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America's 'untouchables': the silent power of the caste system

We cannot fully understand the current upheavals, or almost any turning point in American history, without accounting for the human pyramid that is encrypted into us all: the caste system. By Isabel Wilkerson in The Guardian 


In the winter of 1959, after leading the Montgomery bus boycott that arose from the arrest of Rosa Parks and before the trials and triumphs to come, Martin Luther King Jr and his wife, Coretta, landed in India, in the city then known as Bombay, to visit the land of Mahatma Gandhi, the father of nonviolent protest. They were covered in garlands upon arrival, and King told reporters: “To other countries, I may go as a tourist, but to India I come as a pilgrim.”

He had long dreamed of going to India, and they stayed an entire month. King wanted to see for himself the place whose fight for freedom from British rule had inspired his fight for justice in America. He wanted to see the so-called “untouchables”, the lowest caste in the ancient Indian caste system, whom he had read about and had sympathy for, but who had still been left behind after India gained its independence the decade before.

He discovered that people in India had been following the trials of his own oppressed people in the US, and knew of the bus boycott he had led. Wherever he went, the people on the streets of Bombay and Delhi crowded around him for an autograph. At one point in their trip, King and his wife journeyed to the southern tip of the country, to the city of Trivandrum in the state of Kerala, and visited with high-school students whose families had been untouchables. The principal made the introduction.

“Young people,” he said, “I would like to present to you a fellow untouchable from the United States of America.”

King was floored. He had not expected that term to be applied to him. He was, in fact, put off by it at first. He had flown in from another continent, and had dined with the prime minister. He did not see the connection, did not see what the Indian caste system had to do directly with him, did not immediately see why the lowest-caste people in India would view him, an American Negro and a distinguished visitor, as low-caste like themselves, see him as one of them. “For a moment,” he wrote, “I was a bit shocked and peeved that I would be referred to as an untouchable.”

Then he began to think about the reality of the lives of the people he was fighting for – 20 million people, consigned to the lowest rank in the US for centuries, “still smothering in an airtight cage of poverty,” quarantined in isolated ghettoes, exiled in their own country.

And he said to himself: “Yes, I am an untouchable, and every negro in the United States of America is an untouchable.” In that moment, he realised that the land of the free had imposed a caste system not unlike the caste system of India, and that he had lived under that system all of his life. It was what lay beneath the forces he was fighting in the US.

Martin Luther King Jr visiting India in 1959. Photograph: Rangaswamy Satakopan/AP

What Martin Luther King Jr, recognised about his country that day had begun long before the ancestors of our ancestors had taken their first breaths. More than a century and a half before the American Revolution, a human hierarchy had evolved on the contested soil of what would become the United States – a concept of birthright, the temptation of entitled expansion that would set in motion what has been called the world’s oldest democracy and, with it, a ranking of human value and usage.

It would twist the minds of men, as greed and self-reverence eclipsed human conscience and allowed the conquering men to take land and human bodies that they convinced themselves they had a right to. If they were to convert this wilderness and civilise it to their liking, they decided, they would need to conquer, enslave or remove the people already on it, and transport those they deemed lesser beings in order to tame and work the land to extract the wealth that lay in the rich soil and shorelines.

To justify their plans, they took pre-existing notions of their own centrality, reinforced by their self-interested interpretation of the Bible, and created a hierarchy of who could do what, who could own what, who was on top and who was on the bottom and who was in between. There emerged a ladder of humanity, global in nature, as the upper-rung people would descend from Europe, with rungs inside that designation – the English Protestants at the very top, as their guns and resources would ultimately prevail in the bloody fight for North America. Everyone else would rank in descending order, on the basis of their proximity to those deemed most superior. The ranking would continue downward until one arrived at the very bottom: African captives transported in order to build the New World and to serve the victors for all their days, one generation after the next, for 12 generations.

There developed a caste system, based upon what people looked like – an internalised ranking, unspoken, unnamed and unacknowledged by everyday citizens even as they go about their lives adhering to it and acting upon it subconsciously, to this day. Just as the studs and joists and beams that form the infrastructure of a building are not visible to those who live in it, so it is with caste. Its very invisibility is what gives it power and longevity. And though it may move in and out of consciousness, though it may flare and reassert itself in times of upheaval and recede in times of relative calm, it is an ever-present through-line in the country’s operation.

A caste system is an artificial construction, a fixed and embedded ranking of human value that sets the presumed supremacy of one group against the presumed inferiority of others, on the basis of ancestry and often of immutable traits – traits that would be neutral in the abstract, but are ascribed life-and-death meaning in a hierarchy favouring the dominant caste whose forebears designed it. A caste system uses rigid, often arbitrary boundaries to keep the ranked groupings apart, distinct from one another and in their assigned places.

Throughout human history, three caste systems have stood out. The tragically accelerated, chilling and officially vanquished caste system of Nazi Germany. The lingering, millennia-long caste system of India. And the shape-shifting, unspoken, race-based caste pyramid in the US. Each version relied on stigmatising those deemed inferior in order to justify the dehumanisation necessary to keep the lowest-ranked people at the bottom, and to rationalise the protocols of enforcement. A caste system endures because it is often justified as divine will, originating from a sacred text or the presumed laws of nature, reinforced throughout the culture and passed down through the generations.

As we go about our daily lives, caste is the wordless usher in a darkened theatre, the flashlight cast down the aisles, guiding us to our assigned seats for a performance. The hierarchy of caste is not about feelings or morality. It is about power: which groups have it and which do not. It is about resources: which caste is seen as worthy of them, and which are not; who gets to acquire and control them, and who does not. It is about respect, authority and assumptions of competence: who is accorded these, and who is not.

As a means of assigning value to entire swaths of humankind, caste guides each of us, often beyond the reaches of our awareness. It embeds into our bones an unconscious ranking of human characteristics, and sets forth the rules, expectations and stereotypes that have been used to justify brutalities against entire groups within our species. In the American caste system, the signal of rank is what we call race, the division of humans on the basis of their appearance. In the US, race is the primary tool and the visible decoy – the frontman – for caste.

Racial segregation at a bus station in North Carolina in 1940. Photograph: PhotoQuest/Getty Images

Race does the heavy lifting for a caste system that demands a means of human division. If we have been trained to see humans in the language of race, then caste is the underlying grammar that we encode as children, as when learning our mother tongue. Caste, like grammar, becomes an invisible guide not only to how we speak, but to how we process information – the autonomic calculations that figure into a sentence without our having to think about it. Many of us have never taken a class in grammar, yet we know in our bones that a transitive verb takes an object, that a subject needs a predicate, and we know without thinking the difference between third-person singular and third-person plural. We might mention “race”, referring to people as black or white or Latino or Asian or indigenous, when what lies beneath each label is centuries of history, and the assigning of assumptions and values to physical features in a structure of human hierarchy.

What people look like – or rather, the race they have been assigned, or are perceived to belong to – is the visible cue to their caste. It is the historic flashcard to the public, showing how people are to be treated, where they are expected to live, what kinds of positions they are expected to hold, whether they belong in this section of town or that seat in a boardroom, whether they should be expected to speak with authority on this or that subject, whether they will be administered pain relief in a hospital, whether their neighbourhood is likely to adjoin a toxic waste site or to have contaminated water flowing from their taps, whether they are more or less likely to survive childbirth in the most advanced nation in the world, whether they may be shot by authorities with impunity.

Caste and race are neither synonymous nor mutually exclusive. They can and do coexist in the same culture, and serve to reinforce each other. Caste is the bones, race the skin. Race is what we can see, the physical traits that have been given arbitrary meaning and become shorthand for who a person is. Caste is the powerful infrastructure that holds each group in its place.

Caste is fixed and rigid. Race is fluid and superficial, subject to periodic redefinition to meet the needs of the dominant caste in what is now the US. While the requirements to qualify as white have changed over the centuries, the fact of a dominant caste has remained constant from its inception – whoever fit the definition of white, at whatever point in history, was granted the legal rights and privileges of the dominant caste. Perhaps more critically and tragically, at the other end of the ladder, the subordinated caste, too, has been fixed from the beginning as the psychological floor beneath which all other castes cannot fall.

Caste is not a term often applied to the US. It is considered the language of India or feudal Europe. But some anthropologists and scholars of race in the US have made use of the term for decades. Before the modern era, one of the earliest Americans to take up the idea of caste was the antebellum abolitionist and US senator Charles Sumner, as he fought against segregation in the north. “The separation of children in the Public Schools of Boston, on account of color or race,” he wrote, “is in the nature of Caste, and on this account is a violation of Equality.” He quoted a fellow humanitarian: “Caste makes distinctions among creatures where God has made none.”

We cannot fully understand the current upheavals, or almost any turning point in American history, without accounting for the human pyramid that is encrypted into us all. The caste system, and the attempts to defend, uphold or abolish the hierarchy, underlay the American civil war and the civil rights movement a century later, and pervade the politics of the 21st-century US. Just as DNA is the code of instructions for cell development, caste has been the operating system for economic, political and social interaction in the US since the time of its gestation.

In 1944, the Swedish social economist Gunnar Myrdal and a team of the most talented researchers in the country produced a 2,800-page, two-volume work that is still considered perhaps the most comprehensive study of race in the US. It was titled An American Dilemma. Myrdal’s investigation into race led him to the realisation that the most accurate term to describe the workings of US society was not race, but caste – and that perhaps it was the only term that really addressed what seemed a stubbornly fixed ranking of human value.

The anthropologist Ashley Montagu was among the first to argue that race is a human invention – a social construct, not a biological one – and that in seeking to understand the divisions and disparities in the US, we have typically fallen into the quicksand and mythology of race. “When we speak of ‘the race problem in America’,” he wrote in 1942, “what we really mean is the caste system and the problems which that caste system creates in America.”

There was little confusion among some of the leading white supremacists of the previous century as to the connections between India’s caste system and that of the American south, where the purest legal caste system in the US existed. “A record of the desperate efforts of the conquering upper classes in India to preserve the purity of their blood persists to until this very day in their carefully regulated system of castes,” wrote Madison Grant, a popular eugenicist, in his 1916 bestseller, The Passing of the Great Race. “In our Southern States, Jim Crow cars and social discriminations have exactly the same purpose.”

In 1913, Bhimrao Ambedkar, a man born to the bottom of India’s caste system, born an untouchable in the central provinces, arrived in New York City from Bombay. He came to the US to study economics as a graduate student at Columbia, focused on the differences between race, caste and class. Living just blocks from Harlem, he would see first-hand the condition of his counterparts in the US. He completed his thesis just as the film The Birth of a Nation – the incendiary homage to the Confederate south – premiered in New York in 1915. He would study further in London and return to India to become the foremost leader of the untouchables, and a pre-eminent intellectual who would help draft a new Indian constitution. He would work to dispense with the demeaning term “untouchable”. He rejected the term Harijans, which had been applied to them by Gandhi, to their minds patronisingly. He renamed his people Dalits, meaning “broken people” – which, due to the caste system, they were.

A statue of Bhimrao Ambedkar under a flyover in Amritsar, India. Photograph: Narinder Nanu/AFP/Getty Images

It is hard to know what effect his exposure to the American social order had on him personally. But over the years, he paid close attention, as did many Dalits, to the subordinate caste in the US. Indians had long been aware of the plight of enslaved Africans, and of their descendants in the US. Back in the 1870s, after the end of slavery and during the brief window of black advancement known as Reconstruction, an Indian social reformer named Jyotirao Phule found inspiration in the US abolitionists. He expressed hope “that my countrymen may take their example as their guide”.

Many decades later, in the summer of 1946, acting on news that black Americans were petitioning the United Nations for protection as minorities, Ambedkar reached out to the best-known African American intellectual of the day, WEB Du Bois. He told Du Bois that he had been a “student of the Negro problem” from across the oceans, and recognised their common fates.

“There is so much similarity between the position of the Untouchables in India and of the position of the Negroes in America,” Ambedkar wrote to Du Bois, “that the study of the latter is not only natural but necessary.”

Du Bois wrote back to Ambedkar to say that he was, indeed, familiar with him, and that he had “every sympathy with the Untouchables of India”. It had been Du Bois who seemed to have spoken for the marginalised in both countries as he identified the double consciousness of their existence. And it was Du Bois who, decades before, had invoked an Indian concept in channelling the “bitter cry” of his people in the US: “Why did God make me an outcast and a stranger in mine own house?”

I began investigating the American caste system after nearly two decades of examining the history of the Jim Crow south, the legal caste system that grew out of enslavement and lasted into the early 70s, within the lifespans of many present-day Americans. I discovered that I was not writing about geography and relocation, but about the American caste system – an artificial hierarchy in which most everything that you could and could not do was based upon what you looked like, and which manifested itself north and south. I had been writing about a stigmatised people – 6 million of them – who were seeking freedom from the caste system in the south, only to discover that the hierarchy followed them wherever they went, much in the way that the shadow of caste (as I would soon discover) follows Indians in their own global diaspora.

The American caste system began in the years after the arrival of the first Africans to the Colony of Virginia in the summer of 1619, as the colony sought to refine the distinctions of who could be enslaved for life and who could not. Over time, colonial laws granted English and Irish indentured servants greater privileges than the Africans who worked alongside them, and the Europeans were fused into a new identity – that of being categorised as white, the polar opposite of black. The historian Kenneth M Stampp called this assigning of race a “caste system, which divided those whose appearance enabled them to claim pure Caucasian ancestry from those whose appearance indicated that some or all of their forebears were Negroes”. Members of the Caucasian caste, as he called it, “believed in ‘white supremacy’, and maintained a high degree of caste solidarity to secure it”.

While I was in the midst of my research, word of my inquiries spread to some Indian scholars of caste based in the US. They invited me to speak at an inaugural conference on caste and race at the University of Massachusetts in Amherst, the town where WEB Du Bois was born and where his papers are kept.

There, I told the audience that I had written a 600-page book about the Jim Crow era in the American south – the time of naked white supremacy – but that the word “racism” did not appear anywhere in the narrative. I told them that, after spending 15 years studying the topic and hearing the testimony of the survivors of the era, I had realised that the term was insufficient. “Caste” was the more accurate term, and I set out to them the reasons why. They were both stunned and heartened. The plates of Indian food kindly set before me at the reception thereafter sat cold due to the press of questions and the sharing that went on into the night.

At a closing ceremony, the hosts presented to me a bronze-coloured bust of the patron saint of the low-born of India, Bhimrao Ambedkar, the Dalit leader who had written to Du Bois all those decades before.

It felt like an initiation into a caste to which I had somehow always belonged. Over and over, they shared stories of what they had endured, and I responded in personal recognition, as if even to anticipate some particular turn or outcome. To their astonishment, I began to be able to tell who was high-born and who was low-born among the Indian people there, not from what they looked like, as one might in the US, but on the basis of the universal human response to hierarchy – in the case of an upper-caste person, an inescapable certitude in bearing, demeanour, behaviour and a visible expectation of centrality.

On the way home, I was snapped back into my own world when airport security flagged my suitcase for inspection. The TSA worker happened to be an African American who looked to be in his early 20s. He strapped on latex gloves to begin his work. He dug through my suitcase and excavated a small box, unwrapped the folds of paper and held in his palm the bust of Ambedkar that I had been given.

“This is what came up in the X-ray,” he said. It was heavy like a paperweight. He turned it upside down and inspected it from all sides, his gaze lingering at the bottom of it. He seemed concerned that something might be inside.

“I’ll have to swipe it,” he warned me. He came back after some time and declared it OK, and I could continue with it on my journey. He looked at the bespectacled face, with its receding hairline and steadfast expression, and seemed to wonder why I would be carrying what looked like a totem from another culture.

“So who is this?” he asked.

“Oh,” I said, “this is the Martin Luther King of India.”

“Pretty cool,” he said, satisfied now, and seeming a little proud.

He then wrapped Ambedkar back up as if he were King himself, and set him back gently into the suitcase.

German court decides to take back control with ECB ruling

Martin Wolf in The Financial Times 

The 75th anniversary of the defeat of Nazi Germany was May 8. The 70th anniversary of the Schuman declaration, which launched postwar European integration, was May 9. Just days before both, the German constitutional court launched a legal missile into the heart of the EU. Its judgment is extraordinary. It is an attack on basic economics, the central bank’s integrity, its independence and the legal order of the EU. 

The court ruled against the ECB’s public sector purchase programme, launched in 2015. It did not argue that the ECB had improperly engaged in monetary financing, but rather that it had failed to apply a “proportionality” analysis, when assessing the impact of its policies, on a litany of conservative concerns: “public debt, personal savings, pension and retirement schemes, real estate prices and the keeping afloat of economically unviable companies”. 

Monetary policies are necessarily economic policies. But the ECB’s policies, including asset purchases, are justified by the fact that it was — and is — failing to achieve its treaty-mandated “primary objective”, which is “price stability” defined as inflation “below, but close to, 2 per cent over the medium-term”. The EU treaty says other considerations are secondary. 

The court also decreed that “German constitutional organs and administrative bodies”, including the Bundesbank, may not participate in ultra vires acts (those outside one’s legal authority). Thus, the Bundesbank may not continue to participate in the ECB’s asset purchase programmes, until the ECB has conducted a “proportionality assessment” satisfactory to the court. 

Yet the EU treaty states that “neither the ECB, nor a national central bank . . . shall seek or take instructions . . . from any government of a member state or from any other body [my emphases].” The court’s instruction puts the Bundesbank into a conflict of laws. 

The court is also assailing the right of the ECB to make its policy decisions independently. Germany fought hard to install central bank independence within the monetary union. Now, its constitutional court has decreed that unless the ECB satisfies the justices that it has taken full account of a highly political list of side-effects of monetary policies, asset purchases are impermissible. Courts in other member countries may see fit to decree that their national central banks cannot participate in policies they dislike. Pretty soon, the ECB will have been sliced and diced into a nullity. 

Above all, the German court decreed that it can ignore an earlier ruling of the European Court of Justice in favour of the ECB, because the former “exceeds its judicial mandate . . . where an interpretation of the Treaties is not comprehensible and must thus be considered arbitrary from an objective perspective.” This is an act of judicial secession. 

The EU is an integrated legal system, or it is nothing. It rests on the acceptance by all member states of its authority in areas of its competence. In a press release after the constitutional court’s judgment, the ECJ rightly responded that “the Court of Justice alone . . . has jurisdiction to rule that an act of an EU institution is contrary to EU law. Divergences between courts of the member states as to the validity of such acts would indeed be liable to place in jeopardy the unity of the EU legal order and to detract from legal certainty.” Imagine if the courts of every member state were able to decide that ECJ rulings were “arbitrary from an objective perspective”. 

What are the implications? 

If the German court is ultimately satisfied that the ECB adequately assessed the economic impact of its purchases, the PSPP might continue. But the courthas reduced the ECB’s future flexibility by limiting its holdings of any member country’s debt to 33 per cent of the outstanding total and insisting that asset purchases be allocated according to member states’ shares in the ECB. 

In the absence of other eurozone support programmes, the chance of defaults has jumped. Indeed, spreads on Italian government bonds have duly risen a little since the court’s announcement. A crisis might ultimately ensue, with devastating effects; perhaps even a break-up of the eurozone. 

Others might follow Germany in rejecting the jurisdiction of the ECJ and EU. Hungary and Poland are obvious candidates. Future historians may mark this as the decisive turning point in Europe’s history, towards disintegration. 

What can be done? The ECB cannot be accountable to a national court. But the Bundesbank could provide the court with the proportionality analysis. Maybe that would be enough, albeit also a bad precedent. Or, the decision could be ignored. If a German court can ignore the ECJ, maybe the Bundesbank can ignore that court. Alternatively, the ECB could just abandon efforts to rescue the eurozone and accept whatever outcome emerges. 

The EU could initiate an infringement proceeding against Germany. But its direct target would be the German government, which is caught between the EU organs on the one hand and the court on the other. It could not change the ruling. 

More radically, the EU could act to create the needed degree of fiscal solidarity. But the obstacles to this are large. A new treaty looks out of the question in today’s environment of intense mutual distrust. Finally, Germany could boldly secede from the eurozone. Yet, before it makes such a decision, one hopes it, too, will be required to do a full analysis of whether that would be “proportionate”.

One point is clear: The constitutional court has decreed that Germany, too, can take back control. As a result it has created a possibly insoluble crisis.

My plan to revive Europe can succeed where Macron and Piketty failed

Under my Green New Deal, €500bn a year can be created without raising taxes – and it may tempt Britain back to the fold writes Yanis Varoufakis in The Guardian

 

‘Historians will mark Emmanuel Macron’s failed reform agenda as a turning point in the EU, perhaps one that is more significant than Brexit.’ Photograph: François Lenoir/Reuters


If Brexit demonstrates that leaving the EU is not the walk in the park that Eurosceptics promised, Emmanuel Macron’s current predicament proves that blind European loyalism is, similarly, untenable. The reason is that the EU’s architecture is equally difficult to deconstruct, sustain and reform.

While Britain’s political class is, rightly, in the spotlight for having made a mess of Brexit, the EU’s establishment is in a similar bind over its colossal failure to civilise the eurozone – with the rise of the xenophobic right the hideous result. 

Macron was the European establishment’s last hope. As a presidential candidate, he explicitly recognised that “if we don’t move forward, we are deciding the dismantling of the eurozone”, the penultimate step before dismantling of the EU itself. Never shy of offering details, Macron defined a minimalist reform agenda for saving the European project: a common bank deposit insurance scheme (to end the chronic doom loop between insolvent banks and states); a well-funded common treasury (to fund pan-European investment and unemployment benefits); and a hybrid parliament (comprising national and European members of parliament to lend democratic legitimacy to all of the above).

Since his election, the French president has attempted a two-phase strategy: “Germanise” France’s labour market and national budget (essentially making it easier for employers to fire workers while ushering in additional austerity) so that, in the second phase, he might convince Angela Merkel to persuade the German political class to sign up to his minimalist eurozone reform agenda. It was a spectacular miscalculation – perhaps greater than Theresa May’s error in accepting the EU’s two-phase approach to Brexit negotiations.

When Berlin gets what it wants in the first phase of any negotiation, German chancellors then prove either unwilling or incapable of conceding anything of substance in the second phase. Thus, just like May ending up with nothing tangible in the second phase (the political declaration) by which to compensate her constituents for everything she gave up in the first phase (the withdrawal agreement), so Macron saw his eurozone reform agenda evaporate once he had attempted to Germanise France’s labour and national budget. The subsequent fall from grace, at the hands of the offspring of his austerity drive – the gilets jaunes movement – was inevitable.


The great advantage of our Green New Deal is we are taking a leaf out of Franklin Roosevelt’s original New Deal in the 1930s

Historians will mark Macron’s failure as a turning point in the EU, perhaps one that is more significant than Brexit: it puts an end to the French ambition for a fiscal union with Germany. We can already see the decline of this French reformist ambition in the shape of the latest manifesto for saving Europe by the economist Thomas Piketty and his supporters – published this week. Professor Piketty has been active in producing eurozone reform agendas for a number of years – an earlier manifesto was produced in 2014. It is, therefore, interesting to observe the effect of recent European developments on his proposals. 

In 2014, Piketty put forward three main proposals: a common eurozone budget funded by harmonised corporate taxes to be transferred to poorer countries in the form of investment, research and social spending; the pooling of public debt, which would mean the likes of Germany and Holland helping Italy, Greece and others in a similar situation to bring down their debt; and a hybrid parliamentary chamber. In short, something similar to Macron’s now shunned European agenda.

Four years later, the latest Piketty manifesto retains a hybrid parliamentary chamber, but forfeits any Europeanist ambition – all proposals for debt pooling, risk sharing and fiscal transfers have been dropped. Instead, it suggests that national governments agree to raise €800bn (or 4% of eurozone GDP) through a harmonised corporate tax rate of 37%, an increased income tax rate for the top 1%, a new wealth tax for those with more than €1m in assets, and a C02 emissions tax of €30 per tonne. This money would then be spent within each nation-state that collected it – with next to no transfers across countries. But, if national money is to be raised and spent domestically, what is the point of another supranational parliamentary chamber?

Europe is weighed down by overgrown, quasi-insolvent banks, fiscally stressed states, irate German savers crushed by negative interest rates, and whole populations immersed in permanent depression: these are all symptoms of a decade-long financial crisis that has produced a mountain of savings sitting alongside a mountain of debts. The intention of taxing the rich and the polluters to fund innovation, migrants and the green transition is admirable. But it is insufficient to tackle Europe’s particular crisis.

What Europe needs is a Green New Deal – this is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer.

The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.

Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.

Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.

Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.

Why Germany Cannot and Should Not Pay to Save the Eurozone

Yanis Varoufakis at the Leibnitz Institute

The best thing Germany could do for Europe is quit the single currency – but it won’t

Larry Elliott in The Guardian



 

‘Germany is the one country that has really benefited from the single currency.’ Photograph: Hannelore Foerster/Getty Images


Even when it was clearly in decline, the Soviet Union commanded loyal devotion. Its admirers could never quite grasp that the nation instrumental in winning the second world war had a broken economy.

The same cognitive dissonance applies to the European Union today. There is the EU as it exists in the minds of its most avid supporters: fast-growing, a defender of progressive values, fighting the good fight against Thatcherism, and marching steadfastly towards greater integration.

Then there is the EU as it really is: struggling economically; wedded to an aggressive form of neoliberal economics; insistent that there is no alternative to a top-down, ever-closer union; and spawning anti-elite parties across the continent.

Like the USSR under Gorbachev, Europe needs radical reform before it is too late because, as George Soros noted last week, everything that could go wrong has gone wrong. The EU is saddled with a single currency that doesn’t work but unable to admit it. It has forced its weaker members to suffer the consequences of the euro’s design weaknesses with austerity policies; it has told those who complain about low growth and high unemployment to sort out their own problems through structural reforms (wage cuts and privatisation); and it has failed to comprehend the anger felt at mass immigration, which has increased the pool of readily available cheap labour. 

A particularly serious form of this cognitive dissonance seems to afflict some left-leaning remainers in the UK. They appear to have forced Jeremy Corbyn and John McDonnell into softening (or fudging) Labour’s stance on the single market, even though they were two of the very few Labour MPs who rightly predicted where Europe would end up if it insisted on following rightwing economic policies.

And their insistence that the best way to help those who voted for Brexit is a reformed UK in a reformed EU glides over the fact that they rarely come up with any ideas for what these reforms might look like or how they might come about. That, of course, is because they have no plan other than to return Britain to its blissful prelapsarian state before the referendum. Gordon Brown’s plan to tackle the causes of Brexit – low wages, the sense of being cast adrift, the pressures from migration, the loss of sovereignty and concerns about the NHS – is a welcome and timely exception to this rule. But Brown’s warning that serious change is needed to prevent Britain being permanently paralysed applies equally to the rest of Europe, divided between social liberals and conservatives, between a rich north and a poorer south, and between those for whom globalisation works and those for whom it doesn’t.

Those who think that Euroscepticism is just a British phenomenon need to take a long, hard look at the populism on the march across Europe and ask themselves why it is happening. Then they need to work out what they are going to do about it.

One option, proposed by Emmanuel Macron, is to make Europe more like the US. Macron’s argument, which makes a lot of sense, is that the single currency is an unfinished and hence inherently unstable construct, which needs a much bigger budget, run by a single finance minister, to even out variations in economic performance. But there is little appetite in the rest of the EU for Macron’s plan, particularly where it really counts: in Germany.

Another option would be for Italy to precipitate change by leaving the euro. This is even less likely than adoption of Macron’s plans, because as soon as the financial markets got whiff of the idea it would result in sky-high Italian interest rates and the collapse of an already shaky banking system. Italians with savings would see their value decimated by a return to the lira. The only way Italy will leave the euro is by mistake, and then it would be catastrophic.

A third option would be for the conduct of European economic policy to become less fixated on austerity. There could be less emphasis on hitting arbitrary budget deficit targets, a move away from the neoliberal structural adjustment policies imposed on those countries seeking support, an acceptance that those countries trying to cope with migration flows across the Mediterranean need much more financial help than they are currently getting, and a Marshall plan for Africa of the sort floated by Soros. All would be welcome: all would meet with strong opposition from Angela Merkel.

By far the best option would be for Germany to take the initiative and announce that it was leaving the single currency, taking a small group of northern European countries with it. This would have a number of clear advantages. First, it would remove the stigma of leaving the euro because the decision would be taken from a position of strength not weakness. Second, the new mark would be a lot stronger than the euro and that would help iron out some of the imbalances in Europe’s economy by making German exports dearer and German imports cheaper. Third, the new hard eurozone would be more like Germany’s original vision of what it imagined monetary union would look like.

Fourth, it would breathe new life into plans for European integration because it could start small and get bigger over time. Countries such as the Netherlands and Austria would be obvious choices as founder members of a smaller club bound by common fiscal rules.

Finally, it would make a reality of a multispeed Europe in which some countries would be members of the hard eurozone, some would be actively planning to join it once their economies were ready, and some would decide they never wanted to join.

As things stand, this is just as big a fantasy as Macron’s integrationist blueprint. Germany is the one country that has really benefited from the single currency and is not going to propose a hard-mark zone that might exclude France. Macron would throw a wobbly if it did.

But if European leaders had the opportunity to turn the clock back to before the euro was introduced, this is the sort of plan they would probably come up with. And if this sort of EU had seemed feasible in June 2016, the UK would never have voted for Brexit.

In silencing Euroscepticism, Italy’s president has gifted its far right

Yanis Varoufakis in The Guardian

Italy should be doing well. Unlike Britain, it exports considerably more to the rest of the world than it imports, while its government spends less (excluding interest payments) than the taxes it receives. And yet Italy is stagnating, its population in a state of revolt following two lost decades.

Italian president names interim prime minister until fresh elections


While it is true that Italy is in serious need of reforms, those who blame the stagnation on domestic inefficiencies and corruption must explain why Italy grew so fast throughout the postwar period until it entered the eurozone. Was its government and polity more efficient and virtuous in the 1970s and 1980s? Hardly.

The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.

In 2015 the Greek people elected a progressive, Europeanist government with a mandate to demand a new deal within the eurozone. In the space of six months, under the guidance of the German government, the European Union and its central bank crushed us. A few months later, I was asked by the Italian daily newspaper Corriere della Sera if I thought European democracy was at risk. I answered: “Greece surrendered but it was Europe’s democracy that was mortally wounded. Unless Europeans realise that their economy is run by unelected and unaccountable pseudo-technocrats, committing one gross error after another, our democracy will remain a figment of our collective imagination.”

Since then, the pro-establishment government of Italy’s Democratic party implemented, one after the other, the policies that the unelected bureaucrats of the EU demanded. The result was more stagnation. And so, in March, a national election delivered an absolute parliamentary majority to two anti-establishment parties which, despite their differences, shared doubts about Italy’s eurozone membership and a hostility to migrants. It was the bitter harvest of absent prospects and withering hope.

After a few weeks of the kind of post-election horse-trading common in countries like Italy and Germany, the Five Star Movement and League leaders Luigi Di Maio and Matteo Salvini struck a deal to form a government. Alas, President Sergio Mattarella used the powers bestowed upon him by the Italian constitution to prevent the formation of that government and, instead, handed the mandate to a technocrat, a former IMF employee who stands no chance of a vote of confidence in parliament.

Had Mattarella refused Salvini the post of interior minister, outraged by his promise to expel 500,000 migrants from Italy, I would be compelled to support him. But, no, the president had no such qualms. Not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where.

No, Mattarella chose to clash with an absolute majority of lawmakers for another reason: his disapproval of the finance minister designate. Why? Because the said gentleman, while fully qualified for the job, and despite his declaration that he would abide by the EU’s rules, had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.

What is so striking is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?


Beyond his moral failure, the president has made a major tactical blunder

Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.

Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”

If Mattarella takes solace from the fact that previous Italian presidents managed to put in place technical governments that did the establishment’s job (so “successfully” that the country’s political centre imploded), he is very badly mistaken. This time around he, unlike his predecessors, has no parliamentary majority to pass a budget or indeed to lend his chosen government a vote of confidence. Thus, the president is forced to call fresh elections that, courtesy of his moral drift and tactical blunder, will return an even stronger majority for Italy’s xenophobic political forces, possibly in alliance with the enfeebled Forza Italia of Silvio Berlusconi.

When Your Capitalist Economy Fails, Blame the Foreigners!

‘From bad to worse’: Greece hurtles towards a final reckoning

Helena Smith in The Guardian


Dimitris Costopoulos stood, worry beads in hand, under brilliant blue skies in front of the Greek parliament. Wearing freshly pressed trousers, polished shoes and a smart winter jacket – “my Sunday best” – he had risen at 5am to get on the bus that would take him to Athens 200 miles away and to the great sandstone edifice on Syntagma Square. By his own admission, protests were not his thing.

At 71, the farmer rarely ventures from Proastio, his village on the fertile plains of Thessaly. “But everything is going wrong,” he lamented on Tuesday, his voice hoarse after hours of chanting anti-government slogans.

---For Background Knowledge read:

Yanis Varoufakis and the Greek Tragedy

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“Before there was an order to things, you could build a house, educate your children, spoil your grandchildren. Now the cost of everything has gone up and with taxes you can barely afford to survive. Once I’ve paid for fuel, fertilisers and grains, there is really nothing left.”

Costopoulos is Greece’s Everyman; the human voice in a debt crisis that refuses to go away. Eight years after it first erupted, the drama shows every sign of reigniting, only this time in a new dark age of Trumpian politics, post-Brexit Europe, terror attacks and rise of the populist far right.

“I grow wheat,” said Costopoulos, holding out his wizened hands. “I am not in the building behind me. I don’t make decisions. Honestly, I can’t understand why things are going from bad to worse, why this just can’t be solved.”

As Greece hurtles towards another full-blown confrontation with the creditors keeping it afloat, and as tensions over stalled bailout negotiations mount, it is a question many are asking.

The country’s epic struggle to avert bankruptcy should have been settled when Athens received €110bn in aid – the biggest financial rescue programme in global history – from the EU and International Monetary Fund in May 2010. Instead, three bailouts later, it is still wrangling over the terms of the latest €86bn emergency loan package, with lenders also at loggerheads and diplomats no longer talking of a can, but rather a bomb, being kicked down the road. Default looms if a €7.4bn debt repayment – money owed mostly to the European Central Bank – is not honoured in July.



Farmer Dimitris Costopoulos in front of the Greek parliament in Athens. Photograph: Helena Smith for the Observer

Amid the uncertainty, volatility has returned to the markets. So, too, has fear, with an estimated €2.2bn being withdrawn from banks by panic-stricken depositors since the beginning of the year. With talk of Greece’s exit from the euro being heard again, farmers, trade unions and other sectors enraged by the eviscerating effects of austerity have once more come out in protest.

From his seventh-floor office on Mitropoleos, Makis Balaouras, an MP with the governing Syriza party, has a good view of the goings-on in Syntagma. Demonstrations – what the former trade unionist calls “the movement” – are a fine thing. “I wish people were out there mobilising more,” he sighed. “Protests are in our ideological and political DNA. They are important, they send a message.”

This is the irony of Syriza, the leftwing party catapulted to power on a ticket to “tear up” the hated bailout accords widely blamed for extraordinary levels of Greek unemployment, poverty and emigration. Two years into office it has instead overseen the most punishing austerity measures to date, slashing public-sector salaries and pensions, cutting services, agreeing to the biggest privatisation programme in European history and raising taxes on everything from cars to beer – all of which has been the price of the loans that have kept default at bay and Greece in the euro.

In the maelstrom the economy has improved, with Athens achieving a noticeable primary surplus last year, but the social crisis has intensified.

For men like Balaouras, who suffered appalling torture for his leftwing beliefs at the hands of the 1967-74 colonels’ regime, the policies have been galling. With the IMF and EU arguing over the country’s ability to reach tough fiscal targets when the current bailout expires in August next year, the demand for €3.6bn of more measures has left many in Syriza reeling. Without upfront legislation on the reforms, creditors say, they cannot conclude a compliance review on which the next tranche of bailout aid hangs.

“We had an agreement,” insisted Balaouras, looking despondently down at his desert boots. “We kept to our side of the deal, but the lenders haven’t kept to their side because now they are asking for more. We want the review to end. We want to go forward. This situation is in the interests of no one. But to get there we have to have an honourable compromise. Without that there will be a clash.”

It had been hoped that an agreement would be struck on Monday at what had been billed as a high-stakes meeting of euro area finance ministers. On Friday, EU officials announced that the deadline had been all but missed because there had been little convergence between the two sides.

With the Netherlands holding general elections next month, and France and Germany also heading to the polls in May and September, fears of the dispute becoming increasingly politicised have added to its complexity. Highlighting those concerns, the German chancellor, Angela Merkel, attempted to end the rift that has emerged between eurozone lenders and the IMF over the fund’s insistence that Greece can only begin to recover if its €320bn debt pile is reduced substantially.

In talks with Christine Lagarde, the Washington-based IMF’s managing director, Merkel agreed to discuss the issue during a further meeting between the two women to be held on Wednesday. The IMF has steadfastly refused to sign up to the latest bailout, arguing that Greek debt is not only unmanageable but on a trajectory to become explosive by 2030. Berlin, the biggest contributor of the €250bn Greece has so far received, says it will be unable to disburse further funds without the IMF on board.

The assumption is that the prime minister, Alexis Tsipras, will cave in, just as he did when the country came closest yet to leaving the euro at the height of the crisis in the summer of 2015. But the 41-year-old leader, like Syriza, has been pummelled in the polls. Persuading disaffected backbenchers to support more measures, and then selling them to a populace exhausted by repeated rounds of austerity, will be extremely difficult. Disappointment has increasingly given way to the death of hope – a sentiment reinforced by the realisation that Cyprus and other bailed-out countries, by contrast, are no longer under international supervision.

In his city centre office, the former finance minister Evangelos Venizelos pondered where Greece’s predicament was now. “[We are] at the same point we were several years ago,” he joked. “The only difference is that anti-European sentiment is growing. What was once a very friendly country towards Europe is becoming increasingly less so, and with that comes a lot of danger, a lot of risk.”

When historians look back they, too, may conclude that Greece has expended a great deal of energy not moving forward at all.

The arc of crisis that has swept the country – coursing like a cancer through its body politic, devastating its public health system, shattering lives – has been an exercise in the absurd. The feat of pulling off the greatest fiscal adjustment in modern times has spawned a slump longer and deeper than the Great Depression, with the Greek economy shrinking more than 25% since the crisis began.

Even if the latest impasse is broken and a deal is reached with creditors soon, few believe that in a country of weak governance and institutions it will be easy to enforce. Political turbulence will almost certainly beckon; the prospect of “Grexit” will grow.

“Grexit is the last thing we want, but we may arrive at a point of serious dilemmas,” said Venizelos. “Whatever deal is reached will be very difficult to implement, but that notwithstanding, it is not the memoranda [the bailout accords] that caused the crisis. The crisis was born in Greece long before.”

Like every crisis government before it, Tsipras’s administration is acutely aware that salvation will come only when Greece can return to the markets and raise funds. What happens in the weeks ahead could determine if that is likely to happen at all.

Back in Syntagma, Costopoulos the good-natured farmer ponders what lies ahead. Like every Greek, he stands to be deeply affected. “All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

Seven changes needed to save the euro and the EU

Joseph Stiglitz in The Guardian

To say that the eurozone has not been performing well since the 2008 crisis is an understatement. Its member countries have done more poorly than the European Union countries outside the eurozone, and much more poorly than the United States, which was the epicentre of the crisis.

The worst-performing eurozone countries are mired in depression or deep recession; their condition – think of Greece – is worse in many ways than what economies suffered during the Great Depression of the 1930s. The best-performing eurozone members, such as Germany, look good, but only in comparison; and their growth model is partly based on beggar-thy-neighbour policies, whereby success comes at the expense of erstwhile “partners”.

Four types of explanation have been advanced to explain this state of affairs.Germany likes to blame the victim, pointing to Greece’s profligacy and the debt and deficits elsewhere. But this puts the cart before the horse: Spain and Ireland had surpluses and low debt-to-GDP ratios before the euro crisis. So the crisis caused the deficits and debts, not the other way around.

Deficit fetishism is, no doubt, part of Europe’s problems. Finland, too, has been having trouble adjusting to the multiple shocks it has confronted, with GDP in 2015 around 5.5% below its 2008 peak.

Other “blame the victim” critics cite the welfare state and excessive labour-market protections as the cause of the eurozone’s malaise. Yet some of Europe’s best-performing countries, such as Sweden and Norway, have the strongest welfare states and labour-market protections.

Many of the countries now performing poorly were doing very well – above the European average – before the euro was introduced. Their decline did not result from some sudden change in their labour laws, or from an epidemic of laziness in the crisis countries. What changed was the currency arrangement.

The second type of explanation amounts to a wish that Europe had better leaders, men and women who understood economics better and implemented better policies. Flawed policies – not just austerity, but also misguided so-called structural reforms, which widened inequality and thus further weakened overall demand and potential growth – have undoubtedly made matters worse.

But the eurozone was a political arrangement, in which it was inevitable that Germany’s voice would be loud. Anyone who has dealt with German policymakers over the past third of a century should have known in advance the likely result. Most important, given the available tools, not even the most brilliant economic tsar could not have made the eurozone prosper.

The third set of reasons for the eurozone’s poor performance is a broader rightwing critique of the EU, centred on the eurocrats’ penchant for stifling, innovation-inhibiting regulations. This critique, too, misses the mark. The eurocrats, like labour laws or the welfare state, didn’t suddenly change in 1999, with the creation of the fixed exchange-rate system, or in 2008, with the beginning of the crisis. More fundamentally, what matters is the standard of living, the quality of life. Anyone who denies how much better off we in the west are with our stiflingly clean air and water should visit Beijing.

That leaves the fourth explanation: the euro is more to blame than the policies and structures of individual countries. The euro was flawed at birth. Even the best policymakers the world has ever seen could not have made it work. The eurozone’s structure imposed the kind of rigidity associated with the gold standard. The single currency took away its members’ most important mechanism for adjustment – the exchange rate – and the eurozone circumscribed monetary and fiscal policy.

In response to asymmetric shocks and divergences in productivity, there would have to be adjustments in the real (inflation-adjusted) exchange rate, meaning that prices in the eurozone periphery would have to fall relative to Germany and northern Europe. But, with Germany adamant about inflation – its prices have been stagnant – the adjustment could be accomplished only through wrenching deflation elsewhere. Typically, this meant painful unemployment and weakening unions; the eurozone’s poorest countries, and especially the workers within them, bore the brunt of the adjustment burden. So the plan to spur convergence among eurozone countries failed miserably, with disparities between and within countries growing.

This system cannot and will not work in the long run: democratic politics ensures its failure. Only by changing the eurozone’s rules and institutions can the euro be made to work. This will require seven changes:

• abandoning the convergence criteria, which require deficits to be less than 3% of GDP

• replacing austerity with a growth strategy, supported by a solidarity fund for stabilisation

• dismantling a crisis-prone system whereby countries must borrow in a currency not under their control, and relying instead on Eurobonds or some similar mechanism

• better burden-sharing during adjustment, with countries running current-account surpluses committing to raise wages and increase fiscal spending, thereby ensuring that their prices increase faster than those in the countries with current-account deficits;

• changing the mandate of the European Central Bank, which focuses only on inflation, unlike the US Federal Reserve, which takes into account employment, growth, and stability as well

• establishing common deposit insurance, which would prevent money from fleeing poorly performing countries, and other elements of a “banking union”

• and encouraging, rather than forbidding, industrial policies designed to ensure that the eurozone’s laggards can catch up with its leaders.
From an economic perspective, these changes are small; but today’s eurozone leadership may lack the political will to carry them out. That doesn’t change the basic fact that the current halfway house is untenable. A system intended to promote prosperity and further integration has been having just the opposite effect. An amicable divorce would be better than the current stalemate.

Of course, every divorce is costly; but muddling through would be even more costly. As we’ve already seen this summer in the United Kingdom, if European leaders can’t or won’t make the hard decisions, European voters will make the decisions for them – and the leaders may not be happy with the results.

The Shias are winning in the Middle East – and it's all thanks to Russia

Robert Fisk in The Independent

The Shias are winning. Two pictures prove it. The US-Iranian photo op that followed the signing of the nuclear deal with Iran last year and the footage just released – by the Russian defence ministry, no less – showing Moscow’s Tupolev Tu-22M3 bombers flying out of the Iranian air base at Hamadan and bombing the enemies of Shia Iran and of the Shia (Alawite) regime of Syria and of the Shia Hezbollah.

And what can the Sunni Kingdom of Saudi Arabia match against this? Only its wretched war to kill the miserable Shia Houthis of Yemen – with British arms.

Poor, luckless Turkey — whose Sultan Erdogan makes Theresa May’s political U-turns look like a straight path – is at the centre of this realignment. Having shot down a Russian jet and lost much of his Russian tourist trade, the Turkish president was quickly off to St Petersburg to proclaim his undying friendship for Tsar Vladimir. The price? An offer from Erdogan to stage Russian-Turkish “joint operations” against the Sunni enemies of Bashar al-Assad of Syria. Turkey is now in the odd position of assisting US jets to bomb Isis while ready to help Russian jets do exactly the same.

And Jabhat al-Nusrah? Let’s remember the story so far. Al-Qaeda, the creature of the almost forgotten Osama bin Laden, sprang up in both Iraq and Syria where it changed its name to the Nusrah Front and then, just a few days ago, to “Fatah al-Sham”. Sometimes allied to Isis, sometimes at war with Isis, the Qatari-funded legion is now the pre-eminent guerrilla army in Syria – far eclipsing the black-costumed lads of Raqqa whose gruesome head-chopping videos have awed the West in direct proportion to their military defeats. We are still obsessed with Isis and its genocidal creed. We are not paying nearly enough attention to Nusrah.

But the Russians are. That’s why they are sprinkling their bombs across eastern Aleppo and Idlib province. Nusrah forces hold almost all the rebel areas of Syria’s second city and much of the province. It was Nusrah that fought back against its own encirclement by the Syrian regime in Aleppo. The regime kicked Isis out of Palmyra in a short and bloody battle in which Syrian soldiers, most of whom are in fact Sunnis, died by the dozen after stepping on hidden land mines.

But Nusrah is a more powerful enemy, partly because it has more Syrians among its ranks than Isis. It’s one thing to be told that your country is to be ‘liberated’ by a Sunni Syrian outfit, quite another to be instructed by the purists of Isis that your future is in the hands of Sunni Chechens, Pakistanis, Iraqis, Saudis, Qataris, Egyptians, Turks, Frenchmen, Belgians, Kosovars and British. Isis has Sunni Saudi interests (and money) behind it. Nusrah has Sunni Qatar.

As for Turkey – Sunni as well, of course, but not Arab – it’s now being squeezed between giants, the fate of all arms smuggling nations as Pakistan learned to its cost. Not only has it been pushed into joining Moscow as well as the US in waging war on Isis, it’s being politically attacked from within Germany, where a leaked state intelligence summary – part of a reply to a parliamentary question by the interior ministry – speaks of Turkey as a “central platform for Islamist and other terrorist organisations”. State interior secretary Ole Schroder’s remarks, understandably stamped “confidential”, are flawed since he lumps Erdogan’s support for the Egyptian Muslim Brotherhood and Hamas with armed Islamist groups in Syria.

The Sunni Brotherhood, prior to its savaging by Egypt’s President-Field Marshal al-Sissi, did indeed give verbal approval to Assad’s Sunni armed opponents in Syria, and Sunni Hamas operatives in Gaza must have cooperated with Isis in its struggle against Sissi’s army in Sinai. But to suggest that Turkey is in some way organising this odd triumvirate is going too far. To claim that “the countless expressions of solidarity and supportive actions of the ruling AKP (Justice and Development Party) and President Erdogan” for the three “underline their ideological [affinity] to their Muslim brothers” is going too far. “Ideological affinity” should not provide a building block for intelligence reports, but the damage was done. In the report, the Turkish president’s name was written ERDOGAN, in full capital letters.

Someone in the German intelligence service – which regularly acts as a negotiator between Israel and the Shia Hezbollah in Lebanon, usually to exchange bodies between the two sides – obviously decided that its erring Sunni NATO partner in Ankara should get fingered in the infamous “war on terror” in which we are all supposed to be participants. So Erdogan offers help to Russia in the anti-Isis war, continues to give the US airbases in Turkey – and gets dissed by the German federal interior ministry, all at the same time. And the only Muslim state in Nato, which just happens to be Sunni Muslim, is now being wrapped up in the Sunni-Shia war. What future Turkey?

Well, we better not write it off. Just as Erdogan has become pals with Putin, the Turkish and Iranian foreign ministers have been embracing in Ankara with many a promise that their own talks will produce new alliances. Russia-Turkey-Iran. In the Middle East, it’s widely believed that Tehran as well as Moscow tipped Erdogan off about the impending coup. And Erdogan himself has spoken of his emotion when Putin called after the coup was crushed to express his support.

The mortar to build this triple alliance could well turn out to be the Kurds. Neither Russia nor Iran want independent Kurdish states – Putin doesn’t like small minorities in nation-states and Iran’s unity depends on the compliance of its own Kurdish people. Neither are going to protect the Kurds of Syria – loyal foot-soldiers of the Americans right now – in a “new” Syria. Erdogan wants to see them crushed along with the dreams of a “Kurdistan” in south-east Turkey.

Any restored Syrian state will insist on national unity. When Assad praised the Kurds of Kobane for their resistance at the start of the war, he called their town by its Arab name of Ein al-Arab.

It is, of course, a paradox to talk of the Middle East’s agony as part of an inter-Muslim war when one side talks of its enemies as terrorists and the other calls its antagonists apostates. Arab Muslims do not deserve to have their religious division held out by Westerners as a cause of war.

But Saudis and Qataris have a lot to answer for. It is they who are supporting the insurgents in Syria. Syria – dictatorial regime though it is – is not supporting any revolutions in Riyadh or Doha. The Sunni Gulf Arabs gave their backing to the Sunni Taliban in Afghanistan, just as they favour Sunni Isis and Sunni Nusrah in Syria. Russia and America are aligned against both and growing closer in their own weird cooperation. And for the first time in history, the Shia Iranians have both the Russians and the Americans on their side – and Turkey tagging along.

No grades, no timetable: Berlin school turns teaching upside down

Philip Olterman in The Guardian

Anton Oberländer is a persuasive speaker. Last year, when he and a group of friends were short of cash for a camping trip to Cornwall, he managed to talk Germany’s national rail operator into handing them some free tickets. So impressed was the management with his chutzpah that they invited him back to give a motivational speech to 200 of their employees.

Anton, it should be pointed out, is 14 years old.

The Berlin teenager’s self-confidence is largely the product of a unique educational institution that has turned the conventions of traditional teaching radically upside down. At Oberländer’s school, there are no grades until students turn 15, no timetables, no lecture-style instructions. The pupils themselves decide which subjects they want to study for each lesson and when they want to take an exam.

The school’s syllabus reads like any helicopter parents’ nightmare. Set subjects are limited to maths, German, English and social studies, supplemented by more abstract courses such as “responsibility” or “challenge”. For “challenge”, students aged 12 to 14 are each given €150 (£115) and sent on an adventure they have to plan entirely by themselves. Some go kayaking, others work on a farm. Anton went trekking along England’s south coast.

The philosophy behind these innovations is simple: as the requirements of the labour market are changing, and smartphones and the internet are transforming the ways in which young people process information, headteacher Margret Rasfeld argues, the most important skill a school can pass down to its students is the ability to motivate themselves.

“Look at three or four year olds – they are all full of self-confidence,” Rasfeld says. “Often children can’t wait to start school. But frustratingly, most schools then somehow manage to untrain that confidence.”

The Evangelical School Berlin Centre (ESBC) is trying to do nothing less than “reinvent what a school is”, she says. “The mission of a progressive school should be to prepare young people to cope with change, or better still, to make them look forward to change. In the 21st century schools should see it as their job to develop strong personalities.”

Making students listen to a teacher for 45 minutes and punish them for collaborating on an exercise, Rasfeld says, was not only out of sync with the requirements of the modern world of work but also counterproductive. “Nothing motivates students more than when they discover the meaning behind a subject of their own accord.”

Students at her school are encouraged to think up other ways to prove their acquired skills, such as coding a computer game instead of sitting a maths exam. Oberländer, who had never been away from home for three weeks until he embarked on his challenge in Cornwall, said he learned more English on his trip than he had in several years of learning the language at school.

Reinventing education: pupils at the ESBC, which is gaining a reputation as Germany’s most exciting school. Photograph: Handout

Germany’s federalised education structure, in which each of the 16 states plans its own education system, has traditionally allowed “free learning” models to flourish. Yet unlike Sudbury, Montessori or Steiner schools, Rasfeld’s institution tries to embed student self-determination within a relatively strict system of rules. Students who dawdle during lessons have to come into school on Saturday morning to catch up, a punishment known as “silentium”. “The more freedom you have, the more structure you need,” says Rasfeld.

The main reason why the ESBC is gaining a reputation as Germany’s most exciting school is that its experimental philosophy has also managed to deliver impressive results. Year after year Rasfeld’s institution ends up with the best grades among Berlin’s gesamtschulen, or comprehensive schools, which combine all three school forms of Germany’s tertiary system. Last year’s school leavers achieved an average grade of 2.0, the equivalent of a straight B – even though 40% of the year had been advised not to continue to Abitur, the German equivalent of A-levels, before they joined the school. Having opened in 2007 with just 16 students, the school now operates at full capacity, with 500 pupils and long waiting lists for new applicants.


Given its word-of-mouth success, it is little wonder there have been calls for Rasfeld’s approach to go nationwide. Yet some educational experts question whether the school’s methods can easily be exported: in Berlin, they say, the school can draw the most promising applicants from well-off and progressive families. Rasfeld rejects such criticisms, insisting the school aims for a heterogenous mix of students from different backgrounds. While a cross adorns the assembly hall and each school day starts with worship, only a third of current pupils are baptised. Thirty per cent of students have a migrant background, and 7% are from households where no German is spoken at all.

Even though the ESBC is one of Germany’s 5,000 private schools, fees are means tested and relatively low compared with those common in Britain, ranging between €720 and €6,636 a year. About 5% of students are exempt from fees.

Yet even Rasfeld admits that finding teachers able to adjust to the school’s learning methods can be harder than getting students to do the same.

Aged 65 and due to retire in July, Rasfeld still has ambitious plans. A four-person “education innovation lab” based at the school has been developing teaching materials for schools that want to follow the ESBC’s lead. About 40 schools inGermany are in the process of adopting some or all of Rasfeld’s methods. One in Berlin’s Weissensee district recently let a student trek across the Alps for a challenge project. “Things are only getting started,” says Rasfeld.

“In education, you can only create change from the bottom – if the orders come from the top, schools will resist. Ministries are like giant oil tankers: it takes a long time to turn them around. What we need is lots of little speedboats to show you can do things differently.”

Brexit may be the best answer to a dying eurozone

Larry Elliott in The Guardian

Staying in the EU means hitching ourselves to an undemocratic project run by and for a remote elite

 

Illustration by Ellie Foreman-Peck

The elephant in the room. Everybody knew what Mark Carney meant when he paused halfway through his regular three-monthly update on the state of the economy: the implications of Brexit.

The governor of the Bank of England did not pull any punches. He warned of a potential run on the pound and of possible problems financing the UK’s whopping balance of payments deficit. He said the Bank expected growth to be materially lower and inflation to be notably higher. Voters trust the Bank of England. They sat up and took notice. The opinion polls started to move in favour of remain. When the history of the referendum campaign is written, Carney’s may be seen as the decisive intervention.

In truth, there was more than one elephant in the room. Carney was right when he said there was a risk that the upheaval caused by Brexit could tip an already weakening economy into recession. But as elephants in the room go, this was the smaller, Indian version. The equivalent of the bigger, African elephant was the shocking state of the eurozone after the failure of the single currency experiment. This went unremarked by Carney, although it is relevant to the debate aboutEurope.

Why? Because, although Britain is likely to stay in the EU, Brexit will remain a live issue unless the eurozone can sort itself out. That means either admitting that the euro has been a terrible mistake, or going the whole hog and integrating further, with a single banking system, a Europe-wide treasury, and a democratically elected finance minister with the power to raise money in Germany and spend it in Greece. This is not going to happen any time soon, and perhaps never. Countries that joined the eurozone gave up a considerable amount of economic power when they adopted the euro, but they retained the right to raise their own taxes and make their own spending decisions.

Britain is not in the euro, for which we should all be thankful. But let’s be clear: staying in the EU means hitching the wagon to a currency zone unable to go forwards or backwards, and which will continue to struggle as a result.

The euro brought to fruition the idea of ever-closer union, a plan that dates back to the early 1950s. Lots of things considered good ideas back then are no longer considered quite so clever: system-built high-rise flats as the answer to slum housing; nuclear power to meet energy needs. Put ever-closer union in the same category as the Birmingham inner-city ring road: it seemed a good idea at the time.

Dan Atkinson and I spent the winter working on a book about the single currencycommissioned in the wake of last summer’s Greek crisis. The brief was to look at what had gone wrong from a left-of-centre perspective; to explore the widespread disquiet about the way in which a country that voted in January 2015 for an end to austerity ended up seven months later being forced to accept even deeper cuts in wages and spending.
The eurozone crisis is about more than Greece. It is about Italy, where the economy is barely any bigger now than it was when the single currency was introduced. And France, where unemployment is double the level of the UK or the US. And Finland, one of the most tech-savvy countries in Europe, where the economy is 7% smaller than it was before the start of the financial crisis. And even Germany, where an export boom and high corporate profits have been paid for by workers in the form of below-inflation pay increases.

Our investigations took us back to the last time Britain held a referendum on EU membership, when during the cabinet discussions Tony Benn warned that Britain was signing up for something that was undemocratic, deflationary and run in the interests of big business. “I can think of no body of men outside the Kremlin who have so much power without a shred of accountability for what they do,” Benn said.

Benn’s dystopian vision proved entirely accurate. When the architects of the new Europe looked to the future, they envisaged a new and better version of the United States of America. Europe would have all the good bits about the US – such as the economic dynamism, a large barrier-free market and a single currency – without any of the bad bits: the inequality, the high levels of incarceration, the poverty and the inadequate welfare safety net. 

This dream lives on. Yanis Varoufakis, the deposed finance minister of Greece, thinks the eurozone could be recast along Keynesian lines, with the rich and strong countries obliged to provide financial help to the poor and weak. Good luck with getting Germany to agree to that.
Economic policy has been relentlessly deflationary. The interests of bankers have been given a higher priority than workers’. Greece, Ireland, Portugal, Cyprus and Spain have been the laboratory mice in a continent-wide neoliberal experiment of a sort Tea Party Republicans in the US can only fantasise about.

Given the obscene level of long-term unemployment, the idea of Europe as the guardian of labour rights is laughable. The gap between the US and Europe has widened, not narrowed, since the launch of the single currency. Populist parties of both left and right are gaining in support. One left-of-centre argument against Brexit is that it would result in the breakup of the euro and by doing so set off a chain reaction that would lead to the next global crisis: a perfectly fair point. Those who fear that another recession and even higher levels of joblessness would threaten a return to the totalitarian politics of the 1930s are right to highlight the risks. Some on the left who want Brexit say that the time is not yet ripe.

The left-of-centre case for divorce is that Europe doesn’t work, is not remotely progressive and is heading for an existential crisis anyway. Last year’s threat was Grexit. This year’s threat is Brexit. Next year’s threat will be something else: Italy leaving the single currency, perhaps, or Marine Le Pen’s tilt for the French presidency.

This presents an opportunity for those who believe that the way ahead still involves closer integration. Jean Monnet, the godfather of the EU, always said that ever-closer union would be forged through crises, which is what Brexit would undoubtedly trigger.

If the polls are right, Britain seems unready to trigger this act of creative destruction and it will be left to Varoufakis to do out of office what he could not do in power: prove a different Europe is possible.

A different Europe is needed, but it is stretching credibility to imagine that the Europe of Greece and the Transatlantic Trade and Investment Partnership can easily morph into America with the nice people in charge. The eurozone is economically moribund, persists with policies that have demonstrably failed, is indifferent to democracy, is run by and for a small, self-perpetuating elite, and is slowing dying. The wrong comparison is being made. This is not the US without the electric chair; it is the USSR without the gulag.