Tag Archives: Jean-Claude Juncker

Long live Europe, but which one?

Illustration by Manos Symeonakis

Europe is dead. Long live Europe. The demise of the political and economic union, as we knew it, became evident at the recent meeting of European Union leaders in Brussels. What is less apparent is which Europe will replace it. A rapidly changing world has forced the once-untroubled Europeans to think again about where their continent is heading and how it will get there. The decisions taken over the next few weeks and months will determine whether a brave new world lies ahead or whether we will be left clutching the remnants of a flawed past.

The February 4 summit confirmed that the European project, built on the expectations of decent salaries, respectable retirement ages and an abundance of jobs, mostly in the service sector, has reached its expiry debt. The “social Europe” envisioned by, among others, former European Commission President Jacques Delors, where workers’ rights were protected and adequate public services were available to all, has fallen victim to circumstances. The sovereign debt crisis has been a major catalyst in this, but the Union faces much wider challenges than just how to deal with debt and deficit problems.

Although one EU government after another has been cutting its spending and trimming the fat from its public sector over the past couple of years, February 4 proved a watershed in the process of sacrificing the old Europe at the altar of the new economic reality. French President Nicolas Sarkozy and German Chancellor Angela Merkel unveiled their “pact of competitiveness” as a strategy to help the eurozone out of the crisis and to harmonize economic and social policies between the 17 members. The six-point package includes proposals to increase each country’s retirement age to reflect its demography, abolishing automatic inflation-linked wage increases and setting an across-the-board minimum corporate tax rate.

The proposals have divided Europe, not just because Merkel and Sarkozy continue to forego consensus in favor of maintaining an agenda-setting momentum, but because some of their suggestions go against the European grain. “I can’t really detect a reason why abolishing the indexation of wages should improve the competitiveness of my country,” said Luxembourg Prime Minister and head of the Eurogroup, Jean-Claude Juncker. “This is not a competitiveness pact, it’s a perverse pact toward lower living standards, greater inequalities and more precarious employment conditions,” said John Monks, head of the European Trade Union Confederation.

The six-point plan is cast in the mold of the EU’s two dominant economies: the French and German — particularly the latter. But those who oppose the competitiveness pact argue that in a Europe that is not homogeneous, creating more economies in the image of Germany’s is unfeasible and undesirable. “The German model, which relies on a permanent trade surplus is neither sustainable, nor transferable,” wrote the left-leaning German daily Berliner Zeitung. “It works as a model for a selfish nation that floods the neighborhood with its goods and services and exports unemployment at the expense of others.”

“What the chancellor is proposing is a pact of insanity,” concludes the newspaper. “Europe doesn’t need more Germany, rather it needs more cooperation and community.”

However, there are many within Europe who think that Merkel and Sarkozy are on the right track and that although their proposals may reflect a grim reality, it’s reality nonetheless. “The competitiveness pact is a step in the right direction because it means that we are not discussing just narrow economic governance — having more rules — but the broader approach about what competitiveness is as well, and how we will ensure that what has happened over the last two years does not happen again,” Karel Lannoo, CEO of the Center for European Policy Studies told Kathimerini English Edition.

“It is much more important to have disagreement on issues of competitiveness, such as real unit labor costs and how to run public finances, than to have even more rules in the Growth and Stability Pact or balancing the budget. It’s much better to have agreement on broader principles and have them effectively applied.”

Merkel and Sarkozy, some believe, are trying to drag an aging Europe toward economic pragmatism; the lofty ambitions that accompanied the euro for the past decade and the dreams of social security and stability that have formed the cornerstone of the EU will have to be tempered, if not completely abandoned. The debt crisis triggered by Greece’s spectacular unravelling lit the blue touch paper for this dramatic reconceptualization but there is more to it than that. China is the dragon in the room that Europeans are only starting to talk about it now.

China has become a key trading partner for the EU and, in cases such as its purchase of Portuguese, Spanish and Greek bonds, is actively trying to help Europe through this crisis because it values having a reliable trading partner and a counterbalance to the influence of the USA. However, China has also become a competitor because of its meteoric rise in the production sector. The market dominance that has come with it has reminded Europe, that its service-based economy is not strong or versatile enough to withstand the force of the crisis, that it no longer makes things, that its industries are in decline and that it has little capacity for creating new jobs at a time when they are needed most.

Last December, China said that it had created 57 million manufacturing jobs between 2006 and 2010. Between 2008 and 2010, the EU shed almost 5 million jobs in industry while seeing its unemployment rate grow to an average of more than 10 percent and an increasing number of people (40 percent of the EU’s young) working in temporary jobs.

“A little while ago we declared that we were in the post-industrial age and this had a huge impact on such things as the structure of education: we didn’t have any engineers — it was more in vogue to become a psychologist than an engineer,” former Regional Policy Commissioner and current MEP Danuta Hubner told Kathimerini English Edition. “There were a lot of factors that made industry much less important in our economy. And then there is China, which is a completely new factor, which is competing with us mostly in industry and agriculture but not yet in the services. So, now we have to think about creating jobs in the real economy.”

Merkel and Sarkozy’s “competitiveness pact” suggests what underlying conditions, such as low debt and a more flexible and cheaper workforce, might be needed for growth to return to Europe but it still doesn’t propose how jobs will be created. This is an issue that the EU is only beginning to grapple with and the proposals on the table still seem nebulous. It is not clear if the focus has to be on better education, more research or gearing up industrial production. Will the new jobs be in laboratories, on factory floors or in design studios? If the plan is to improve the skills and knowledge of the next generation to give Europe the edge over China, India, Brazil and any other competitors, will Europe be able to survive a lean period in the intervening years? These are quandaries that the EU, collectively and individually, has yet to really address.

At a central level, the European Commission unveiled last October its plans in a communication titled “An industrial policy for the globalization era,” which called for initiatives to create more favorable conditions for industry, including simplifying legislation and offering financial incentives. However, this was somewhat contradicted by EU Research Commissioner Maire Geoghegan-Quinn, who at the beginning of this month said that Europe has to focus more on innovation, which would involve reforming education and investing more in research and development. Last year, the EU adopted the 2020 strategy as a successor to the Lisbon Agenda, which had sought to make Europe a “knowledge-based” economy. The 2020 strategy aims to set targets for reducing the number of early school leavers, increasing the number of people in employment and boosting investment in research and development. The chances of these targets being met in Greece, Ireland or debt-burdened Portugal, for instance, seem slim. Beyond this, the strategies and goals of the individual states have to be taken into account as well. Europe, it seems, is lost in the fog created by the debt crisis, unsure of which way to turn.

“There are still people in important European institutions who believe that just by training people you can create jobs, which I don’t think is really true,” said Hubner. “You still need investment, not just any investment; you need investment that is not just allowing us to compensate for what we lost in the crisis but to have a new type of production that will let us compete with everyone else.

“That’s why we want to focus on the knowledge that comes from education and innovation. We also have to look for jobs in combating climate change. You have to use the European budget to help with this because it has a strong catalytic function, and you must have national budgets working. We have to push for the European Investment Bank to have a greater role. But it is still not enough; we cannot create jobs without private capital,” said Hubner.

The Europe of the future, it seems, will have to turn back the clock by rebuilding a production base, albeit one that will rely on small and medium-sized enterprises pumping out innovative ideas and products rather than large factories pumping out carbon emissions.

“We have to invest in things that generate competitiveness,” said Hubner. “We don’t want just any growth but very concrete growth because we are losing jobs to India and China overnight.”

Although China is reportedly losing some labor-intensive manufacturing jobs to countries like Bangladesh, Vietnam and Cambodia because they offer even lower wages and more unskilled labor, it is still an immensely cheaper place to make things than Europe. Compensation rates for workers in China are estimated to be no more than 5 percent of those in Europe. So, even if European wages are suppressed, as Sarkozy and Merkel’s pact proposes, competing with China or India on labor costs is out of the question.

“I don’t believe that you can change Europe’s development model to compete with China,” said Hubner. “We have to invest in productivity.”

This argument is the starting point for those within the EU who say the answer to the Union’s problems is not becoming more like China, but becoming more like Europe. In other words, it must not stake its future on an export-driven economy supported by cheap, precarious labor but find a better way to harness the potential of a highly developed group of states with a combined population of more than 500 million people.

“At the moment, Europe is one of the most competitive regions in the world,” Jurgen Klute, an MEP for Germany’s leftist Die Linke party and a member of the European Parliament’s economic and monetary affairs committee told Kathimerini English Edition. “This talk [of competitiveness] is only designed to build up psychological pressure on people. It’s not reality.

“We have to look to be competitive but that is only one aspect. We should not focus just on the Chinese, we have to be focused on our own market and development. We have to organize a production sector, a service sector and a sector for delivering goods for our own population. That should be the first goal of every politician in Europe.”

The concern of many in Brussels, and other European capitals, is that Merkel and Sarkozy are pushing an agenda, which is to be reassessed at the next EU leaders’ summit on March 24 and 25, that suits them and their economies but not necessarily the rest of Europe. Their insistence on concluding their business behind closed doors and then presenting other European leaders with a fait accompli is heightening fears that rather than bringing the EU together so it can meet its new challenges with a united front, the Franco-German allies could cause irreparable differences.

“There was no democratic control over the discussion that happened,” said Klute. “Merkel and Sarkozy are trying to change the culture and procedures of the EU. In the past it was clear that you have to find compromises and balances.

“The Council [of EU leaders] is focused only on the single state, not the relationship between states. They ignore that there is a relationship between the deficit of some countries and the surplus of other countries. If there is to be solidarity, then the stronger states have to reduce their speed a little bit.”

The EU is not just facing an economic dilemma, it has an existential question to answer about how its decisions are taken and where these decisions lead, Klute suggests.

“There has been a change in the understanding of how the EU should develop, in the understanding of solidarity and of the democratic process. It’s a very big change in the direction of the EU.”

The issue of competitiveness, as set out in Merkel and Sarkozy’s proposals, therefore seems to be a misleading one. Few people have better first-hand experience of European affairs than Pierre Defraigne, the executive director of the Madariaga-College of Europe Foundation, who served as a European civil servant for 25 years. He is adamant that tweaking wages and retirement ages will not be enough to save Europe. He believes there needs to be a concerted effort to transform Europe into a much tighter-knit community with a specific economic agenda.

“The first thing I would do is to delete the word ‘competitiveness’ from the vocabulary of politicians and economists,” he told Kathimerini English Edition during a seminar organized by the European Journalism Center. “We have to climb up the technology ladder. This is a matter of public policy and small firms — start-ups and so on — and of large firms, of champions. We don’t have the right system and we are still just an economic space, a market; we are not really an integrated politico-economic system.”

Defraigne suggests that Europe can have an industrial future but that it will need to find the appropriate mix of labor market and social policies to achieve it. To reach this point though, Europe will need a level of coordination and harmonization that it has only flirted with in previous years. It seems that the EU’s political and economic viability is reliant on the bloc’s politicians and opinion-makers being able to redefine what this Union is about.

“For me, the key issue is to give Europe a sense of direction, a sense of purpose,” said Defraigne. “The half-century of effort we have carried out successfully will be legitimized in history if we move to closer political union.”

With just over a month until its leaders meet again for a crucial summit in Brussels, the EU must begin redefining itself. Visions must be reconjured, goals reset and strategies redrawn. In the meantime, the words of Delors, one of the architects of the Europe that is now crumbling like a desiccated sand castle will ring poignantly through the corridors of power. “The problem with a purely collective system,” said the Frenchman, “is not only that it requires economic growth, and the right sort of demographic trends, but that it prevents people thinking about their futures in a responsible way.” A lack of growth and the unfavorable demographic trends have forced Europe to emerge from its cozy collectivity and think about its future. Now we wait to see which Europe will emerge from this process.

Nick Malkoutzis

The Eurobonds that bind us

Illustration by Manos Symeonakis

At first they appeared to be two disparate worlds even though they were physically separated by only about 100 meters: The Communist Party supporters who gathered in front of Parliament on Tuesday to tell International Monetary Fund Managing Director Dominique Strauss-Kahn to go home; and the journalists, academics and students who took seats in a snug underground amphitheater to hear a debate on how the media in Germany and Greece have covered the economic crisis.

However, these two seemingly unconnected events had much more in common than at first glance. In essence, they formed a microcosm of the European Union today, emphasizing the unrest and dissent that exist within states but also the disagreement and tension that exist between them. The Communists represented the growing disquiet about an EU that’s moving away from the platform of security and prosperity it was built on. The differing views of the Greek and German journalists and government officials on the panel epitomized the way the crisis has laid bare the contrasting visions that Europeans have about the way forward.

Europe takes its name from the mythological figure of Europa – so beautiful that Zeus transformed himself into a bull to seduce her and carry her to Crete. The tale is depicted on the reverse of the 2-euro coin. It’s the euro that has been at the forefront of carrying the EU to what looked like a promised land of economic growth and shared values. But now Europe is lost in a wilderness of debt and national interests and there is nobody around to whisk her off to greener pastures. The euro, however, has the ability to become the Union’s driving force again – even if this week’s events made that seem as likely as Zeus coming down from Mount Olympus to wipe out Greece’s national debt.

The disagreement and division in the air around Syntagma Square this week was in keeping with the mood of disunity that followed a proposal to launch a Eurobond that would, in theory, ensure greater economic stability within the bloc. The suggestion was made by Italian Finance Minister Giulio Tremonti and Luxembourg’s Prime Minister Jean-Claude Juncker, also the head of the Eurogroup, in the Financial Times on Monday. They proposed that the members of the eurozone issue common bonds, or E-bonds, because this pooling of debt would bring greater stability, fiscal integration and create a note so attractive to investors that it would bring down the cost of borrowing for eurozone members like Greece, which are currently suffering from soaring spreads.

The Eurobond would, as Juncker and Tremonti argued, send a clear message to financial markets that European politicians are committed to political, economic and monetary union and the “irreversibility of the euro.”

On the same day, a top economist at the British Treasury told a parliamentary committee that the collapse of the euro was “possible,” sparking all kinds of consternation across the continent and on the markets. It made the significance of Juncker and Tremonti’s suggestion even greater. Beyond the economic principles behind the idea of creating the E-bond, the proposal urges togetherness at a time when the EU desperately needs it.

The Eurobond, however, was immediately and flatly rejected by German Chancellor Angela Merkel. “It is our firm conviction that the treaties do not allow joint Eurobonds; in other words, no universal interest rate for all European member states,” she said.

French President Nicolas Sarkozy, who lately has formed a policy tag-team with Merkel, also shunned the proposition, arguing it would allow the more irresponsible states to run up debts in the knowledge it would not increase the cost of their borrowing. “If it’s about increasing Europe’s debt, that would have the effect of taking responsibility away from each state,” he said after meeting the German chancellor on Friday. “We want exactly the opposite – making states more responsible.”

The Netherlands and Austria were also against the idea. Along with Germany, these countries have lower debt levels, competitive economies and therefore pay much lower interest on their bonds than eurozone members at the other end of the scale, like Greece, Ireland and Portugal. A move to a Eurobond would lead to Germany paying higher interest as the risk of default among the weaker eurozone members would be factored into the note’s yield.

The German concerns are therefore understandable, but the alternatives to the Eurobond are equally worrying. Clearly, further steps need to be taken to bring eurozone members and their economic and fiscal policies closer together if the single currency is going to come out of this crisis with any long-term viability. If Germany rejects such moves, it opens up the possibility of creating a two-tier, two-speed euro, whereby the more stable countries introduce a “hard-currency euro.”

Such an idea was recently put forward by Hans-Olaf Henkel, former president of the Federation of German Industry, who is rumored to be considering launching an anti-euro party. The other alternative, which perhaps would not displease many Germans at the moment, would be a return to the Deutsche Mark, leaving the others to pick up the pieces of a broken euro. Either scenario would be disastrous for European unity.

Perhaps that’s why Juncker shed the cloak of diplomacy usually worn by European technocrats and gave an uncharacteristically blunt response. “Germany is thinking a little simply,” he told the weekly Die Zeit, accusing Berlin of rejecting the idea before studying it properly and of behaving in an “un-European manner.”

Who would have thought that the chief architects of a united Europe would one day be accused of being “un-European”? Even though the crisis has highlighted common weaknesses and interdependencies in Europe, it has also prompted countries to focus on their own interests more intently than before. Nowhere is this more evident than in Germany, where the national mood seems to be one of unwillingness to give up or give away what Germans have spent decades working for.

“Perhaps for the first time since the Second World War, they are allowing themselves to be defiant and proud,” Katinka Barysch, deputy director of the Center for European Reform, told the Financial Times. “Their export-oriented, stability-obsessed economic model is not up for discussion.”

At times, this has caused Germany to be shortsighted or even selfish: Its initial reluctance to bail out Greece, its insistence that the IMF be part of the rescue package, its persistence in ensuring that private bondholders share the liability for a permanent support mechanism or in its rejection of the Eurobond proposal.

But, again, the alternative of being a lone wolf rather than part of the pack is not as appealing as it might first seem. Not being involved in the single currency would have a disastrous effect on the German economy. Roughly 40 percent of German exports go to eurozone countries. These would all immediately become much more expensive if the Deutsche Mark returned. A downturn in exports would then have a series of knock-on effects, including a rise in unemployment. It would also mean the EU losing its voice in the global economy, where the USA and China would be left in a much more dominant position.

Whichever way Germany turns, its future seems inextricably linked to the EU and the euro. Ultimately, it has much more to gain from the eurozone riding out this crisis and emerging stronger on the other side than by cutting its losses now and going it alone.

Despite her recalcitrance, Merkel acknowledged as much on Friday. “If the euro fails, Europe fails,” she said. “This is a deeply serious matter for me and that’s why Germany will do everything to defend the euro jointly with the other members.”

That’s why Germany may change its mind on the Eurobond proposal. Yes, it will make the cost of borrowing a little more expensive, but the alternatives could be more damaging. “What are the risks to the German yield curve of the destruction of around half of German banks’ capital if the eurozone was broken up?” writes Joseph Cotterill in the FT’s Alphaville blog. “Or if, say, the European Financial Stability Facility’s lending capacity becomes so debased that only a direct fiscal transfer will satisfy markets, should it come to Spanish or Italian crisis?”

In the midst of the acrimony and disagreement clouding Europe’s decision-making process, one thing seems clear: The future of Europe, as well as that of Germany, rests on the ability of its policymakers to find the points where national interests meet common interests. This is the place where Zeus now has to carry Europa. It is here that she has a chance of living securely and prosperously.

This commentary was written by Nick Malkoutzis and was published in Kathimerini English Edition on December 11, 2010.

Disposable heroes of hypocrisy

Illustration in linocut by Manos Symeonakis

Is Greece corrupt? If it’s possible to quantify such things, as the graft watchdog Transparency International does regularly, then the answer is yes. Does that make all Greeks corrupt? Emphatically, no. Does it mean that Greece is forever destined to walk Europe’s corridors of power feeling like an inbred among lots of thoroughbreds? Again, absolutely not. It’s really as simple as that. But over the past few days, much of the media and political world — no strangers to the odd corrupt moment themselves — decided it would be more fun to muddy the waters. At a time when thousands of people’s jobs are on the line and the country’s immediate future still hangs in the balance, they chose to play a childish game of pinning blame for the corrupt image that haunts Greece.

At the sidelines of the International Monetary Fund and World Bank meeting in Washington last Friday, the head of the Eurogroup, Jean-Claude Juncker, held a news conference. During this session, which was not attended by any Greek journalists, Juncker referred to a Greek prime minister openly admitting that his country was corrupt. When his comments were later reported second- and third-hand, it sparked faux moral anguish from scores of politicians and journalists. Suddenly, there was a hunt on to uncover this dastardly Greek premier, who so heartlessly sold his country down the river to snobbish European bureaucrats. It was a game that PASOK and New Democracy played with glee.

Forgotten for the past few months in the fusty attic that politics reserves for retired leaders, Costas Simitis sprang into life like a well-oiled jack-in-the-box to vehemently deny he’d ever claimed Greece was corrupt — even though this was the same Simitis who, as prime minister, in a frank assessment of his nation’s deep-rooted incompetence following the sinking of the Samina Express passenger ferry in September 2000 had said: “That’s Greece.” Another ex-premier, Costas Karamanlis, the talking bear whose pull string no longer works, also let it be known via his friends that he would never bring such shame on the country he served for five and a half years — even though this was the same Karamanlis who six months after coming to power in 2004 had told a select group of MPs over souvlaki and beer that he was determined to confront corruption by taking on the “five pimps” (industrialists and publishers) that controlled the country.

As it turned out, Juncker had not recounted a private conversation with either of these premiers. The head of the group of 16 countries that use the euro currency had simply referred to one of several public comments over the last 12 months by current Prime Minister George Papandreou about his country’s unsuccessful battle against graft. This appeared to settle the dispute but, aided by compliant members of the media, ND and PASOK tried to squeeze a little more playtime out of the affair, launching claims and counterclaims at each other. Oblivious to the hypocrisy of it all, ND even demanded an apology from PASOK on behalf of Karamanlis for implicating the ex-prime minister. Meanwhile, nobody spared a thought for the Greek people, who were the ones really deserving of an apology.
All this flapping over trivialities meant that an added, more important dimension to Juncker’s comments went largely unnoticed in Greece. The Luxembourg prime minister said he’d known for some time that the Greek economy would hit a brick wall but he “could not go public with the knowledge.” The crisis could have been avoided, in Juncker’s opinion, if Greece had adopted different policies in the past. “It was clear that this problem would occur,” he said, according to the Irish Times, which was actually at his news conference. “We knew it would, because we were discussing it among the Germans, the French and myself.”

How gratifying it is to know that Greece’s failed policies, for which the same Greek taxpayers have been paying for so many years, provided a hot topic for conversation between our continental partners — partners who, for reasons that Juncker did not clarify, decided to remain silent about these catastrophic shortcomings. Could it be that as long as Greece was useful to Germany and France as an importer of goods and purchaser of weapons, nobody wanted to rock the boat? Or, was it that they feared the impact on the single currency if widespread corruption and mismanagement was uncovered in one of the eurozone’s member states? Maybe Juncker will eventually reveal what prevented Europe’s big players from enforcing the strict terms of monetary union and forcing Greece to put its house in order, allowing instead one of the members of what was once known as a “community” and now as a “union” to dig an ever deeper hole for itself as they looked on in silence.

Of course, Juncker and other European leaders would argue that they cajoled their Greek counterparts in a way that avoided publicity so as to minimize the damage to the country’s credibility. Presumably, they would also argue that, ultimately, it was Greece’s responsibility to implement the changes its eurozone peers had recommended. Both arguments are valid. After all, it would be a serious dereliction of duty if a country’s leader consistently ignored warnings that disaster would strike unless specific measures were taken, wouldn’t it?

It was illuminating, therefore, to read Tony Barber’s account in the Financial Times last week about how European leaders arrived in April and May at the decision to provide, with the assistance of the IMF, 110 billion euros of emergency loans to Greece and then set up a 750-billion-euro “stabilization mechanism” for the other eurozone countries. Barber describes how on May 7 in Brussels, Jean-Claude Trichet, the president of the European Central Bank, spoke bluntly to the leaders of eurozone countries about the dangers to the single currency. “Mr Trichet told the leaders that the crisis was partly their own fault because they had too often turned a deaf ear to ECB appeals for fiscal discipline after the euro’s launch,” writes Barber. “The ECB, he said, had repeatedly warned of the need for strict control of public borrowing and spending.”

Well, what do you know? Could it be that at the same time Greek leaders were unwilling to heed advice because it involved taking non-politically expedient measures, their European counterparts were doing exactly the same thing?

The furor over Juncker’s comments should not disguise that Greece has a serious corruption problem, which is clear to all regardless of whether our leaders admit it publicly or not. But the dust that’s been kicked up this week by politicians and journalists should also not cloud the fact that although hypocrisy is a Greek word, it’s not an exclusively Greek trait.

This commentary was written by Nick Malkoutzis and was published in Athens Plus on October 15, 2010.

Sovereign territory

Illustration by Manos Symeonakis

“Sovereignty is rather like virginity: You either have it or you don’t,” a wise man told me some years ago. If this is the case, then, in an age when sexual morals are more lax, it seems fitting that there are only few, if any, states that can truly claim to be sovereign.

For the last few decades, a number of transnational factors — capital, migration, environmental degradation, communication, technology and even terrorism — have chipped away at states’ sovereignty. Rather than a case of “wham bam thank you ma’am,” it’s been a series of long, complicated dates that have led to the same, inevitable outcome.

Of course, there are still moments when sovereignty can be lost in a flash — for example, when Haitian Prime Minister Jean-Max Bellerive last Friday transferred operations at the airport in Port-au-Prince to the USA to speed up the earthquake relief effort. The scale of the disaster that hit the Western Hemisphere’s poorest nation meant that Bellerive had little choice than to put his faith in the Americans. Nevertheless, handing control of your country’s airport and air space to another state is a landmark moment when one assesses the withering sovereignty of nations.

Greece is inextricably linked to Haiti, as the island state was the first to recognize the Hellenic Republic as an independent country in 1822. But over the past few days, the two countries have had something else in common: Greece also saw its sovereignty vanish, albeit under less horrific circumstances.

While preparing its Stability and Growth Program, which was officially presented to eurozone members on Monday, Greece essentially gave up control of its economy, and therefore its sovereignty. The measures that Athens intends to adopt as part of the four-year economic recovery plan were written here but they were dictated from other European capitals, even though the onus is on Greece to solve the problem on its own. “It would be wrong to presume or let Greece presume that the other countries could solve its problems,” said Luxembourg Prime Minister Jean-Claude Juncker, the chairman of eurozone finance ministers or Eurogroup.

The death stare that Juncker fixed on Finance Minister Giorgos Papaconstantinou during Monday’s eurozone meeting was both humiliating and frightening. It was confirmation that Juncker, a career politician who has been at the heart of EU developments for many years, intends to watch the Greek government like a hawk. But he won’t be satisfied with just monitoring Athens’s movements. He’s already shown he’ll test the limits of Greek sovereignty. It was Juncker, rather than Papaconstantinou, who last week got in touch with International Monetary Fund (IMF) Chief Dominique Strauss-Kahn to discuss whether Greece could use some financial help. “We think IMF assistance to Greece would not be opportune or welcome,” said Juncker after the chat.

“It’s nice of him to let us know,” the Greek minister might have thought. Well, he’d better get used to it because Juncker won a fresh 30-month mandate as the Eurogroup chief on Monday and the 55-year-old is the kind of technocrat who believes Europe’s strength lies in closer integration, a concept that allows little prospect for EU member states to make decisions independently. In a letter circulated to the eurozone finance ministers this week, the Luxembourger said he wants the Eurogroup “to pursue broader economic surveillance” of its 16 members. Greece’s recklessness and untrustworthiness means other countries could soon suffer the ignominy of outside interference in their economies.

Getting its figures right, cutting costs and generating revenues were never Greece’s strengths — but even so, relying on its European friends to prescribe a way out of this mess seems a high price to pay. It’s difficult to know what’s more galling: the fact that Greece’s ministers are being hauled before Juncker and similar EU officials like errant schoolboys or that it’s now been confirmed in black and white, in page after page of reports, that Greeks are truly incapable of exercising their sovereignty.

If we are to take anything positive from this sobering experience it’s the hope that our European partners have a better idea of what to do than we ever did but, more importantly, that we now have a chance to regain trust and rebuild confidence. Although there are many trials and tribulations that come with a loss of sovereignty or virginity, a loss of dignity will always be more painful. But, unlike virginity and possibly sovereignty, dignity can be restored.

This commentary was written by Nick Malkoutzis and first appeared in Athens Plus on January 22, 2010.

The ditch Blair project

Tony_blair_witch Project_a.jpg

Illustration by Manos Symeonakis

Tony Blair must be getting used to rejection by now. He left office in 2007 unloved and unwanted after 10 years as British prime minister. His attempt to win back some respectability as an international statesman by becoming a Middle East envoy has been a damp squib. And now his voyage to become the Europe’s first president appears to have foundered on the EU’s perennial rock of uncertainty.

In hushed tones and behind closed doors, European leaders last week seemed to reject the idea of Blair being appointed president of the European Council, a position created by the ratification of the Lisbon Treaty by all 27 EU member states.

Blair has some characteristics that would make him a suitable candidate for the role (charisma, valuable political experience, good communication skills, the ability to lead and diplomatic presence) but for many these are outweighed by the baggage he would bring with him (the Iraq War, his close ties to George W. Bush, his unpopularity in his own country, a pending investigation into whether he lied to his people and parliament and a fraught relationship with the EU in the past).

The fallout from the Iraq War is the biggest elephant in the room blocking Blair’s path to the presidency. The decision to hitch his wagon to George W. Bush’s lone star is something Europeans cannot overlook easily. But given the chance, Blair would probably explain that as the British prime minister, he had to make a decision – a very wrong one as it turned out – about whether to take part in a war. Had he been the prime minister of Belgium or Luxembourg, for example, perhaps his toughest foreign policy choice would have been what color bunting to get out when dignitaries visit from abroad.

Blair might even argue that having been through such a maelstrom and suffered the political consequences of his choices, he has the ideal experience to now be a unifying rather than a divisive figure. But even this does not dispel the dark cloud of mendacity that hangs over him. The Chilcot inquiry into Britain’s participation in the Iraq War will hopefully establish beyond doubt what Blair knew and what he told MPs and the public before committing troops to that conflict. The fact he’s due to face such an investigation appears to undermine his bid to become EU president. To risk having the first person in such a high-profile role publicly exposed as a liar would damage the Union. Of course, there would be more than a hint of hypocrisy in the air if he is rejected on this basis alone: Few of the 27 leaders who decide who fills the role are paragons of virtue themselves – any group that has Silvio Berlusconi as one of its most prominent decision-makers can hardly claim the moral high ground.

Perhaps that’s why some of them decided to suddenly create new criteria for any presidential candidate: his country would have to be a member of the eurozone and part of the Schengen Agreement – Britain is neither. If the EU’s aim is to appoint the best person for the job, then this shifting of the goalposts is preposterous. Theoretically, the EU president should be someone that’s transnational, not national, federal, not feudal. If he or she subscribes to the European project, then their homeland’s policy should be irrelevant.

10_okOf course, Blair’s critics would argue that he’s always been at loggerheads with the Union, typified by his stance in 2003 in the buildup to the Iraq War, which was widely interpreted as an effort to split the bloc. However, Blair has engaged with the EU in more constructive ways as well. One of his first acts after being voted into power in 1997 was to abolish Britain’s opt-out of the Maastricht Treaty’s Social Protocol. He was also one of the proponents in 1998 of giving the EU a role in defense policy and was a champion of the bloc’s enlargement. He was the first British prime minister to put the UK’s budget rebate up for discussion in 2005, when he urged member states to reform the Common Agricultural Policy and cut the extensive waste and laziness that it leads to, as we are well aware of in Greece.

In June of that year, Blair stood before the members of the European Parliament and set out a vision for a less bureaucratic, more liberal and modern Europe. “The people of Europe are speaking to us,” he said of citizens’ waning interest in the EU. “They are posing the questions. They want our leadership. It is time we gave it to them.” More than four years on, that leadership is still absent and, as the turnout in June’s European Parliament elections indicated, interest in the EU is flimsy. These are issues that, theoretically, a European president could address.

The role has been created so that someone can preside over the European Council – the regular summits between the 27 heads of government – and coordinate its work. According to the Lisbon Treaty, the president should also “ensure the external representation of the Union on issues concerning its common foreign and security policy.”

Yet, what we have seen over the last couple of weeks is a climb down from this position. The message from Brussels last week was that it would be preferable for the president to come from one of the smaller member states, that he or she should be able to strengthen Europe from within, not necessarily give it a presence on the world stage, and be willing to play second fiddle to European Commission President Jose Manuel Barroso and the 27 leaders.

“There is an argument that a political star as a president of the EU would lead to trouble with the president of the Commission and other leaders,” Robert Goebbels, the Luxembourg MEP who has launched a petition to stop Blair from being considered for the job, told Athens Plus.

It would be one of the EU’s more quixotic moments should it create an opening for a figurehead who could use diplomatic and communication skills to promote the Union to an increasingly apathetic public and give it a greater presence on the global stage only to then shackle him or her for fear of upsetting internal balances.

As the Dutch daily De Volkskrant put it in a recent headline: “Europe chooses: chief or messenger boy.” Given some of the names that have been mentioned as alternatives to Blair – Luxembourg Prime Minister Jean-Claude Juncker, Dutch Prime Minister Jan Peter Balkenende, former Finnish Prime Minister Paavo Tapio Lipponen, former Austrian Chancellor Wolfgang Schussel, former Belgian Prime Minister Guy Verhofstadt and former Latvian President Vaira Vike-Freiberga – it seems the EU has decided there are too many indians to have a chief.

Presumably some of these politicians, if not all, are who The Economist had in mind when it referred to “the usual Europygmies.” Maybe, it’s a harsh assessment of men and women who are capable politicians in their domains, although hardly singular figures, but it underlines the challenge the EU now faces in trying to select someone to fulfill a role whose purpose remains unclear and undefined.

At least something is much clearer now: rejecting Blair was the easy part, too easy perhaps.

This commentary was written by Nick Malkoutzis and first appeared in Athens Plus on November 6, 2009.