The hopelessly corrupt structure of the Eurozone & the Eurogroup

The hopelessly corrupt structure of the Eurozone & the Eurogroup
  1. The hopelessly corrupt structure of the Eurozone & the Eurogroup
    RAMIN MAZAHERI—You might support creating a new Eurozone or changes to the Eurozone structure, but supporting the current Eurozone is simply morally indefensible, and you don’t have to be an open communist like me to see that. What will you get if you keep supporting it,READ ON…


Part of the problem of criticizing the “pan-European project” is that you have multiple bodies which overlap. And you also have some nations which are part of one, but not another. Or which pay into one body, but abstain from another. A clear analysis is needed of the most important part of the pan-European project: the Eurozone. The Eurozone is the most important because it controls the money in the world’s largest macro-economy.

By comparison, the European Union is mainly a regulatory body, and their extremely modest annual budget – about the size of Denmark’s – reflects that. 

The Eurogroup in session—most of the members remain non-celebrities, and they like it that way.

There is a relentless focus among Western media on the European Union over the Eurozone, but this article hopes to put the emphasis where it should be: follow the money. But to examine the Eurozone you have to bring up something which mainstream media likes to ignore – the Eurogroup.

The Eurogroup rules the Eurozone and its 19 member states. It also governs the “bailouts” to member nations like Greece.

Basically, if you find the EU to be undemocratic…well, you haven’t seen anything like the Eurogroup.

The Eurogroup: The banker cabal hidden in plain sight

I reviewed the fake-leftist book “And the Weak Suffer What They Must?” by former Greek Finance Minister Yanis Varoufakis. The analysis and proffered solutions from this self-declared “erratic Marxist” are not Marxist at all, but his eyewitness unveiling of the cartelized capitalist structure that is the Eurogroup has truly been an enormous contribution to European democracy.

The Eurogroup is, at face value, an informal monthly meeting of the finance ministers of the member countries. Ah, government representatives getting together for discussions and planning – sounds democratic, right? Hardly….

I will quote Varoufakis often, because his matter-of-fact condemnations will carry more weight than my own:

“Moreover, the Eurogroup, where all the important economic decisions are taken, is a body that does not even exist in European law, that operates on the basis that the ‘strong do as they please while the weak suffer what they must’, that keeps no minutes of its proceedings, and whose only rule is that its deliberations are confidential – that is, not to be shared with Europe’s citizenry. It is a set-up designed to preclude any sovereignty traceable back to the people of Europe.”

So there are no rules, no records, no democratic process and no democratic accountability…and this is what is in charge of the world’s largest economic engine.

These are appalling realities. They cannot be disseminated widely enough or often enough.

Thanks to the whistle-blowing of Varoufakis, we also know that there is also essentially no discussion at Eurogroup meetings: The Troika (the IMF, European Central Bank and European Commission) initiates, dominates and outlines the terms…and then the finance minister-members vote. In short, the overwhelming majority of participants in the group which governs economic policy (and thus social policy) are bankers, former bankers or intimately tied to high finance. When bankers run economic policy, one shouldn’t be surprised if the resulting social policy is for the benefit of bankers.

As Varoufakis relates, maybe the finance ministers will speak, or maybe they won’t even be allowed to speak. Maybe finance ministers will be allowed to disseminate documents which support the positions taken by their democratically-elected governments, or maybe they won’t even be allowed to champion a differing position. Many will justifiably ask: What’s the point of voting in any politician if they have little to no chance of influencing policy at the highest level – the Eurogroup?

The Eurogroup is not an EU institution and cannot declare any legally-binding decisions. It can never be blamed for a bad decision, nor held accountable, because it is not answerable to any parliament or body politic whatsoever.

In short: it is the perfect cabal.

An undemocratic Eurozone produces only hopeless non-democracies

It is axiomatic that that when [democratic] politics does not rule – where there is no law or regulation – the rich are the rulers. It is also axiomatic that in a climate of total deregulation the richest nation will benefit the most.

Unsurprisingly, the US pioneered the concept of mass deregulation in the early 1980s, which they foisted on Europe as much as possible in order to ensure the status quo-dominance of US corporations. Washington may have even created a Frankenstein’s monster, because the Eurogroup has achieved the American dream of total deregulation even more than in America.

The Eurogroup is not an EU institution and cannot declare any legally-binding decisions. It can never be blamed for a bad decision, nor held accountable, because it is not answerable to any parliament or body politic whatsoever. In short: it is the perfect cabal.

We owe Varoufakis a debt of gratitude for extensively detailing the utter lack of democracy within the Eurogroup. What’s absolutely appalling is that most media do not hammer these facts repeatedly, but even seem totally unaware of them.

In this sense – critique of the status quo – Varoufakis’ book is essential reading for Europeans who want to know what principles their society really is based upon. For all the nonsense about “European work-life balance” and “third way politics”…that may have applied pre-Eurozone, but it sure doesn’t apply anymore.

After all, what do you get when your leadership group has no democracy, no oversight and no records? You get anti-democratic oligarchy: the richer members controlling the poorer ones:

“…Dr. Schauble and the Eurogroup had succeeded in overthrowing our government by asphyxiating us enough for Prime Minster Tsipras to surrender…our newly elected government could choose any policy mix it liked as long as it was virtually identical to the calamitous one imposed by the Troika on previous Greek governments.”

The Eurozone is, and has always been from its inception as the European Coal and Steel Community in 1951, merely a cartel of high finance which wants only to preserve its economic dominance and monopolies. The Eurogroup is the most anti-democratic, the most brutal and the most hypocritical aspect of the pan-European project, and Varoufakis makes that clear in multiple appalling passages.

“When I asked a friend who played a central role in Greece’s induction talks how they had managed to convince Germany to let Greece into the Eurozone, his answer was fantastically unassuming: ‘We just copied everything the Italians had done, and a few tricks used by Germany itself. And when they threatened to veto our entry, we threatened them back that we would tell the world what Italy and Germany had been up to.”

“Give me a part of the action, or I rat you out.” Is that not the very definition of criminal collusion on the part of Greece’s 1% with the 1%-ers in other nations?

“Of course, the Maastricht Criteria’s real purpose was to allow into the Eurozone countries that did not meet these criteria and then force them to do whatever it demanded to meet them.” 

Only France, Ireland and Denmark held referendums on Maastricht ratification, anyway.

“When it comes to countries like Germany and France, the rules are meant to be broken. But for countries like Greece the rules are the rules are the rules! Even if they are unworkable and unenforceable. The Greek state can default against the weakest of Greek and non-Greek citizens, against pension funds and the like, but its debts to the ECB are sacrosanct. They have to be paid come what may. But how?”

The loans are not meant to be repaid, of course, but to exist indefinitely so that the 1% can live in ease thanks to the curse of compound interest.

But who was the first country to break the EU fiscal deficit rules? France and Germany, in 2003, and they united their power to make sure they did not face sanctions (and certainly not the Troika). But in 2011, when countries like Ireland, Greece and others were loaded beyond economic recognition with (French and German) banker bailout debt, it was a totally different story.

Francois Hollande, notably, broke the fiscal deficit rules when France wanted to increase military spending after the Bataclan attacks. Military spending is always ok for the 1% – they give the orders – so the increase was approved.

France just announced that they will be under the fiscal deficit rule of 3% this year – one year early. Even if the “fiscal deficit rule” fig leaf has withered from overuse, no matter – austerity will continue anyway in 2018 with 16 billion euros of cuts. Housing and Job Ministries will be slashed, and the major cuts to social security will be paid for by slashing the already poverty-line incomes of the elderly. 

These were just a handful of examples of Eurogroup’s hypocrisy/tyranny/treachery listed by Varoufakis, but rest assured that I could add many others.

Just for fun – remember Iceland?

And yet to be against the European project makes you a racist, jingoistic, hillbilly, deplorable….

Iceland – which we all looked at with horror in 2009, assuming they would be in debt for generations AND also living on what must be a frozen and lonely speck of an island – has just been declared the “3rd happiest country” according to the UN.

I guess Iceland is a bunch of deplorable racists, because they cancelled their plans to join the EU. Well, Iceland has one thing which Marx valued perhaps above all: the right to determine their own destiny in order to fulfill their potential:

“‘Surely there is no room for small sovereign countries in this globalized world,’ I was told by another finance minister during a break in a Eurogroup meeting. ‘Iceland can never truly be sovereign,’ he concluded….However limited these choices might be, Iceland’s body politic retains absolutely authority to hold its elected officials accountable for the decisions they have reached within the nation’s exogenous constraints and to strike down every piece of legislation that it has decided upon in the past. In this sense, small, powerless Iceland continues to enjoy full sovereignty while the comparatively omnipotent European Union has been stripped of all forms of sovereignty.”

It’s a pretty bad scene when you can’t even stand up for yourself as much as an Icelander….

Can we combine the Eurogroup with a parliament? Not in real life….

What is clear is that the Eurogroup operates with even more power than the US Federal Reserve and the Bank of Japan because there is absolutely zero citizen accountability. Right now, the Troika steers the 19 national budgets the way they want, with Germany their public Rottweiler.

But now you say that you want Eurogroup citizen accountability? You mean, regarding the crucial questions of national budgets and are they in line with the rules/sound economic thinking?

Ok then, a “leviathan” in Varoufakis’ words (or perhaps just a “Eurozone Finance Minister”), must be created to accept or reject the 19 national budgets. But you can’t just have an executive branch – you need a legislative branch as well. What is this? A permanent state of emergency, where laws get made by decree and cops are the judges? Of course that’s unacceptable in freedom-loving Western countries like France, don’t be fatuous….

So there are 3 minimum conditions for this Eurozone Parliament:

1) The Eurozone Parliament can hire or fire the new “Eurozone Finance Minister”. 2) It must approve the final contents of every national budget. 3) The Parliament’s powers are clearly defined by a Eurozone Constitution.

This would move the Eurogroup from the current cabal system to 18th century bourgeois democracy; from the Dark Ages to the Enlightenment, but well short of the Industrial, Socialist and Digital Revolutions.

Regardless of how ultimately reactionary such an “improvement” would be, Varoufakis acknowledges that all of this speculation is a political impossibility:

“It is crystal clear that at least two of these conditions will not be met. Neither the German government nor the Parisian elites would countenance allowing the euro chamber to hire or fire the leviathan. Nor would they dare embark upon the writing of a euro constitution.”

Obviously, there is no support among the 1% for meeting even the minimum requirements of “modern democracy” for the Eurozone’s citizens.

This means it would take a true revolution in ideology and practice to even get these paltry bourgeois powers added to the Eurozone. And why would The People make a true revolution…and then be content with something so pathetically inadequate and unmodern?

In keeping with a historical theme I elaborated in the previous article of this 7-part series, France’s historic effort for an anti-austerity Eurozone, France in 2017 remains far more progressive than their slightly-more dominant neighbor to the east: Macron wants a finance minister, parliament and budget for the Eurozone…but he’s not going to get it. Merkel has only expressed tepid proposal for a Eurozone Budget Minister, and two things appear likely: he or she will be German, and Germany will insist that the post holds much less power than the other 18 Eurozone members would prefer. After all, why would Germany want to change the status quo? As that article discussed, Germany has been a rabidly anti-communist, pro-American, economically-imperialist country ever since the US decided shortly after WWII that West Germany was to be reindustrialized in order to become their main client state in Europe.

What does have a lot of support from France and Germany is a “European Monetary Fund”, which would simply codify the current bailout fund. Democracy can wait, but safeguarding bank bailouts cannot, LOL….

The first rule of Eurogroup is: ‘You don’t talk about Eurogroup!’

Such facts make it clear why the Eurogroup cannot be considered compatible with democracy, and thus cannot be supported. Full stop.

You might support creating a new Eurozone or changes to the Eurozone structure, but supporting the current Eurozone is simply morally indefensible, and you don’t have to be an open communist like me to see that.

What will you get if you keep supporting it, like by voting for mainstream politicians or fake “outsiders” like Macron? You will get exactly what has occurred ever since the Eurozone project began in earnest after the fall of the Bretton Woods monetary system/gold standard in 1971 – crisis and austerity across the Eurozone:

“Each one of those heart-rending attempts at monetary union led to the same pattern: a promising beginning that soon degenerated into tears and recriminations as economic warfare erupted and recession impoverished the weakest Europeans.”

Hmmm, efforts at capitalism turned out typically-capitalist results…shocking.

The secret is out about the Eurozone’s false prosperity of the late 1990s and 2000s – it was all built on the ruses of high finance. But – and this is actually really important right now – nothing has been fixed sin…

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