apart. The stronger member states felt responsible for their own savers only – a natural tendency that was nevertheless incompatible with the European internal market for capital. Who was responsible when banks that operated across borders went bankrupt? There was no clear answer. A few banks – such as the Belgian-Dutch ING – were broken up along national lines. A French plan from October 2008 for joint guarantees for the banking system encountered German opposition. “Chacun sa merde” – each his own shit – the French president summed up the German attitude after a fruitless consultation.³ (Without batting an eyelid, spokespersons for the chancellor claimed that she had in fact been referring to a quote from Goethe, according to which every citizen has a duty to sweep the pavement outside their own house.)⁴

The banking crisis was a harsh but instructive experience. It transpired that arrogant global “flash capitalism” cannot do without the order provided by states. In an emergency, political power became visible again. States had to rescue the banks, not out of any love for bankers but to safeguard their citizens from economic and social catastrophe. This gave politicians renewed self-confidence. But Europe learnt something else too in the crisis: there was a disparity between the level of threat and that of the political response. In the face of the borderless internal market for financial services, no integrated political system existed. This disparity was not eliminated during the banking crisis but (provisionally) resolved by means of laborious coordination, the task of a new banking agency headquartered in London.

This experience gave pause for thought about the single currency. If the multitude of transnational European banks could no longer be carved up along national lines in times of crisis and therefore a capacity for joint action was required, what about the European single currency? Did that not also require a capacity to act? You could not simply slice up the euro. Moreover, amid all the uncertainty, one thing was now plainly predictable: at some point some sort of crisis would hit the monetary union. The Maastricht model of pure rules-politics would then be put to the test. There would be no evading the question as to the relationship between the currency and governmental power, so carefully separated when the euro came into being.

When in the course of 2009 Greek public finances reached an alarming state, the moment drew closer when this question would have to be answered. In an end-of-year essay about the economic crisis for Dutch newspaper NRC Handelsblad, I wrote:

Plenty of shared rules, but they are all being trampled underfoot. Unprecedented treasury deficits threaten monetary stability. The question arises: where does political authority in Euroland lie? Who is able, in times of crisis, outside the rules, to address unforeseen threats to prosperity? Or is the euro a pleasure craft without a captain, for good weather only?

I found it striking that, earlier the same month, in a speech to her party in Bonn, Angela Merkel had suggested the Union should take upon itself part of the fiscal burden of those member states with unmanageable debts, and in that context she said the states “share responsibility for the euro” in times of crisis. I concluded: “By using those words, the chancellor crossed a boundary. Anyone who starts talking about responsibility recognizes that the euro needs more than established rules alone. […] Responsibility is demanded in all situations where the rules laid down do not work, where we are empty-handed.”⁵

That analysis dates back to 29 December 2009. Three days later I joined the private office of the first permanent president of the European Council, a man in a new role.⁶ The newspaper article encompassed in part a task I had set myself. For the time being I would put down the pen of the independent writer, but I would keep my eyes and ears open. And I knew where I wanted to focus my attention. In the months and years that followed, events unfolded before me in all their intensity.

Seven episodes

“SHARED RESPONSIBILITY”: 11 FEBRUARY 2010

It was snowing that morning. Several of the participants’ flights were delayed. The media were informed that the European Council would begin late. That suited its chair, who needed time for a pressing problem. Crisis was in the air: Greece was teetering on the verge of state bankruptcy. But the snow did not offer endless postponement. When the last of the government leaders entered the building, Herman Van Rompuy had to choose between two roles. As host it would be impolite to make more than 20 national leaders wait, especially for the first summit since he took up his new post. But as chair it would be irresponsible to break off preparatory talks and risk indecisive division in the plenary session; that would send a disastrous signal to the outside world. He opted for responsibility over courtesy.

It was Thursday 11 February 2010. The meeting, arranged weeks before, had been intended as an informal brainstorming session between the 27 heads of state and government^* about Europe’s structural economic growth. Events decided otherwise. The Greek situation demanded urgent decisions. As a result of astonishing revelations about statistical fraud – uncovered by the incoming government after the parliamentary elections of October 2009 – and because of a budget deficit that was steadily approaching 15 per cent, capital markets were losing confidence that the country could pay its debts. Athens was in danger of being cut off from the markets, a dramatic moment for Greece and its citizens, with results impossible to predict.

But this was about more than just Greece. Speculators were starting to bet billions on “a eurozone debt crisis”, the Financial Times reported that week.⁷ During the summit the other 26 leaders came to realize that a Greek bankruptcy would have severe repercussions for the eurozone, for the entire Union and consequently for their own countries. Their much-praised economic interdepen...