Does Europe need more democracy?

This article was published by Al Jazeera International.

Yanis Varoufakis

When Yanis Varoufakis, Greece’s ostentatious former finance minister, recently proposed to change the course of European politics, he received relatively little attention, and much of it was negative.

“The great deceit right in the heart of our European Union is a top-down political decision-making process which is being presented as apolitical, technical, procedural, neutral,” Varoufakis told a packed audience at Berlin’s Volksbuhne Theatre on February 9. “Why? To deny Europeans democratic control over their money, finance, working conditions, environment and communities.”

The central message of the Democracy in Europe Movement, or DiEM25, which Varoufakis launched, is that “Europe will be democratised or it will disintegrate.” It is a position based on Varoufakis’ bruising experience over the first six months of 2015, while trying to translate Greek popular discontent with austerity into policy at the European level. During countless sessions of the Eurogroup, the informal council of Eurozone finance ministers, he became, as he put it, “a minority of one”.

“This was a body being run behind the scenes by [German finance minister] Wolfgang Scheauble with [Eurogroup chairman] Jeroen Djisselbloem acting as his agent,” says James K Galbraith, economist at the University of Texas at Austin and a personal friend of Varoufakis. “It is also a body that operates without minutes, without transcripts, and so the people running it were in a position to tell the press anything they chose.”

Ultimately Varoufakis failed in part because the Greek government performed a spectacular policy U-turn. But he blames European institutions more than the ineptitude of Syriza, which came to power in January 2015 heralding an end to austerity across Europe.

What irks him most is the power of a relatively small number of people to call the shots. Days after Syriza came to power, European Central Bank chairman Mario Draghi revoked a waiver that had allowed Greek banks to borrow from the ECB in exchange for junk-rated Greek bonds. From that point on the banks depended on Emergency Liquidity Assistance, a short-term emergency facility carrying higher interest. The world’s media began to closely monitor this trickle of cash from Frankfurt, speculating as to when the banks would close their doors.

This “contributed to the slow run on Greek bank deposits that put pressure on the government all through the spring,” says Galbraith. It also ultimately led to capital controls, still in place.

“It should never be the function of the central bank to destabilise any financial system for which it is responsible, never,” says Galbraith. “It achieved a political objective, which is what it was doing in this case.”

Galbraith contrasts this with the Federal Reserve, which answers to Congress. “When members of Congress from appropriate jurisdictions call the chairman of the Federal Reserve to testify, she has to come. If they ask questions they essentially have to be answered. That’s the stuff of power in a parliamentary democracy.”

The ultimate political triumph of European institutions and of austerity over the Greek government, Varoufakis believes, is producing a vicious cycle of recession and further political repression.

“These decisions, because they are never checked by a democratic process, tend to be extremely bad,” Varoufakis told Global Research. “No one asks the question, ‘how can we make life better for Europeans?’ The question they usually ask in Brussels and in Frankfurt is ‘How can we pretend that our previous policy did not fail?’”

What the numbers say

Europeans have not rushed to embrace DiEM25, and the signs are that, in the short term, at least, they won’t. The latest six-monthly Eurobarometer survey appears to suggest that most Europeans don’t share Varoufakis’ concerns. Immigration, the economy and unemployment are their chief worries; and since a slump in confidence during the banking and debt crises in 2009-13, most Europeans (58 percent) are confident about the future of the bloc.

A Special Eurobarometer survey in 2014 found that more Europeans saw the EU’s economic power as its chief asset (19 percent) than its respect for democracy, human rights and the rule of law (17 percent).

Varoufakis supporters might read the most recent Eurobarometer differently, however. Only three in ten Europeans trust their national parliament and government, and only four in ten trust the EU.

Trust is at an all-time low on the other side of the Atlantic, too. Only one in five Americans say they trust the federal government “just about always” or “most of the time” according to a Pew Research Foundation poll late last year.

Freedom House, a human rights watchdog, finds that there is a broader decline in freedom and democracy around the world. Its latest annual survey, Freedom in the World 2016, has found a record number of countries (72) displaying a decline in freedom of expression and the media, as well as the rule of law, since the start of a global trend over the last decade, suggesting that it is accelerating.

Even Europe and the United States, the survey finds, have seen core values of liberty, solidarity and human rights battered by immigration pressure and racism. “The massive influx of people not only exposed areas of weak institutional capacity across [Europe],” the report says, “but also cast doubt on the EU’s ability to maintain high democratic standards among current and aspiring member states in a time of rising populism.”

This is an oblique reference to the fact that having locked horns with eastern European countries over its proposal for mandatory refugee quotas, the European Commission caved in to their policy of exclusion.

The European Council’s March 18 decision to set aside concerns about Turkey’s human rights record and growing authoritarianism, assigning it a key role in protecting Europe from uncontrolled migration, appears to underline the shift in values.

Reforming Europe

So is Varoufakis on to the Next Big Thing, politically speaking, and can DiEM25 save Europe from itself?

The answer partly hinges on Varoufakis himself. “He is a kind of provocateur,” says University of Piraeus economist Theodore Pelagidis, who has known Varoufakis since their student days.

“You need, in order to have some impact, to get some credibility. I am afraid that Mr. Varoufakis is lacking any kind of credibility because of his period as finance minister in the first half of 2015.”

It is true that few Greeks speak well of Varoufakis nowadays, because of Syriza’s botched negotiation, but his reputation outside Greece does not seem to have suffered as much.

What about the substance of reform? DiEM25 would oblige the Eurogroup, ECB board and European Council of heads of government to stream their meetings live. It would elevate the European Parliament, federal Europe’s only directly elected body, to primacy above the executive, the European Commission, and the European Council.

To be more democratic, the EU needs to be fully federal, say some. “In order for the differences between the nation states’ economies to narrow you have to have political integration,” says Pelagidis, who believes that Europeans aren’t ready to surrender national sovereignty or to redistribute wealth across the EU. 

“It’s too early to have, for example, a European parliament making decisions and controlling the ECB,” he says, “because there is still a fight between the communitarian think and the nationalistic think, in the minds of people and within the institutions.”

Then there is the Greek experience, which suggests that European institutions are well-entrenched. Neither through confrontation (January to March) nor through conciliation (April to July) was Syriza able to significantly change the austerity policies previous governments had signed.

The government did consider its one nuclear option – leaving the Eurozone – and shied away from it.

“I was working on the backup plan and it was hugely problematic,” says Galbraith. Greece would have suffered severe shortages under a devalued national currency. Galbraith calls it “a very intimidating proposition, because you had to worry about fuel, you had to worry about medicine, food supplies, older people getting access to enough cash so they could eat, you had to worry about the political reaction in the country.” Syriza, he says, “wasn’t psychologically, technically, tactically prepared for the consequences.”

Varoufakis agrees that Europe cannot change from the bottom up. “The sovereignty of parliaments has been dissolved by the Eurozone and the Eurogroup,” he told the Trans National Institute. “Electoral mandates are by design now impossible to fulfil.”

“So instead of going from the nation-state level to the European level, we thought we should do it the other way around;” Varoufakis says. “That we should build a cross-border pan-European movement, hold a conversation in that space to identify common policies to tackle common problems, and once we have a consensus on common Europe-wide strategies, this consensus can find expression of that at the nation-state and regional and municipal levels.”

Globalisation has not so far pushed Europe or America in the direction of greater democracy. Both are increasingly in competition with regions that have authoritarian governments and little tradition in human rights. They may manage to lead, but this can only be done by example. If the flame flickers in Washington and Brussels, Varoufakis will have lost his gambit.