Europe Is Facing a Fate Worse Than Debt

Article excerpt

As the eurozone crisis sees elected governments replaced by technocrats, democracy seems a high price to pay for market stability

This could be the worst crisis Greece has ever known, an over- excited reporter on the BBC opined the other day. There speaks a man without a history degree, riposted the broadcaster and historian Dan Snow. But you don't have to go back to the time when Alexander of Macedon massacred the Sacred Band of Thebans to find something worse. You could try 21 April 1967, when, on the eve of a general election, a group of right-wing army officers seized power in a coup d'etat after placing tanks in strategic positions around Athens and arresting top politicians and pretty much anyone they suspected might object.

There is, of course, something dramatic about a military coup and tanks on the street. But is it any more radical than what we might call the "market coup", which has suspended, if not overthrown, democracy in Greece in recent days? And not just Greece. In Italy, too, elected leaders have been replaced by rulers at the behest of the overheated financial markets. In the case of Italy, no one has objected too much because the man who has been replaced was a sleazy, manipulative, self-serving buffoon. But the change is one which ought to worry us.

There was general horror when George Papandreou, the outgoing Greek prime minister, announced he would hold a referendum to allow the people to endorse or reject the austerity package deal to save their country from bankruptcy. Citizens could not express their opinion, it was said, because there was no time: falling stock markets and rising bond interest rates would bust Greek banks before the vote could take place. Yet Mr Papandreou, in his cack-handed way, was raising a question that everyone was anxious to avoid: which is more important, economics or politics, capitalism or democracy?

The answer is clear. Political power in Europe has passed to a tiny elite of technocrats. Two days after the economist Lucas Papademos was sworn in as Prime Minister of Greece, another technocrat, Mario Monti, was asked to lead a new unity government in Italy.

Technocrat here is a euphemism for someone who has worked at or with the investment bank Goldman Sachs, nicknamed in financial circles "the vampire squid". Mr Monti was a member of Goldman's board of international advisers. Mario Draghi, the new president of the European Central Bank which controls eurozone monetary policy, is a Goldman man. So is Antonio Borges who, until Wednesday, was running the International Monetary Fund's European division. Mr Papademos is a former vice-president of that same European Central Bank; he is also the man who was running the Central Bank of Greece at the time when that country, like Italy, used complex derivatives to slim down the apparent size of its government debts in order to qualify to join the euro. The rules of the euro mandated that such debts shouldn't be above 60 per cent of the size of the economy. Who was behind that clever idea? The financial wizards of Goldman Sachs.

You don't have to smell conspiracy to be concerned here, merely a confluence of interests. Technocrats or politicians, they all sing from the same highly marketised hymn-sheet. …