Future of the European Union

[Husar]

Re: encyclical - i do you all the credit of being educated chaps, so i consider it clearly to be understood:
That the word combined with Macrons divine self-image, references his attempt to speak to europe about the EU.

I kinda figured the Macron thing from the one article I found about him and had encyclical figured out with a simple search before I even sent the last post. But since I don't want to have to search several times whenebver I try to answer you, it can't hurt to use somewhat plainer language. Being educated doesn't mean one is a walking dictionary of everything. It simply saves everybody some time. I also try not to ask you about German politics using the local language, terms and jokes you don't know.

I assume you mean this: https://www.theguardian.com/world/20...mmanuel-macron

(see, providing a simple link to a source that you and I can trust gives a much better basis for debate than cryptic slang terms that you then disguise as intellectual talk )

It sounds a lot less neoliberal than I expected from Macron, but at the same time it seems vague enough that a lot could happen in practice.
EU reform is not a bad idea though, if Brexit leads to that, then thank you for not ruining it for us any longer.

[Montmorency]

It sounds a lot less neoliberal than I expected from Macron, but at the same time it seems vague enough that a lot could happen in practice.
EU reform is not a bad idea though, if Brexit leads to that, then thank you for not ruining it for us any longer.

Yanis Varoufakis around the same time on EU reform (European New Deal), and the European Spring coalition running in the EU parliamentary elections this May:

The 2008 global financial crisis — the modern 1929 crash — set off a vicious chain reaction across Europe. By 2010 it had irreparably damaged the foundations of the eurozone, causing the establishment to bend its own rules and commit crimes against logic in order to bail out its banker friends. By 2013 the neoliberal ideology that had legitimised the EU’s oligarchic technocracy had plunged millions into misery, even through the enactment of official policies: socialism for the financiers and harsh austerity for the many. These policies were practised as much by conservatives as by social democrats. By 2015 the surrender of the Syriza government in Greece had divided and disheartened the left, robbing Europe of the short-lived hope that progressives rising up in the streets would alter the balance of power.

Since then, anger has combined with hopelessness to create a vacuum, soon filled by the organised misanthropy of a Nationalist International triumphing across Europe, and making Donald Trump a very happy man. Against the background of an establishment that increasingly resembles the unhappy Weimar Republic, and of the recalcitrant racists produced by the crisis’s deflationary forces, the European Union is fragmenting. With Angela Merkel on the way out and Emmanuel Macron’s European agenda dead on arrival, the European election in May could prove the last chance progressives have to make a difference at a pan-European level.

Spoiler Alert, click show to read: 

Something very odd has been happening in recent years: many on the left have come to view open borders as bad for the working class. Jean-Luc Mélenchon of La France Insoumise has said several times, ‘I’ve never been in favour of freedom of arrival.’ In a speech on posted workers at the European Parliament in July 2016, he said migrants were ‘taking the bread out of the mouths’ of French workers. He has since regretted this statement, though his views on the impact of migration on French wages have not changed.

This is not new. In 1907 Morris Hillquit, the founder of the Socialist Party of America, tabled a resolution to end ‘the wilful importation of cheap foreign labour’, arguing that migrants were a ‘pool of unconscious strike-breakers’. What is new is that much of the left seems to have forgotten Lenin’s fierce reaction in 1915 to Hillquit’s call for curbs on migration: ‘We think that one cannot be internationalist and be at the same time in favour of such restrictions … Such socialists are in reality jingoists.’

Lenin had provided the context in an article on 29 October 1913:

‘There can be no doubt that dire poverty alone compels people to abandon their native land, and that the capitalists exploit the immigrant workers in the most shameless manner. But only reactionaries can shut their eyes to the progressive significance of this modern migration of nations … capitalism is drawing the masses of the working people of the whole world … breaking down national barriers and prejudices, uniting workers from all countries.’

DiEM25 adopts Lenin’s apt analysis: walls that curb the free movement of people and goods are a reactionary response to capitalism. The socialist response is to bring down the walls and allow capitalism to undermine itself, while we organise transnational resistance to capitalist exploitation everywhere. It is not migrants who steal the jobs of native workers but governmental austerity, which is part of the class war waged on behalf of the domestic bourgeoisie.

This is why we are adamant that xenophobia-lite must never be allowed to contaminate our agenda. As my friend Slavoj Žižek says, a leftist nationalism is a cruel and inane response to National Socialism. So DiEM25’s position on newcomers is that we refuse to differentiate between migrants and refugees. And we call upon Europe to #LetThemIn.

Comrades from across Europe call us utopian and say the EU cannot be reformed. They may well be right. So for argument’s sake, let us agree that the EU is unreformable. Is progressives’ best response to adopt Lexit (the leftwing campaign for the controlled disintegration of the EU)? Some of my happiest memories are of addressing large audiences in Germany in 2015, soon after Syriza’s surrender to Angela Merkel and the troika (the International Monetary Fund, European Central Bank and European Commission). They were desperate to convey that what had been done to Greece had not been done in their name, the name of the German people. I remember how relieved they were on hearing the DiEM25 call to form one transnational movement, to unify, to fight together, to seize control of EU institutions — European Investment Bank (EIB), ECB etc — and re-deploy them in the interests of all Europeans.

I still feel the elation of our German comrades on hearing our idea to run Greek candidates in Germany and German candidates in Greece to signify that our movement is transnational, that it intends to take over the neoliberal order’s institutions everywhere and at once, not to wreck them but to make them work for the many, in Brussels, Berlin, Athens, Paris. Everywhere.

Compare this with how they would have felt had I told them that the EU was unreformable and must be disbanded; that Greeks must fall back to their nation state and try to build socialism there, while Germans did the same. Once we succeeded, our delegations could meet to discuss collaboration between our newly sovereign progressive states. Our German comrades would undoubtedly have felt deflated, and returned home depressed, thinking that they would have to face the German establishment as Germans, not as part of a transnational movement.

If I am right, it does not matter whether the EU is or isn’t reformable, but it does matter that we put forward concrete proposals on what we would do with EU institutions. Not utopian proposals but complete descriptions of what we would do this week, next month, in the next year, under the existing rules and with the existing instruments — how we would reassign the role of the awful European Stability Mechanism, reorient the ECB’s quantitative easing, and finance immediately, and without new taxes, a green transition and campaign against poverty.

Why such a detailed agenda? To show voters that there is an alternative, even within the rules designed by the establishment to further the interests of the top 1%. No one expects the EU institutions to adopt our proposals, least of all us. All we want is for voters to see what could be done, instead of what is being done, so that they can see through the establishment without turning to the xenophobic right. This is the only way the left can escape its confines and build abroad progressive coalition.

DiEM25’s New Deal for Europe aims at this; it shows how the lives of the majority of people can be improved in the short run under existing rules and with the current institutions. And it maps out the transformation of these institutions while charting a constitutional assembly process that will, in the longer run, lead to a democratic European constitution to replace all existing treaties.

Everyone talks about the importance of the green transition. What they do not say is where the money will come from and who will plan it. Our answer is clear: Europe needs to invest €2 trillion between 2019 and 2023 in green technologies, energy etc. We propose that the EIB issues an additional volume of its bonds, €500bn annually for four years, and that the ECB announces that, if their value drops, it will purchase these on the secondary bond market. With that announcement, and the glut of savings around the world, the ECB will not have to spend a single euro, as the EIB bonds will sell out. A new European Green Transition Agency, modelled on the Marshall Plan’s Organisation for European Economic Cooperation (the OECD’s precursor), will channel those funds to green projects across the continent.

This proposal requires no new taxes, builds on an existing European bond and is fully legal under existing rules. The same applies to our other proposals, such as our Anti-Poverty Fund: we propose that the billions of profits of the European System of Central Banks (from assets purchased under the ECB’s quantitative easing or from the Target2 payment system) be used to provide every European under the poverty line with food, shelter and energy security.

Another example is our plan to restructure the eurozone’s public debt: the ECB mediates between states and money markets to reduce their total debt burden, but without printing money or making Germany pay for, or guarantee, the public debt of the more indebted countries.

As these demonstrate, our New Deal combines technically competent plans, implementable under the EU’s existing framework, with a radical departure from austerity and the troika’s bailout logic. And it goes further by tabling new institutions that prepare for a post-capitalist European future.

A plan for post-capitalism proposes to partly socialise capital and the returns from automation: big business corporations’ right to operate in the EU will be conditional on transferring a percentage of their shares to a new European Equity Fund. The dividends from these will then fund a Universal Basic Dividend (UBD) to be paid to each European citizen independently of other welfare payments or unemployment insurance.

Our proposals for reforming the euro are another radical change. Before getting bogged down in changing the charter of the ECB, we plan to create a public digital-payments platform in every eurozone country. Using their national tax office’s existing digital platform, taxpayers would have the opportunity to purchase digital tax credits, which they can use to pay one another or to pay future taxes at a substantial discount. These credits would be denominated in euros but transferable only between taxpayers within a single country, so would be impervious to sudden capital flight.

Governments would be able to create a limited number of these fiscal euros, to be given to citizens in need or used for the funding of public projects; fiscal euros would allow stressed governments to stimulate demand, lessen the tax burden, and ultimately reduce the crushing power of the ECB and costs of exiting the euro (or of the euro’s disintegration). In the long term, public digital-payment platforms would form a managed system of country-specific euros that work like an International Clearing Union, a modern version of John Maynard Keynes’s 1944 vision for the Bretton Woods system, which sadly failed to materialise.

Our New Deal for Europe is a comprehensive plan for smartly re-deploying existing institutions in the interests of the majority, planning for a radical, post-capitalist green future, and preparing to pick up the pieces if the EU collapses.

Well-meaning leftwing friends ask, ‘Why doesn’t DiEM25 join up with Jean-Luc Mélenchon’s La France Insoumise or Sahra Wagenknecht and Oskar Lafontaine’s Aufstehen movement in Germany? How can the left make a difference if you fail to unite?’ The reason is simple: our duty is to create unity on a foundation of radical, rational and internationalist humanism. This means a common agenda for all Europeans and a radical policy of an Open Europe that recognises borders as scars on the planet and newcomers as welcome. Nothing less will do.

[spmetla]

Bit of a necro-thread rival but this was the most appropriate place:

Germany's goal of a European federal state proves elusive
https://www.dw.com/en/germanys-goal-...ive/a-60539427

It's a vision that is even included in the deal underpinning Germany's new coalition government. But the dream of a European superstate has lost much of its luster and left Germany looking increasingly isolated.
Germany's new three-party coalition government of Social Democrats (SPD), Greens and Free Democrats (FDP) shares the goal of turning the EU into a European federal state. But viewed against the backdrop of current developments, it is a hugely ambitious project and no other European government has the same zeal for integration as that expressed in the ruling coalition's governing deal.

Which is perhaps surprising given the bloc's long tradition of fervent visions for its future. Back in 1957, the Treaty of Rome spoke of the "ever closer union among the peoples of Europe." And in 2009, the Treaty of Lisbon echoed that striving for "ever closer union." Jacques Delors, president of the European Commission from 1985 to 1995, believed that Europe was like a bicycle moving ever closer towards further integration: "Stop pedaling and the bike will fall over!" These days, that kind of almost unquestioning commitment to a trans-European federation is rare. Indeed, the movement that came to be known as Brexit left the bike struggling to stay on track, in the biggest blow yet to a shared European future.
Turning away from the EU vision
The UK had long been seen as particularly skeptical when it came to Europe. But on a visit to Berlin in March 2018, Dutch Prime Minister Mark Rutte appeared to want to demonstrate that his euroskeptic credentials were second to none: "There has been this narrative that there is this inevitability of closer cooperation in a European federal state. This horrible language about 'ever closer Union' I don't like." Rutte rejected what he dismissed as the "romance" of an ever-closer European Union."

Even Donald Tusk, then president of the European Council, was quoted as saying at a European Business Summit in 2016: "Forcing lyrical and in fact naïve Euro-enthusiastic visions of total integration, regardless of the obvious good will of their proponents, is not a suitable answer to our problems. Firstly because it is simply not possible, and secondly because — paradoxically — promoting them only leads to the strengthening of Euroskeptic moods, not only in the UK."
And it was quite a setback when in 2005 the Netherlands and France — both viewed as staunchly pro-European nations — voted in referendums to reject a European constitution. The clear message was: the vision of ever closer unity did not represent the will of the majority of the people in these countries. A number of governments with far-right populist leadership or participation, for example in Hungary and Poland, also rejected further integration.

Federal Europe: 'Nobody really wants it'
So is it blind or brave for the coalition government in Berlin to ignore the current climate of cynicism and continue to push for a European federal state? Political scientist Johannes Varwick from the University of Halle told DW that it's not worth investing in the federal vision: "If the coalition parties really believe in this, then they will find themselves being caught up by the reality that is Europe. Fact is: nobody in Europe really wants it."

It was above all the Brexit vote that persuaded lawyer Daniel Röder to found the pro-European citizens' initiative Pulse of Europe. The aim was to come up with new ideas to galvanize Europe — and not just the politicians and bureaucrats, but also ordinary European citizens. Still, Röder admits he was "surprised" to see the goal of a federal Europe suddenly popping up in the coalition agreement.
He is one person who certainly needs no additional encouragement to push for further integration. "When you look at the huge challenges that we're facing: climate change, integration, pandemics, the conflict with Russia and so on — well, you're not going to achieve much as an individual nation-state. And we can't leave everything up to China or the US, so we need further European integration." However, he adds: a European federal state "isn't necessarily the goal."

European or national solutions: Keep your options open
Just how much integration is ideal varies from issue to issue. In some areas, the EU has gone a long way towards becoming a federal state. Take the development of the single market, or joining forces in the export sector. In other areas, however, countries have been reluctant to give up on their sovereignty and instead focus on shared policy initiatives.
The battle against the COVID pandemic has only underlined this tendency. Health policies are the prerogative of the individual countries — a reality that is welcomed by some and questioned by others. On the other hand, the EU did manage to pull together to come up with a huge economic recovery package designed to ease financial hardship caused by the pandemic.

The fund also illustrates how contentious joint projects can be. When it comes to money, the big question will inevitably remain: Who pays and who profits? For the more prosperous EU member states, the constant concern is that less well-off countries will try to draw them into some kind of arrangement that involves mutualized spending and mutualized borrowing.

The chicken or the egg
Johannes Varwick says that it might be easy to dismiss the very notion of further integration. Still, he cautions: "People should think twice before abandoning such a vision." Daniel Röder from Pulse of Europe, on the other hand, says that for him it's not about visions, but realizing that if you don't move forward, you're likely to end up going backwards.

Röder says that he sees the EU in the current stage of its development as a "fragile and often ineffective construction. Only when it is capable of assuming a more credible and effective role in the interaction of global powers, will it have more clout and greater acceptance, both internally and externally." It's a chicken and egg thing, Röder concludes ominously: "No acceptance means no advancement; no advancement means no acceptance. It's a dilemma that we must resolve — otherwise, I fear the worst for this union."

I think that after the eurozone financial crisis, the migration crisis, brexit, and the current EU/NATO dithering in regards to Russia sorta show that a European state will not happen within the near future. From my outside view it looks like most people are happy with the economic union and its benefits but extremely wary of further political union. Perhaps in a few decades but peoples national identities are still far stronger than a European one. Kind of a Holy Roman Empire situation, when unified in action it is impressive but usually ineffective due to squabbling.

[Montmorency]

Bit of a necro-thread rival but this was the most appropriate place:

Germany's goal of a European federal state proves elusive
https://www.dw.com/en/germanys-goal-...ive/a-60539427



I think that after the eurozone financial crisis, the migration crisis, brexit, and the current EU/NATO dithering in regards to Russia sorta show that a European state will not happen within the near future. From my outside view it looks like most people are happy with the economic union and its benefits but extremely wary of further political union. Perhaps in a few decades but peoples national identities are still far stronger than a European one. Kind of a Holy Roman Empire situation, when unified in action it is impressive but usually ineffective due to squabbling.

We also have to note that

"No acceptance means no advancement; no advancement means no acceptance. It's a dilemma that we must resolve — otherwise, I fear the worst for this union."

applies to the sovereign constituents of the EU. The countries, and seemingly the peoples, of Europe basically can't envision any kind of future for themselves separately. How many perceive anything to hope or strive for beyond watching the slow train wreck of the 21st century pass through? People have their eyes to their feet in national terms, so how would they coalesce together around a supernational aspiration?

The accelerationist premises, if not the arguments, are probably applicable: woe begets violence, the great leveler.

Too few people have the commitment or confidence in us working to solve big problems.

[Furunculus]

From my outside view it looks like most people are happy with the economic union and its benefits but extremely wary of further political union.

In the good times, yes. When there are no 'consequences' to doing nice economicky things that make us feel all EUropean.
But these are not the good times, and we expect 'the state' to step in and do extraordinary things to preserve our declining welfare.

Germany benefits from the single currency by having its natural foriegn exchange rate suppressed by the wider currency region. Its goods are cheaper, but by the same token it raises the exchange rate for the wider currency region. Making their goods more expensive.

And this happens whilst engaging in none of the normal solidarity acts that nation states engage in to normalise wealth potential within the 'regions':

Federal US taxation is ~25% of GDP and the variation in spending levels between rich and poor states is ~5% of GDP, so a variation of roughly 20% of federal spending.

How big a budget would the EU need to be able to slosh around 5% of combined GDP into the poor regions (bearing in mind the current budget is only 1% (and heavily constrained by CAP payments)?

The other point is that americans accept this, they are all american, whereas we are rapidly finding out just how german the germans are, and finnish the finns are, when it comes to firehosing cash at nations they consider to be essentially delinquent! In the UK this ‘sloshing’ occurs in the form of:

a) National pay-bargaining which benefits poorer regions (teachers, nurses, etc)

b) National social benefits more generous than poorer regions could afford alone (eg.housing benefit in glasgow)

c) Targeted regional development grants/discounts to encourage business growth (objective 1 EU/WEFO funds)

d) Additional infrastructure spending to support the local economy (the mainland-skye bridge)

e) Operating national services hubs from depressed regions to boost wages (DVLA in swansea, etc)

Unless Germany recognises the ‘familial’ relationship, and the obligation that goes along with that, then it needs to leave for the good of its neighbours.

This principal applies equally to the netherlands and finland, but since it is Germany that is the driving economic power for the euro’s sake the answer must be ‘right’.

One mechanism to equalise this foriegn exchange disparity would be eurobonds. To compensate for a higher than natural foriegn exchange rate the wider currency union would borrow collectively, and thus lower their borrowing costs on the back of Germany’s strength.

The quid-pro-quo would be that Germany’s cost of borrowing would rise, as it too would be borrowing through the wider currency union and would see its strength diluted in consequence.

What is happening right now is commonly termed “wanting to have your cake, and eat it too“, an attitude considered ugly by weaker members of the polity who consider that cake to be shared treat.

An economic union cannot exist long term without a political union from which to draw legitimacy from for the acts that it must take in regulating society.

[spmetla]

EU's border-free Schengen zone needs overhaul, political leadership - Macron
https://www.reuters.com/world/europe...on-2022-02-02/

The European Union's border-free Schengen area should be managed by regular ministerial meetings, just like the euro zone, French President Emmanuel Macron said on Wednesday, adding that this could start as early as next month.

National security concerns, waves of migration and, most recently, the coronavirus pandemic have led to the re-emergence of border controls in the Schengen zone and much criticism of how it functions, eroding what had been hailed as a milestone achievement in Europe's post-World War Two integration.

Speaking to EU justice and interior ministers, Macron said what he dubbed the "Schengen Council" would evaluate how the border-free area was working but would also take joint decisions and facilitate coordination in times of crisis.

"This Council can become the face of a strong, protective Europe that is comfortable with controlling its borders and therefore its destiny," he said in the northern French town of Tourcoing. He said its inaugural meeting could take place when the EU's justice and home affairs ministers next gather, on March 3.

"We must reform Schengen," he said. "There can be no freedom of movement if we do not control our external borders."

France has also proposed an emergency response mechanism that could be triggered when the bloc's external borders are under threat.

Wonder how far along he'll get in his proposals, Frontex certainly needs more help, the countries that are the first stop for refugees and migrants certainly need far more help in housing, transport, and processing. The power dynamics that Morocco, Belarus, and Turkey have used with migrants certainly has shown that the EU is lacking in a unified front and most of the burden is on the bordering nations.

Something needs to be done to save the Schengen zone's positive benefits while limiting some of these negative outcomes and of course to save the lives of the migrants being used as pawns for power politics.

[Furunculus]

Re: Schenghen and Frontex

They're in a difficult position, as if they aren't willing to be as aggressive as Local enforcement (see: Poland), then domestic politics in frontline states will see the EU as enabling mass migration, and Frontex will be targetted over and above Local enforcement by rogue states like Belarus.

If they aren't deemed credible, then frontline states will marginalise Frontex to safe bureaucratic roles behind the border, at which point is the involvement of the EU a net-benefit to frontline states?

-------------------

Separately:

ECB keeps interest rate at -0.5% and quantitative easing at £20b/month despite inflation running at over 5%:

https://www.telegraph.co.uk/business...stine-lagarde/

Consumer prices soared by 5.1pc up in the year to January, up from 5pc in December, according to Eurostat’s first estimates. Economists had forecast a slowdown to 4.4pc.

The rise was spurred by higher food and energy costs, which left the rate of inflation more than two-and-a-half times higher than the ECB’s 2pc target. Energy prices were 28.6pc higher, while unprocessed food cost 5.2pc more.

With those volatile components stripped out, core inflation stood at 2.3pc, down from 2.6pc the previous month. Officials watch this measure as a better indicator of medium-term inflation.

They provide a difficult backdrop as officials prepare to meet in Frankfurt on Thusday to decide on the course of eurozone monetary policy. Ms Lagarde has repeatedly said that high levels of price growth will fade as energy costs come back to normal and global supply chain issues fade.

The ECB has laid out plans to move less speedily than the Bank of England and US Federal Reserve to cut back on its ultra-loose monetary policy stance.
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In December, it set out an aim to cut asset purchases to €20bn a month by October, but members of its governing council have said they do not expect to increase rates this year.

Markets think differently, however, and are pricing in three ECB rate rises in 2022, two fewer than the five increases expected from Threadneedle Street and the Fed. Increasing interest rates raises the cost of borrowing, with the aim of curbing inflation.

This has to be causing political friction in Germany and the Netherlands. How will that manifest?
My guess would be the steady erosion of trust in the Gov'ts that notionally were not elected on a cost-of-living manifesto (fair enough you might say, as they don't control monetary policy, but they still carry the can for the consequences).

[Montmorency]

The alternative to liquidity support is, of course, is a short-to-medium term decrease in living standards.

Bank of England: Households must brace themselves for the biggest annual fall in their standard of living since comparable records began

The Bank of England has raised interest rates to 0.5 per cent and signalled more hikes are on the way as it warned rocketing inflation will see the worst hit to household income for at least 32 years.

The Bank’s Monetary Policy Committee (MPC) voted 5-4 to raise rates from 0.25 per cent to 0.5 per cent – marking the first back-to-back rise since 2004, coming after a quarter point increase at its last meeting in December.

In a gloomy prediction for under-pressure households, the Bank said this will see disposable incomes fall by around 2 per cent – the worst impact since Bank records began in 1990.

Ofgem’s 54 per cent energy price cap increase to around £1,971 in April is the driving force behind the inflation forecast hike, with the Bank predicting around another 10 per cent rise in the cap this October.

But its forecasts do not take into account the Chancellor’s package of measures announced on Thursday, offering £350 support for the majority of UK households.

But the Bank cooled financial market forecasts of a flurry of rate rises in 2022.

It predicts that inflation will undershoot its 2 per cent target in the medium term if rates rise to 1.5 per cent by the middle of 2023, as financial markets expect, signalling it will take a more cautious approach.

However, it gave a sobering alert on the impact of rising inflation on consumers and the wider economy.

The Bank said sharp rises in energy prices and the cost of goods amid supply chain pressures will weigh on spending and growth.

“This is something monetary policy is unable to prevent,” it cautioned.

The Bank downgraded the growth outlook to 3.75 per cent in 2022 and 1.25 per cent in 2023 from the 5 per cent and 1.5 per cent respectively predicted in November.

Because so far Western governments refuse to get involved in industrial management and price controls, the most serious tool they have to reassure markets is the self-hobbling one of interest rate increases. Which in turn may have to be complemented by orthogonal fiscal support to households...

When you only use the hammer you have to strike gingerly. As you say, EU-wide policy will piss off many people regardless of its direction.

(Note also that the US is one of the only OECD countries to experience durable rises in disposable incomes during the pandemic, due to government policies.)