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Business News/ Opinion / Online-views/  Opinion | Progressive Europeanism in action
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Opinion | Progressive Europeanism in action

To preserve the EU, the European Central Bank had to step in with negative interest rates and asset purchases

File photo: ReutersPremium
File photo: Reuters

Despite its obvious significance, Brexit is a mere sideshow compared to the muffled, but more fundamental disintegration taking place across the European Union (EU). The political centre is not holding in the key member states. Nationalism is on the march everywhere. Even pro-European governments have, in practice, abandoned all blueprints for genuine consolidation and are increasingly drifting toward re-nationalization of banking systems, public debt, and social policy.

With Brexit from the north and the Italian government’s deployment of xenophobic anti-Europeanism from the south, “ever-closer union" is becoming a farcical symbol of the disconnect between reality and the EU establishment’s propaganda. And German chancellor Angela Merkel’s political eclipse is adding impetus to this dynamic.

While most eyes are on events in London and Rome, it is Germany that offers the best clues to the EU’s weakened state. Germany is experiencing a paradoxical crisis. Europe’s powerhouse is awash with money. A breathtaking current account surplus is producing a tsunami of capital inflows.

So, why is Germany’s political centre not holding? Why are the major parties haemorrhaging support? Why is discontent, xenophobia, and precariousness seemingly triumphant?

Germany’s habitat, Europe, is in a deepening systemic crisis, with effects that are reaching deep into German society. The inhuman austerity policies first tried and tested in Greece were soon after extended to the rest of Europe. The policy of running a federal budget surplus during deflationary times has led to crumbling infrastructure and deteriorating public services. The repercussions of low levels of investment in people and green technologies have left a majority of Germans feeling trapped.

Since the euro crisis began, a wall of money has been boosting German share prices, house prices in the main cities, and inequality. Indeed, half of the population is finding it increasingly hard to make ends meet. We should not be surprised by Germany’s paradoxical crisis. European economies are fully intertwined, and so are the fates of their people.

Internal devaluation in southern countries failed to rebalance their economies for the simple reason that, while wages and prices fell in, say, Greece and Spain, debt did not, thus trapping whole populations in insolvency. To preserve the EU, the European Central Bank had to step in with negative interest rates and asset purchases. But the negative interest rates resulted in shrinking German pension funds, while the asset purchases magnified inequality in Germany. This combination of low demand, negative interest rates, rising inequality, and increasing asymmetries within and between European countries is the true cause of rising nationalism.

This is why the whiff of disintegration is everywhere. The pre-condition for ending Europe’s disintegration is the release of millions of Germans from a precarious existence in the midst of tremendous wealth. And the prerequisite for releasing them is the abandonment of the false belief that northern Europe is clashing with southern Europe.

The real battle is taking place within every EU country. It is a battle between progressives and authoritarians, whether establishment austerians or insurgent racists. This is the true conflict that hides behind the façade of identity politics and moral panic over migrants.

Those of us who are active in building a pan-European progressive political movement believe that only transnationality-in-action can counter the sectarian, nationalist narratives that conceal the underlying struggle. In practice, this means developing a single pan-European policy agenda and forming a single transnational electoral vehicle that contests elections across Europe on the basis of that agenda.

Fortunately, this is no longer a theoretical endeavour. The Democracy in Europe Movement 2025 (DiEM25) has already formulated such an agenda, a Green New Deal for Europe, and has formed such a transnational electoral formation, the European Spring. In May 2019, when the European Parliament election takes place, the European Spring will contest them via the national parties across the continent.

Last weekend, the assembly of our German party, Demokratie in Europa, elected me to lead its list of European Parliament candidates. My candidacy symbolizes the end of the north-south divide and epitomizes the new transnational politics that is uniquely capable of saving European democracy, German democracy, and, indeed, Greek, Italian, and French democracies. In the coming months, I will campaign in Greece, as leader of our Greek party (MeRA25) running in Greece’s national elections, in Germany as a candidate for the European Parliament, and in the rest of Europe on behalf of European Spring.

When my fellow Greeks ask me why I am running simultaneously in Greece’s national election and in Germany as a candidate to represent Germans in Brussels, my answer will be: Because our European crisis is one, even if it manifests itself differently in Greece and in Germany. And when German voters ask me, “Why are you, a Greek, seeking our vote here in Germany to represent us in the European Parliament?", my answer will be: Because the policies that are depriving so many Germans of hope were first tried and tested in the dystopic laboratory that was Greece.

This is a time for Europeans to be bold, courageous, and prepared to do what our forebears failed to accomplish in the 1930s: to press transnational democratic politics into the service of progressive Europeanism. ©2018/project syndicate

Yanis Varoufakis is a former finance minister of Greece.

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Updated: 05 Dec 2018, 12:24 AM IST
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