On August 9th, the French Constitutional Council, the highest authority on matters concerning the country’s constitution, announced that the adoption by France of the European Union Treaty on Stability, Coordination and Governance (TSCG) required no constitutional reform, and therefore no ratification by referendum.
The very name of the treaty, elaborated jointly by German Chancellor Angela Merkel and former French President Nicolas Sarkozy, spells out the historic importance of the judgment, which was based more on political considerations than legal ones.
Europe, faced with a debilitating crisis, sorely needs a thorough public debate. To avoid one is to do it the worst injustice, for such a denial of the democratic process will claim as its first victim the very ideal upon which European institutions were founded.
The day the Constitutional Council (le Conseil constitutionnel) rendered its decision, with a display of amnesia and blindness, also marked the fifth anniversary of the moment in France when the financial crisis became clear. For it was on August 9th 2007 that the BNP Paribas bank announced it was to suspend the valuation of assets in three of its speculative funds that owned US subprime mortgage securities. Five years on, the Council continues to reason in a manner that ignores that and the events that followed, as if their magnitude, duration, surprises and revelations had taught its members nothing about the disastrous consequences of barring democratic debate from economic policy-making.
The adoption without national debate or referendum of the TSCG and its Fiscal Compact, the heart of the treaty, is nothing short of a silent Coup d’Etat. Integrated as an organic law, its ‘golden rule’ dictating that the public deficit should not exceed 0.5% of Gross Domestic Product (GDP) will now be imposed on French public finance policies, over and above any parliamentary debate on yearly budget bills or the shaping of fiscal laws. Effective as of January 1st 2013, it allows for automatic penalties of up to 0.2% of GDP in the event that it has not been respected.
Even those on the Left who are ready, amid the present economic debacle, to accept such a clear loss of sovereignty, should not allow it to be imposed without public consultation. During the presidential elections in France this year, the majority of voters elected the candidate – François Hollande - who promised to renegotiate this European treaty, one which had been approved by his opponent, Nicolas Sarkozy. Why, then, must we now accept that this same treaty, with not a comma changed to its text, has become law?
Political sleight of hand, not constitutional study
No-one among the socialists or Greens now in power – a power that is unshared thanks to the presidential system – should be surprised that the question is now asked loudly and clearly. For the trap of this treaty and its golden rule has been dangling before them ever since July 26th 2011, when Nicolas Sarkozy, then president, sent a letter to Members of Parliament appealing for their support for a new law on budgetary deficit rules. At that time, constitutional experts questioned by Mediapart , and who are today all too-silent, agreed together that the French constitution would need to be amended if Sarkozy’s proposed law came about.
“The budget […] is one of the pillars of national sovereignty,” then commented Didier Maus, a senior civil servant, university professor and expert on the French constitution. “The finance law is the most important political event of the year,” added his colleague, Jean Gicquel, emeritus professor of law with the Paris 1 Panthéon Sorbonne University. These experts referred back to historical examples, including the founding act of the first National Assembly, in June 1789, during the French Revolution, as well as the rallying call of the American revolutionaries during the War of Independence against Britain, “No taxation without representation”.
The current French president, his prime minister and his ministers know this perfectly well. Especially since the issuewas the subject of wide debate during the Socialist Party’s primary elections to designate its presidential candidate, a debate that resulted in a majority position opposite to what has been enacted this month.
After the results were announced of the first round of voting in this year’s presidential elections, on April 22nd, which left François Hollande and Nicolas Sarkozy as the two candidates for the second and final round play off on May 6th, the socialist candidate promised: “I will re-orientate Europe, [with] a renegotiation of the austerity treaty towards growth and employment.” Following his election on May 6th, Hollande declared: “We must change the logic, and firstly in Europe […] Empowered by your support, I will renegotiate the European treaty to launch important future projects and to protect us from the unfair competition of globalization.”
Arnaud Montebourg, now minister for industrial renewal under Hollande, whose camp he rallied after losing to him in the Socialist party primaries, regularly denounced what he called “the wall of debt and the accountancy trap of fear”, referring to the ideology that places States in the defendant’s box rather than the markets and the banks.
But the TSCG was never renegotiated. Hollande’s election pledge was buried under the sands of European compromise. Without sufficient support from other leaders, Hollande only succeeded in obtaining an annex to the treaty in the form of a ‘growth pact’. Immediately after obtaining this concession, not without difficulty, it was criticized as being wholly insufficient; under its terms, 120 billion euros, just 1% of the European Union’s combined GDP, was allocated to efforts to fund a kick-start European growth. That is vastly inferior to the gigantic sums given, without anything in return, to the out-of-control private banking sector over the past five years by the European Central Bank.
Europe is a matter of permanent, ongoing negotiation, and negotiation always presupposes compromise. But can anyone fail to see what a raw deal this treaty is? On the one hand, we have a binding treaty that subjects sovereign nations to an arbitrary “balanced budget rule” with fines for non-compliance that cannot be appealed. On the other hand, we have the structural causes of the crisis: the financialisation of the economy, deregulation of the banking system, widespread tax avoidance, tax havens, misappropriation of national resources etc., about which little or nothing is being done. On the one hand are firm and categorical demands, while on the other are vague and uncertain hopes already severely dashed by the deepening of the crisis this summer.
Barring disingenuous denials, the current French government is well aware that the treaty and its Fiscal Compact is booby-trapped, posing a threat to its own credibility with an electorate that just voted it into office. The government, whose very make-up reflects a reconciliation between the Socialist Party contingents for and against the European Constitution in the 2005 referendum, knows full well that another impasse over EU policy would revive past divisions within its ranks. Above all, that would again disappoint rank-and-file voters, who’ve been disappointed at every EU policy decision taken with too little public debate. And with disastrous social repercussions, since those decisions seem to be so blatantly imposed by those at the top – and to run so blatantly counter to the commitments they’d made to those at the bottom.
This is where the Constitutional Council has come to its rescue, in a move as questionable in form as in substance, a tactical manoeuvre that has more to do with political sleight of hand than careful consideration of constitutional law.
Constitutional Council plays three-card Monte
After the signatory states’ common goal of ‘budgetary discipline’ is explicitly set forth in Article 1 of the TSCG, Article 3 (entitled “Fiscal Compact”) gets at the heart of the treaty (click here to download full text of TSCG). Point (a) of the first paragraph stipulates that “the budgetary position of the general government of a Contracting Party shall be balanced or in surplus”. Point (b) then provides that “the rule under point (a) shall be deemed to be respected if the annual structural balance of the general government is at its country-specific medium-term objective, as defined in the revised Stability and Growth Pact, with a lower limit of a structural deficit of 0.5 % of the gross domestic product at market prices”.
The political crux of the matter, namely the transfer of national fiscal sovereignty, follows in paragraph 2 of the same article: “The rules set out in paragraph 1 shall take effect in the national law of the Contracting Parties at the latest one year after the entry into force of this Treaty through provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to throughout the national budgetary processes.”
The French Constitutional Council, with its granting to former French presidents a permanent seat (Valéry Giscard d’Estaing took part in the deliberations on August 9th) and a third of whose members are appointed by a mere three elected officials (the presidents of the Republic, of the Senate, the upper house of parliament, and of the National Assembly, the lower house), engages in politics as much as in deciding points of law. And this is a flagrant case in point. To stave off constitutional reform, it seizes on one single word in this paragraph: the disjunctive conjunction “or”. In its ruling, the Council argues that the wording allows for “an alternative”: either “provisions of binding force and permanent character, preferably constitutional” or the other provisions described in the second part of the clause.
The Council was bent on opting for the second term of the alternative, on the pretext that previous European treaties have already set the lower limit on national deficits (3% of GDP). So it recommends passing an organic law, which requires only a simple majority vote in the upper and lower houses of French parliament. And that’s that, the matter closed.
But there’s a hitch with this. The Council didn’t pay great attention to the commas here, and the devil is in the detail. If the punctuation is to make any sense, the phrase “provisions of binding force and permanent character” applies to both the “preferably constitutional” variant and the “otherwise guaranteed” variant. But the Council acts as though it didn’t, to the point of dissociating the requirement of “binding force” from that of permanence.
Far from excluding once and for all the solution of constitutional reform, which would involve holding a referendum, the Constitutional Council clearly states (in point 21 of its ruling) that “If France chooses to render effective the rules laid down in paragraph 1 of Article 3 by means of provisions of binding force and permanent character, the authorisation to ratify the treaty must be preceded by a revision of the Constitution.” So in the next point, number 22, it splits hairs to argue that “in the second term of the alternative, […] compliance with the rules is not guaranteed by ‘binding’ provisions” and that, moreover, they must “be of a permanent nature” and “concern all public administrations”.
If the reader isn’t already lost in this labyrinth, they will have understood that this three-card trick is a clever attempt to relativise the political ramifications of adopting the TSCG. In other words, to get round the letter of the Treaty – a supranational economic straitjacket – and retain only the spirit thereof; permanent fiscal discipline. But no amount of glossing or quibbling can alter the concrete consequences of a treaty whose mechanisms are formidable and whose intentions are clearly stated in its very preamble: “the Contracting Parties' obligation to transpose the ‘balanced budget rule’ into their national legal systems, through binding, permanent and preferably constitutional provisions”.
In a word, “binding provisions” are part and parcel of the deal. An imperative which, according to the Constitutional Council itself, will necessitate a revision of the Constitution, which the selfsame Council refuses to happen.
The last thing crisis-stricken Europe needed
Even leaving aside the confiscation of democracy, no amount of casuistry can conceal the fact that this Fiscal Compact is, as the left-wing opposition at the time insisted when Sarkozy and Merkel signed it, a disservice to Europe, It continues along the road leading the EU away from the peoples of Europe and towards the abyss. It barrels ahead as though the lessons of the crisis we’re going through hasn’t shifted the lines of European debate, prompting some of the most fervent champions of Europe to mull its in-built inconsistencies and disastrous consequences.
The attempt at the political construction of Europe buttressed by the roundabout means of monetary union has failed. The reality is the opposite: the EU, personified by increasingly spineless and transparent leaders, is a fragile political construct at the mercy of a single currency subject to the unpredictable and uncontrollable dictates of the markets. At the mercy, in other words, of a chosen ideology that is an inherently flawed mix of dogma and faith: nations that can’t come to each other’s assistance, a European Central Bank totally out of control, priority given to bankers and financiers, fiscal and social convergence postponed indefinitely, national governments powerless against markets that have become the all-powerful judges of their policies.
And if an umpteenth proof of this parlous state of affairs was needed, witness how little the Treaty trusts in the European Parliament when it comes to the “governance of the eurozone”: at most its president may be “invited to be heard” (but this is not mandatory) at eurozone summits, while its members merely receive a report after the event on all the decisions reached without consulting them. After all, one might have thought the constraints imposed on national parliaments would be offset by beefing up the European Parliament’s say in the orientation, choices and objectives of fiscal policies that have been harmonised and conjoined.
But there is nothing of the sort, for the objective, once again, is something else entirely. And those who, out of European conviction, didn’t see it coming before can’t ignore it now that it’s been driven home by the crisis. In the name of this ‘ordoliberalism’ – a German brand of neoliberalism that now reigns supreme over Europe, replacing the pluralism of democracy with the absolutism of experts –, the object is to radicalise the very approach that has led us to the present dead end. To ‘de-democratise’ economic policy, in other words, by removing it from the sphere of deliberation. A telltale example of that trend was recently provided by Italian Prime Minister Mario Monti, an unabashed technocrat, warning against the consequences of governments’ being “completely bound by decisions of their parliaments”. It would be better for market expectations to be “disappointed by democracy,” retorted Bundestag President Norbert Lammert, “than for the country's legal order to take a back seat to markets.”
The treaty is useless: that is, in a nutshell, what the European Parliament said of the TSCG in a resolution passed by a large majority on January 18th 2012, in which it “expresses its doubts about the necessity of such intergovernmental agreement”. And this verdict is used to open an edifying new book about the Fiscal Compact by the Appalled Economists (Économistes Atterrés), a group of economists “appalled” by the markets’ stranglehold on economic policy. After stressing the Treaty’s wilful blindness to the lessons of the crisis, they solemnly sum up the historic stakes involved: “We wish to alert the citizens to the huge dangers to which this treaty would expose the peoples of Europe if it were to be ratified by the 25 countries whose leaders signed it on March 2nd 2012. For implementation of the Treaty would lead at once to a form of perpetual austerity and to a very pronounced risk of the eurozone’s exploding. But also, and no less importantly, to a fatal diminution of democracy in Europe. Much to the benefit of the xenophobic and authoritarian forces whose power is visibly growing in a number of countries, starting with France.”
These economists from varied backgrounds, who are neither fanatical supporters of deficit-building nor opposed to the coordination of economic policies in Europe, warn against the breakup of the eurozone and, in its wake, of the European project as a whole. In view of the current crisis, they do not shrink from raising the spectre of the 1930s. This is not a rhetorical artifice, they point out, but an “obvious” analogy “for historians as well as economists like us”. Likening the ordoliberal dogmas governing the eurozone now to the fetishism of the gold standard back then, they find the same blinkered states, whose totems are austerity and deflation, drawing illusory Maginot lines in the face of mounting perils.
And they aren’t the only ones. The European debate, of which the Constitutional Council’s casuistry would deprive us here in France, is vibrant abroad. First off, in Germany, whose Constitutional Court, which is to hand down its judgment in September, has been seized of six appeals against the Fiscal Compact. The appeals are based on the infringement of parliamentary prerogatives by a European Commission that would be accorded oversight of national budgets. Meanwhile, since autumn 2011 and the Merkozy offensive, German philosopher Jürgen Habermas, whose pro-European convictions are incontestable, has nobly stirred up public debate over the demise of democracy in the EU.
Far from being a prisoner of that ‘gramophone mind’ which, according to George Orwell (1903–1950), unites ideologues and bureaucrats of every regime and persuasion in the same static orthodoxy, Habermas is a thinker who’s willing to put his convictions to the acid test of reality.
An absent debate that rages beyond Europe
A steadfast advocate of the European Constitution back in 2005, Habermas was alarmed in October 2011 at the advent of a “post-democratic domination” in Europe. The Fiscal Compact that being was drawn up at the time would serve as the instrument of that domination. “This regime would allow for the projection of market imperatives onto national budgets without any specific democratic legitimation,” he explains. “In so doing, heads of government are transforming the European project into its opposite: the first democratically legalised supranational community will be transformed into an effective arrangement that results in non-transparent post-democratic domination.” In a subsequent interview with French daily Le Monde, he commented: “The pretty word ‘governance’ is but a euphemism for a harsh form of political domination.”
Enlargement : Illustration 2
Based on his post-2008 writings in the wake of the crisis (which he calls “the bankruptcy”), his The Crisis of the European Union is the other essential reading for the debate we are clamouring for. The current French government would do well to consider this double recommendation in Habermas’ book: “Yet in times of crisis a somewhat broader perspective may be more needful than that offered by mainstream advice and the petty manoeuvring of politics as usual. […] Europe will not be able to acquire a democratic character either as long as the political parties are too timid even to thematize alternatives to decisions of great moment.”
Thanks to the intellectual and moral authority of the author of The Transformation of the Public Sphere (1962), Habermas’ words are not falling on deaf ears. The Social Democrats (SPD) can’t afford to ignore this powerful voice as they gear up for the 2013 elections, goaded on by the Die Linke party, – just as the French Socialist Party is spurred on by the radical-left Front de Gauche. As a result, 23 SPD members of the Bundestag have voted against ratification of the Treaty, which they deem “politically wrong, economically absurd and socially unjust”. Indeed, they have co-signed a similar statement by the left-wing of the French Socialist Party in the run-up to its imminent convention. This same left current in France’s ruling party, who include Benoît Hamon, junior minister responsible for the social economy, cannot sacrifice its convictions on the altar of allegiance to the government without renouncing everything they have stood for. That would be tantamount to mute submission.
But the European debate is loudly echoed overseas, especially in North and South America, where economists are aghast at the prospect of a European catastrophe, the unforeseeable fallout from which could wreak devastating havoc. Luiz Carlos Bresser-Pereira, for example, an internationally renowned Brazilian economist (and Francophile) who served as finance minister in 1987 when Brazil restructured its public debt, wonders whether France shouldn’t simply give up the euro to save Europe. Since 2011 he has proposed “thinking the unthinkable” in his articles in the Brazilian daily Folha de S. Paulo, making the case for a Europe freed from a ruinous currency.
“The building of Europe is a beautiful project,” Bresser-Pereira explained in a recent interview with Le Monde. “You have the most advanced political and social systems in the world, but the euro was too ambitious. A single currency can only exist in a federal state in which the federated states hardly have any fiscal autonomy, in which debt is controlled by the federal government.” In a word, Europe put the cart before the horse, and that’s why everything’s going wrong. So we need to step back and recall the wisdom of patience: “A shared currency ought to remain the goal of the European project once you’ve put paid to the euro, but only the ultimate goal. And so what if it takes ten or twenty years to recreate it,” Bresser-Pereira concluded.
Others, including France’s Appalled Economists, will probably counter that he is underestimating the devastating effects the end of the euro would have on the EU itself, even though the Union did work for decades without a shared currency. But Bresser-Pereira’s view should not be discarded out of hand, especially as it coincides with those of two Nobel laureates, the iconoclastic American economists Joseph Stiglitz and Paul Krugman. Both are sounding the alarm about Europe’s present-day course. The first to leave the euro will come out in the best shape, Stiglitz told the Asian Financial Forum in January, at the height of the Greek crisis, and went on to rail against the “criminal” austerity policies imposed on the nations of the continent in the name of saving the euro. (see Mediapart’s 2010 interview in English with Stiglitz on the dangers of austerity measures here, and another, in 2011, on the failure of governments to learn the lessons of the financial crisis here).
“This is a water pistol against a charging rhinoceros,” Paul Krugman scoffed recently about the paltry growth pact in which François Hollande has been glorying, in his New York Times op-ed piece published July 26th. “This is ridiculous. These are ludicrous, trivial things compared with the scale of what's going on [...] So it’s time to stop paying attention to the alleged wise men who hijacked our policy discussion and made the deficit the center of conversation. They’ve been wrong about everything – and these days even the financial markets are telling us that we should be focused on jobs and growth.” And his latest book, End This Depression Now!, is a diatribe against the apostles of austerity, the ‘austerians’, as he calls them.
These die-hard deficit hawks are obviously allied with the world of ‘finance’, a faceless foe that François Hollande pilloried during his presidential campaign under the slogan “Change is now!” Writing on Europe and the euro this past February, the then-socialist candidate said: “No economic, much less monetary, entity can last without the trust, adhesion and support of the people. The markets have taught themselves that very lesson. They could not have destabilised the eurozone to such an extent had they not been aware that they were dealing with an authority vested with strong legitimacy, with unfailing continental solidarity. What was lacking were effective instruments and, above all, a vibrant democracy.”
The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union,the permanent budgetary straitjacket it would foist on us and the procedure chosen for its ratification are the very opposite of that “vibrant democracy”. This is why, as it stands, we must reject it. And hope that a surge of civic engagement will save this democracy that has been left in the lurch by politicians with no grit, no guts and no vision.
- Edwy Plenel is Editor-in-Chief, and a co-founder, of Mediapart, and was formerly editor of French daily Le Monde.
This is a lightly abridged version of Edwy Plenel's original text published in French under the title Le nécessaire débat européen
-------------------------
English version: Eric Rosencrantz and Graham Tearse
(Editing by Graham Tearse)