Is globalisation no longer a good thing?

John O'Sullivan in The Economist

THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year.

The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation.

In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper.

The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs.





North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought.

A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America.

Keep-out signs

The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants.

There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition.

Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour.

Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion.

But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry.

This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by.





It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology.

The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits.


Multiple hits


This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle.

First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event.

The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation.

Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully.

This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off.

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.

Donald Trump supporters are not the bigots the left likes to demonise

John Harris in The Guardian

Last Tuesday, at about 3pm, I parked my rental car outside a polling station in the suburbs of Indianapolis, and began to talk to the droves of people going in and out. There was only one subject I really wanted to hear about:Donald Trump, and his jaw-dropping progress to being the presumptive Republican nominee.

As he said himself, a win in the state of Indiana would seal the deal, and so it proved: he got 53% of the vote, which triggered the exit of his two supposed rivals. Meanwhile, the global liberal left seemed to be once again working itself into a lather, which was easily translatable: how awful that a man routinely described using all the boo-words progressives can muster – misogynist, racist, fascist, xenophobe, or “xenophobic fascist”, as George Clooney understatedly put it – could now be a resident of the political mainstream, and a serious contender for president.

Though calling him a fascist surely demeans the victims of the real thing, Trump has some extremely grim views, and the idea of him in the White House has an obviously terrifying quality. But for those who loathe him, a problem comes when the nastier elements of his rhetoric are conflated with the supposed instincts of millions of his supporters, and familiar stereotypes come into play. “Not all Donald Trump supporters are racists, but most racists are Donald Trump supporters,” says the liberal online outlet Salon. “The unusual geographic pattern of Trumpism … corresponds to the geography of white racial resentment in the United States,” offers a contributor to the political website Vox. “They vote for him because he is a racist bigot,” reckoned one eloquent tweeter I briefly corresponded with.

George Clooney: 'There’s not going to be a President Donald Trump'


Caricatures of rednecks and white trash are obviously in the foreground here. Worse still, such judgments are often arrived at through polling data, guesswork, and a large measure of metropolitan prejudice: in keeping with one of the most baffling failings of political journalism across the globe, too few people think of speaking to the voters themselves.

So to Indiana, where, with my Guardian colleague John Domokos, I spent the best part of five days following the Trump campaign. No one mentioned his assuredly unpleasant ideas about excluding Muslims from the US, nor his absurd proposal to build a wall between America and Mexico, at the latter country’s expense. Indeed, when I saw Trump speak at a rally in the Indiana town of Evansville, he made no reference to what he has said about Muslims, and dealt with the fabled wall in a matter of seconds.

Instead, he talked at length about two of his pet themes. First, he banged on about the free trade deals that he says have blitzed US industry as companies have moved abroad, luxuriated in newly low labour costs, and imported their wares back into the country. Second, he fed that specific story into a general sense of national decline.

‘Clinton’s enemies malign her as someone who enthusiastically supported the trade deal to end all trade deals: Nafta, in 1994, which the Carrier workers put at the centre of their predicament.’ Photograph: Mark Wilson/Getty

All of this is very real. From the dreadful state of the roads to the palpable sense of communities reeling from the military adventures that began in 2001, time spent in the US quickly reveals a country that collectively feels it has taken no end of wrong turns, and must somehow sort itself out. It is one of the more overlooked stories of the 2016 election that Trump’s views about this malaise intersect with the insurgent campaign still being waged by that great left hope, Bernie Sanders. There are, in other words, two anti-establishment figures doing their thing on either side of the political divide, with great success.

Trump calls DC Republicans to heel



But in the case of Trump, his positioning fuses with his hyperactive, barnstorming TV persona, and creates something with particularly populist appeal. The presentation is pure political vaudeville, used in the service of anti-politics: rambling (and often very funny) oratory, cartoon political incorrectness, self-obsession so extreme that it comes out looking endearingly self-parodic. But at the core are oomphy words about something built into his audiences’ daily reality: stores full of goods made overseas, and jobs that feel increasingly under threat.

His proposed solution, his detractors say, is probably beyond the reach of a president, and in the short term would presumably hit his supporters’ wallets like a hammer, but it’s simple enough: if any company dares move overseas, he’ll whack their goods with such high tariffs that they’ll soon come running back.

At the polling station, all of the above was reflected in the reasons people gave for supporting him. Just to make this clear: obviously, there are voters with bigoted opinions who think he’s their man. But equally, almost none of the Trumpites I met seemed to be the gun-toting zealots of liberal demonology: they explained voting for him in very matter-of-fact terms, usually with explicit criticism of the current political class. “Jobs, outsourcing, bringing jobs back to our country,” offered one of his supporters. “We’re getting aluminium from China – we don’t need aluminium from China. Hell, we make it right here,” said another. There was also much more nuance than you might expect. “I hate the way he talks about women, but I love the way he handles things,” one woman told me.

Indiana has one particular case study Trump talks about. In Indianapolis, a company called Carrier recently announced the imminent closure of an air-conditioning factory, with the loss of 1,400 jobs. Its operations will be shifted to Mexico. In Indianapolis, average wages are over $20 an hour, but once the move over the border is complete, pay will be more like $3. Talking to workers, it seemed that they were split down the middle, with some – like the local branch of their union, the United Steelworkers – supporting Sanders, while others favoured Trump.

Again, the latter option was often framed in terms of difficult choices, and some degree of hesitancy. A Carrier employee called Brad Stepp described his fear of the future, and why Trump represents “the lesser of three evils”. He was well aware of the absurdities of a high-living billionaire claiming to have the back of American workers, not least in the context of Trump’s recent(ish) claim that people in the US are paid too much. But he had made his choice. “We need somebody that’s tough,” he said. “If he can’t stop Carrier going, maybe he can stop other companies doing the same thing.” In the midst of all this, one character sits in a very uneasy position. Unsettled by their popularity, Hillary Clinton has been trying to echo some of Trump’s and Sanders’ pronouncements on trade and jobs. “I won’t support any agreement unless it helps create good jobs and higher wages for American workers,” she says, offering to be the president for “the struggling, the striving and the successful”. Her enemies, by contrast, malign her as someone who enthusiastically supported the trade deal to end all trade deals: the North American Free Trade Agreement of 1994, which the Carrier workers put at the centre of their predicament. In fact, politics being politics, the details of her record matter less than broad-brush appearances. And here, the story for her adversaries is a cinch. The establishment has failed; she is a card-carrying member of that establishment; ergo, she has failed too.

Herein lies a vulnerability that should chill the liberal left to the bone. Five days after I got back from Indiana, polls suggested that the presumed contest between Clinton and Trump will be much closer than some people imagine. For those who yell at him and his supporters from the sidelines, that news ought to give pause for thought: before it’s too late, maybe it’s time to stop hysterically moralising and instead try to understand not just how mainstream US politics has so awfully failed, but how it might somehow be rescued.

TTIP leak could it spell the end of controversial trade deal?

Andrew Griffin in The Independent

Hundreds of leaked pages from the controversial Transatlantic Trade and Investment Partnership (TTIP) show that the deal could be about to collapse, according to campaigners.

The huge leak – which gives the first full insight into the negotiations – shows that the relationship between Europe and the US are weaker than had been thought and that major divisions remain on some of the agreement’s most central provisions.

The talks have been held almost entirely in secret, and most information that is known in public has come out from unofficial leaks. But the new pages, leaked by Greenpeace, represent the first major look at how the highly confidential talks are progressing.

They indicate that the US is looking strongly to change regulation in Europe to lessen the protections on the environment, consumer rights and other positions that the EU affords to its citizens. Representatives for each side appear to have found that they have run into “irreconcilable” differences that could undermine the signing of the landmark and highly controversial trade deal, campaigners say.

For instance, the papers show that the US is looking to weaken the EU’s “precautionary principle” that governs how potentially harmful products are sold, Greenpeace says. The US has much weaker regulation that aims to minimise rather than avoid risks, and that same less strict regime could come to the UK and Europe under the deal.

If the EU made further changes to similar regulations, it would have to inform the US and corporations based there, according to the documents. American companies would then be able to have the same input into EU regulation as European ones do.

There are also notable missing parts of the agreement. None of the texts includes any reference to the global effort to cut CO2 emissions agreed in Paris last year, according to Greenpeace, despite a commitment from the European Commission that it would make environmental sustainability a key part of any deal.

Those who support TTIP argue that it represents an important step that will allow the US and EU to work together more closely and that it will support business in both regions. But parts of the deal and the secrecy that surrounds it have led campaigners to argue that it could include dangerous changes to the consumer protections that are guaranteed by the EU.

UK Parliament 'would not be able to stop NHS sell-off under TTIP'

Poverty, environmental and other campaigners have claimed that the new leak could be enough to undermine those already controversial talks.

"The TTIP negotiations will never survive this leak,” said John Hilary, the executive director of War on Want. “The only way that the European Commission has managed to keep the negotiations going so far is through complete secrecy as to the actual details of the deal under negotiation. Now we can see the details for ourselves, and they are truly shocking. This is surely the beginning of the end for this much hated deal."

Other campaigners criticised the fact that the only public information that has emerged about TTIP has come from leaks.

“TTIP is being cooked up behind closed doors because when ordinary people find out about the threat it poses to democracy and consumer protections, they are of course opposed to it,” said Guy Taylor, trade campaigner at Global Justice Now. “It’s no secret that the negotiations have been on increasingly shaky ground. Millions of people across Europe have signed petitions against TTIP, and hundreds of thousands have taken to the streets to call for an end to the negotiations. These leaks should be seen as another nail in the coffin of a toxic trade deal that corporate power is unsuccessfully trying to impose on ordinary people and our democracies.”

Trump says what no other candidate will: the US is no longer exceptional

With his slogan ‘Make America Great Again’, Trump is the first leader of recent times to attack American exceptionalism. In fact, he claims it is the opposite

 

The slogan that changed the trajectory of American political discourse? Only time will tell. Photograph: Matt York/AP


Tom Engelhardt for Tom Dispatch


“Low-energy Jeb”. “Little Marco”. “Lyin’ Ted”. “Crooked Hillary”. Give Donald Trump credit: he has a memorable way with insults. His have a way of etching themselves on the brain. And they’ve garnered media coverage, analysis and commentary almost beyond imagining.

Memorable as they might be however, they won’t be what lasts of Trump’s 2016 election run. That’s surely reserved for a single slogan that will sum up his candidacy when it’s all over (no matter how it ends). He arrived with it on that Trump Tower escalator in the first moments of his campaign, and it now headlines his website, where it’s also emblazoned on an array of products from hats to T-shirts.

President Trump fills world leaders with fear: 'It's gone from funny to really scary'



You already know which line I mean: “Make America Great Again!”

That exclamation point ensures you won’t miss the hyperbolic, Trumpian nature of its promise to return the country to its former glory days. In it lies the essence of his campaign, of what he’s promising his followers and Americans generally – and yet, strangely enough, of all his lines it’s the one most taken for granted, the one that’s been given the least thought and analysis. And that’s a shame, because it represents something new in our American age. The problem, I suspect, is that what first catches the eye is the phrase “make America great” and then, of course, the exclamation point, while the single most important word in the slogan, historically speaking, is barely noted: again.

With that word, Trump crossed a line in American politics that until his escalator moment represented a kind of psychological taboo for politicians of any stripe and of either party, including presidents and potential candidates for that position. He is the first American leader or potential leader of recent times not to feel the need or obligation to insist that the US, the “sole” superpower of Planet Earth, is an “exceptional” nation, an “indispensable” country, or even in an unqualified sense a “great” one. His claim is the opposite: that, at present, America is anything but exceptional, indispensable or great, though he alone could make it “great again”.

In that claim lies a curiosity that, in a court of law, might be considered an admission of guilt. Yes, it says, if one man is allowed to enter the White House in January 2017, this could be a different country, but – and herein lies the originality of the slogan – it is not great now.

Trump, in other words, is the first person to run openly and without apology on a platform of American decline. Think about that for a moment. “Make America Great Again!” is indeed an admission, in the form of a boast.

As he tells his audiences repeatedly, America, the formerly great, is today a punching bag for China, Mexico ... well, you know the pitch. You don’t have to agree with him on the specifics. What’s interesting is the overall vision of a country lacking in its former greatness.

Perhaps a little history of American greatness and presidents (as well as presidential candidates) is in order here.

‘City upon a hill’

John F Kennedy simply assumed America was great. Photograph: Paul Schutzer/Time & Life Pictures/Getty Image

Once upon a time, in a distant America, the words “greatest”, “exceptional” and “indispensable” weren’t part of the political vocabulary.

American presidents didn’t bother to claim any of them for this country, largely because American wealth and global preeminence were so indisputable. We’re talking about the 1950s and early 1960s, the post-second world war and pre-Vietnam “golden” years of American power. Despite a certain hysteria about the supposed dangers of domestic communists, few Americans then doubted the singularly unchallengeable power and greatness of the country. It was such a given, in fact, that it was simply too self-evident for presidents to cite, hail or praise.

So if you look, for instance, at the speeches of John F Kennedy, you won’t find them littered with exceptionals, indispensables or their equivalents.

In a pre-inaugural speech he gave in January 1961 on the kind of government he planned to bring to Washington, for instance, he did cite the birth of a “great republic” and quoted Puritan John Winthrop on the desirability of creating a country that would be “a city upon a hill” to the rest of the world, with all of humanity’s eyes upon us.

In his inaugural address (“Ask not what your country can do for you”) he invoked a kind of unspoken greatness, saying: “We shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.”

It was then common to speak of the US with pride as a “free nation” (as opposed to the “enslaved” ones of the communist bloc) rather than an exceptional one. His only use of “great” was to invoke the US-led and Soviet Union-led blocs as “two great and powerful groups of nations”.

Kennedy could even fall back on a certain modesty in describing the US role in the world (which in those years, from Guatemala to Iran to Cuba, all too often did not carry over into actual policy), saying in one speech: “We must face the fact that the United States is neither omnipotent or omniscient – that we are only 6% of the world’s population – that we cannot impose our will upon the other 94% of mankind – that we cannot right every wrong or reverse each adversity – and that therefore there cannot be an American solution to every world problem.” In that same speech, he typically spoke of America as “a great power” – but not “the greatest power”.

If you didn’t grow up in that era, you may not grasp that none of this in any way implied a lack of national self-esteem. Quite the opposite: it implied a deep and abiding confidence in the overwhelming power and presence of this country, a confidence so unshakeable that there was no need to speak of it.

If you want a pop cultural equivalent for this, consider America’s movie heroes of that time, actors such as John Wayne and Gary Cooper, whose westerns and, in the case of Wayne, war movies were iconic. What’s striking when you look back at them from the present moment is this: while neither of those actors was anything but an imposing figure, they were also remarkably ordinary looking. They were in no way over-muscled, nor were they over-armed in the modern fashion. It was only in the years after the Vietnam war, when the country had absorbed what felt like a grim defeat, been wracked by oppositional movements, riots and assassinations, when a general sense of loss had swept over the polity, that the over-muscled hero, the exceptional killing machine, made the scene. (Think:Rambo.)

Consider this then if you want a definition of decline: when you have to state openly (and repeatedly) what previously had been too obvious to say, you’re heading, as the opinion polls always like to phrase it, in the wrong direction; in other words, once you have to say it, especially in an overemphatic way, you no longer have it.

The Reagan reboot

What better way to attest to America’s greatness than its military might? Photograph: Scott Stewart/AP

That note of defensiveness first crept into the American political lexicon with the unlikeliest of politicians: Ronald Reagan, the man who seemed like the least defensive, most genial guy on the planet. On this subject at least, think of him as Trumpian before the advent of the Donald, or at least as the man who (thanks to his ad writers) invented the political use of the word “again”. It was, after all, employed in 1984 in the seminal ad of his political run for a second term in office. While that bucolic-looking TV commercial was titled “Prouder, Stronger, Better”, its first line ever so memorably went: “It’s morning again in America.” (“Why would we ever want to return to where we were less than four short years ago?”)

Think of this as part of a post-Vietnam Reagan reboot, a time when the US in Rambo-esque fashion was quite literally muscling up and over-arming in a major way. Reagan presided over “the biggest peacetime defense build-up in history” against what, referencing Star Wars, he called an “evil empire” – the Soviet Union. In those years he also worked to rid the country of what was then termed “the Vietnam syndrome” in part by rebranding that war a “noble cause”.

In a time when loss and decline were much on American minds, he dismissed them both, even as he set the country on a path toward the present moment of 1% dysfunction in a country that no longer invests fully in its own infrastructure, whose wages are stagnant, whose poor are a growth industry, whose wealth now flows eternally upward in a political environment awash in the money of the ultra-wealthy, and whose over-armed military continues to pursue a path of endless failure in the greater Middle East.

Reagan, who spoke directly about American declinist thinking in his time – “Let’s reject the nonsense that America is doomed to decline” – was hardly shy about his superlatives when it came to this country. He didn’t hesitate to re-channel classic American rhetoric, ranging from Winthop’s “shining city upon a hill” (perhaps cribbed from Kennedy) in his farewell address to Lincoln-esque (“the last best hope of man on Earth”) invocations such as “here in the heartland of America lives the hope of the world” or “in a world wracked by hatred, economic crisis and political tension, America remains mankind’s best hope”.

And yet in the 1980s there were still limits to what needed to be said about America. Surveying the planet, you didn’t yet have to refer to us as the “greatest” country of all or as the planet’s sole truly “exceptional” country. Think of such repeated superlatives of our own moment as defensive markers on the declinist slope. The now commonplace adjective “indispensable” as a stand-in for American greatness globally, for instance, didn’t even arrive until Bill Clinton’s secretary of state, Madeleine Albright, began using it in 1996.

It only became an indispensable part of the rhetorical arsenal of American politicians, from Barack Obama on down, a decade into the 21st century, when the country’s eerie dispensability (unless you were a junkie for failed states and regional chaos) became ever more apparent.

As for the US being the planet’s “exceptional” nation, a phrase that now seems indelibly part of the American grain and that no president or presidential candidate avoids, it’s surprising how late it entered the lexicon.

As John Gans Jr wrote in the Atlantic in 2011: “Obama has talked more about American exceptionalism than Presidents Reagan, George HW Bush, Bill Clinton, and George W Bush combined: a search on UC Santa Barbara’s exhaustive presidential records library finds that no president from 1981 to today uttered the phrase ‘American exceptionalism’ except Obama.”

Barack Obama: the only president to use the term ‘American exceptionalism’, according to research. Photograph: Rex Features

As US News’s Robert Schlesinger has also noted, “American exceptionalism” is not a traditional part of the presidential vocabulary. According to his search of public records, Obama is the only president in 82 years to use the term.

And yet in recent years it has become a commonplace of Republicans and Democrats alike. As the country has become politically shakier, the rhetoric about its greatness has only escalated in an American version of “the lady doth protest too much”. Such descriptors have become the political equivalent of litmus tests: you couldn’t be president or much of anything else without eternally testifying to your unwavering belief in American greatness.

This, of course, is the line that Trump crossed in a curiously unnoticed fashion in this election campaign. He did so by initially upping the rhetorical ante, adding that exclamation point (which even Reagan avoided). Yet in the process of being more patriotically correct than thou, he somehow also waded straight into American decline so bluntly that his own audience could hardly miss it – even if his critics did.

Think of it as an irony, if you wish, but in promoting his own rise the ultimate American narcissist has also openly promoted a version of decline to striking numbers of Americans. For his followers, a major political figure has quit with the defensive BS and started saying it the way it is.

Of course, don’t furl the flag or shut down those offshore accounts or start writing the complete history of American decline quite yet. After all, the US still looms “lone” on an ever more chaotic planet. Its wealth remains stunning, its economic clout something to behold, its tycoons the envy of the world, and its military beyond compare when it comes to how much and how destructive, even if not how successful. Still, make no mistake about it – Trump is a harbinger, however bizarre, of a new American century in which this country will indeed no longer be “the greatest” or, for all but a shrinking crew, exceptional.

Mark your calendars: 2016 is the year the US first went public as a declinist power, and for that you can thank Donald (or rather Donald!) Trump.

TTIP is a very bad excuse to vote for Brexit

Nick Dearden in The Guardian

Barack Obama gave TTIP the hard sell, but leaving the EU would only make the controversial trade deal more likely – and possibly worse
 

‘In Berlin, 250,000 people took to the streets last October to protest about TTIP.’ Photograph: Axel Schmidt/Getty Images



Barack Obama’s key message to Europe’s leaders last week was “let’s speed up TTIP”. The US-EU trade deal, formally called the Transatlantic Trade and Investment Partnership, has been mired in controversy on both sides of the Atlantic. The “free trade” agenda has become poison in the US primaries, forcing even pro-trade Hillary Clinton to re-examine TTIP.

The next round of talks begin on Monday in New York and Obama is worried – unless serious progress is made in coming months, his trade legacy may be doomed. The problem for the US president is selling TTIP at the same time as trying to warn against the dangers of Brexit. This is a tough ask because TTIP has been a godsend for Brexit campaigners, who argue that the deal is a major reason to cut loose from Brussels.

It’s true that TTIP is a symbol of all that’s wrong with Europe: dreamed up by corporate lobbyists, TTIP is less about trade and more about giving big business sweeping new powers over our society. It is a blueprint for deregulation and privatisation. As such it makes a good case for Brexit.

Until you remember that the British government has done everything possible to push the most extreme version of TTIP, just as they’ve fought against pretty much every financial regulation, from bankers bonuses to a financial transaction tax. While Germany and France were concerned about TTIP’s corporate court system – which allows foreign business to sue governments for “unfair” laws like putting cigarettes in plain packets – the UK secretly wrote to the European commission president demanding he retain it.

At the heart of TTIP is a radical agenda of deregulation. The ambition is that everything from food standards to financial policies are “standardised” in the US and EU, with big business gaining new powers over the process. This could have been inspired by David Cameron’s own programme of stripping away laws that annoy big business, no matter how important they are for people and the environment.

Cameron’s policy means scrapping two laws for every one brought in and giving every regulatory body the duty to have regard to the desirability of “promoting economic growth”. That could include the equality and human rights commission and the health and safety executive. The TUC described Britain as “exporting their anti-worker position into Europe and it is spreading like a bad outbreak of gastric flu”.

Brexit wouldn’t necessarily stop TTIP anyway – that’s all down to the transition process. At the very least, Britain would need to adopt many of TTIP’s provisions in order to remain in the single market.

But it gets worse: every scenario for Brexit is premised on extreme free trade agreements coupled with looser regulation to make us more competitive. “Outcompeting” the EU through lower standards is the strategy. High-profile supporters of the Brexit campaign have repeatedly said that they believe the UK would be able to realise a more “ambitious” and faster free trade deal if we stood alone. There’s every reason to think that Brexit will turn the UK into a paradise for free market capitalism: a TTIP on steroids.

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What is TTIP and why should we be angry about it?
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Is there any hope? Yes – the movement to defeat TTIP received the support of well over 3 million Europeans in a little over a year. In Berlin, 250,000 people took to the streets last October. The deal was meant to be signed by now – but together, Europe’s people have seriously stalled things. Would it really be possible to stop such a move if we couldn’t link up with campaigners across Europe? If being in the EU has brought us TTIP, it has also brought us the means to stop it.

Europe also allows the potential to take on the corporate power which TTIP symbolises: the biggest threat to our sovereignty. Even in the best of circumstances, there is only so much a small nation state can do against the size and power of global big business. But through being in Europe we could stop tax avoidance, introduce a financial transactions tax, hold corporations legally responsible for their human rights abuses, enforce world-leading climate targets, develop new forms of public ownership of key resources. At least, we could if Britain stopped standing in the way.

Obama’s rationale for avoiding Brexit is quite different. The US establishment has always been interested in Britain’s role as a fifth column in Europe, undermining a social Europe on behalf of global (read US) corporations. Reclaiming our sovereignty means not playing this role, and instead working with those in Europe who want to build a different world. Another Europe is possible.

Why we must save the EU

Yannis Varoufakis in The Guardian

The first German word I ever learned was Siemens. It was emblazoned on our sturdy 1950s fridge, our washing machine, the vacuum cleaner – on almost every appliance in my family’s home in Athens. The reason for my parents’ peculiar loyalty to the German brand was my uncle Panayiotis, who was Siemens’ general manager in Greece from the mid-1950s to the late 1970s.

A Germanophile electrical engineer and a fluent speaker of Goethe’s language, Panayiotis had convinced his younger sister – my mother – to take up the study of German; she even planned to spend a year in Hamburg to take up a Goethe Institute scholarship in the summer of 1967.

Alas, on 21 April 1967, my mother’s plans were laid in ruins, along with our imperfect Greek democracy. For in the early hours of that morning, at the command of four army colonels, tanks rolled on to the streets of Athens and other major cities, and our country was soon enveloped in a thick cloud of neo-fascist gloom. It was also the day when Uncle Panayiotis’s world fell apart.

Unlike my dad, who in the late 1940s had paid for his leftist politics with several years in concentration camps, Panayiotis was what today would be referred to as a neoliberal. Fiercely anti-communist, and suspicious of social democracy, he supported the American intervention in the Greek civil war in 1946 (on the side of my father’s jailers). He backed the German Free Democratic party and the Greek Progressive party, which purveyed a blend of free-market economics with unconditional support for Greece’s oppressive US-led state security machine.

His political views, and his position as the head of Siemens’ operations in Greece, made Panayiotis a typical member of Greece’s postwar ruling class. When state security forces or their stooges roughed up leftwing protesters, or even killed a brilliant member of parliament, Grigoris Lambrakis, in 1963, Panayiotis would grudgingly approve, convinced that these were unpleasant but necessary actions. My ears are still ringing with the rowdy exchanges he often had with Dad, over what he considered “reasonable measures to defend democracy from its sworn enemies” – reasonable measures that my father had experienced first-hand, and from which he would never fully recover.

The heavy footprint of US agencies in Greek politics, even going so far as to engineer the dismissal of a popular centrist prime minister, Georgios Papandreou, in 1965, seemed to Panayiotis an acceptable trade-off: Greece had given up some sovereignty to western powers in exchange for freedom from a menacing eastern bloc lurking a short driving distance north of Athens. However, on that bleak April day in 1967, Panayiotis’s life was turned upside down.

He simply could not tolerate that “his” people (as he referred to the rightist army officers who had staged the coup and, more importantly, their American handlers) should dissolve parliament, suspend the constitution, and intern potential dissidents (including rightwing democrats) in football stadia, police stations and concentration camps. He had no great sympathy with the deposed centrist prime minister that the putschists and their US puppeteers were trying to keep out of government – but his worldview was torn asunder, leading him to a sudden spurt of almost comical radicalisation.

A few months after the military regime took power, Panayiotis joined an underground group called Democratic Defence, which consisted largely of other establishment liberals like himself – university professors, lawyers, and even a future prime minister. They planted a series of bombs around Athens, taking care to ensure there were no injuries, in order to demonstrate that the military regime was not in full control, despite its clampdown.

For a few years after the coup, Panayiotis appeared – even to his own mother – as yet another professional keeping his head down, minding his own business. No one had an inkling of his double life: corporate man during the day, subversive bomber by night. We were mostly relieved, meanwhile, that Dad had not disappeared again into some concentration camp.

My enduring memory of those years, in fact, is the crackling sound of a radio hidden under a red blanket in the middle of the living room in our Athens home. Every night at around nine, mum and dad would huddle together under the blanket – and upon hearing the muffled jingle announcing the beginning of the programme, followed by the voice of a German announcer, my own six-year-old imagination would travel from Athens to central Europe, a mythical place I had not visited yet except for the tantalising glimpses offered by an illustrated Brothers Grimm book I had in my bedroom.

Deutsche Welle, the German international radio station that my parents were listening to, became their most precious ally against the crushing power of state propaganda at home: a window looking out to faraway democratic Europe. At the end of each of its hour-long special broadcasts on Greece, my parents and I would sit around the dining table while they mulled over the latest news.

I didn’t fully understand what they were discussing, but this neither bored nor upset me. For I was gripped by a sense of excitement at the strangeness of our predicament: that, to find out what was happening in our very own Athens, we had to travel, through the airwaves, and veiled by a red blanket, to a place called Germany.

The reason for the red blanket was a grumpy old neighbour called Gregoris. Gregoris was known for his connections with the secret police and his penchant for spying on my parents; in particular my Dad, whose leftwing past made him an excellent target for an ambitious snitch. Strange as it may sound today, tuning in to Deutsche Welle broadcasts became one of a long list of activities punishable by anything from harassment to torture. So, having noticed Gregoris snooping around inside our backyard, my parents took no risks. Thus the red blanket became our defence from Gregoris’s prying ears.

A few years later, it was from Deutsche Welle that we learned what Panayiotis and his colleagues had been up to – when the radio announced that they had all been arrested. Dad would joke for years to come about the pathetic inability of these bourgeois liberals to organise an underground resistance group: only a few hours after one of the Democratic Defence members was accidentally caught, the rest were also rounded up. All the police had to do was read the first man’s diary – where he had meticulously listed his comrades’ names and addresses, in some cases including a description of each subversive “assignment”. Torture, court martial and long prison sentences – in some cases the death sentence – followed.

A year after Panayiotis’s capture, the military police guarding him decided to relax his isolation regime by allowing me, a harmless 10-year-old, to visit him once a week. Our already close bond grew stronger with boy-talk that allowed him a degree of escapism. He told me about machines I had never seen (computers, he called them), asked about the latest movies, described his favourite cars.

In anticipation of my visits, he would use matchsticks and other materials that prison guards would let him keep to build model planes for me. Often, he would hide inside his elegant artefacts a message for my aunt, my mother, on occasion even for his colleagues at Siemens. For my part, I was proud of my new skill of disassembling his models with minimal damage, retrieving the message, and putting them back together.

Long after Panayiotis’s death, I discovered the last of these: a matchstick model of a Stuka dive-bomber in my old family home’s attic. Torn between leaving it intact and looking inside, I decided to take it apart. And there it was. His last missive was not addressed to anyone in particular.

It was a single word: “kyriarchia”. Sovereignty.

 
A tank outside the parliament building in Athens during the military coup in 1967. Photograph: Bettmann/Corbis

It was almost 50 years after those childhood evenings under the red blanket that I made my first official visit to Berlin as finance minister of Greece, in February 2015. My first port of call was, of course, the federal finance ministry, to meet the legendary Dr Wolfgang Schäuble. To him, and his minions, I was a nuisance. Our leftwing government had just been elected, defeating a sister party of the Christian Democrats – New Democracy – on an electoral platform that was, to say the least, a form of inconvenience for Schäuble and Chancellor Angela Merkel, and their plans for keeping the eurozone in order.

Our success was, indeed, Berlin’s greatest fear. Were we to succeed in negotiating a new deal for Greece that ended the interminable recession gripping the nation, the Greek leftist “disease” would almost certainly spread to Portugal, Spain and Ireland, all of which had general elections looming.

Before I arrived in Berlin, and only three days after I had assumed office as minister, I received my first high-ranking visitor in my Athens office: Schäuble’s self-appointed envoy, Jeroen Dijsselbloem, the Dutch finance minister and president of the Eurogroup of finance ministers. Within seconds of meeting, he asked me whether I intended to implement fully and unwaveringly the economic programme that previous Greek governments had been forced by Berlin, Brussels and Frankfurt – the seat of the European Central Bank (ECB) – to adopt.

Given that our government had won a mandate to renegotiate the very logic of that disastrous programme (which had led to the loss of one third of national income and increased unemployment by 20%), his question was never going to be the beginning of a beautiful friendship.

For my part, I attempted a diplomatic reply that would be my standard line of argument for the months to follow: “Given that the existing economic programme has been an indisputable failure, I propose that we sit down together, the new Greek government and our European partners, and rethink the whole programme without prejudice or fear, designing together economic policies that may help Greece recover.”

My modest plea for a modicum of national sovereignty over the economic policies imposed on a nation languishing in the depths of a great depression was met with astonishing brutality. “This will not work!”, was Dijsselbloem’s opening line. In less than a minute he had laid his cards on the table: if I were to insist on any substantial renegotiation of the programme, the ECB would close down our banks by the end of February 2015 – a month after we had been elected.

The Greek finance ministry’s office overlooks Syntagma Square and the House of Parliament – the very stage on which, in April 1967, the tanks had crushed our democracy. As Dijsselbloem spoke, I caught myself looking over his shoulder out to the broad square teeming with people and thinking to myself: “This is interesting. In 1967 it was the tanks, now they are trying to do the same with the banks.”

The meeting with Dijsselbloem ended with a tumultuous press conference in which the Eurogroup’s president lost his cool when he heard me say that our government was not planning to work with the cabal of technicians the troika of lenders habitually sent to Athens to impose upon the elected government policies destined to fail. The die had been cast and the battle for reclaiming part of our lost sovereignty was only beginning. Berlin, where I was to meet the troika’s real master, beckoned.

As the car that was driving me from Berlin’s Tegel airport approached the old headquarters of Goering’s air ministry – now the home of the federal ministry of finance – I wondered whether my host, Schäuble, could even begin to imagine that I was arriving in Berlin with my head full of childhood memories in which Germany featured as an important friend.

Once inside the building, my aides and I were ushered briskly into a large lift. The lift door opened up into a long, cold corridor at the end of which awaited the great man in his famous wheelchair. As I approached, my extended hand was refused and, instead of a handshake, he ushered me purposefully into his office.

While my relationship with Schäuble warmed in the months that followed, the shunned hand symbolised a great deal that is wrong with Europe. It was symbolic proof that the half-century that had passed since my red blanket days, and those prison visits to Siemens’ man in Athens, had changed Europe to no end.

I have no idea what role Siemens played in securing my uncle’s release some time in 1972, two years before the regime’s collapse. What I do know is that my parents were convinced that the German company had played a decisive role. For that reason, every time I saw the word “Siemens” around our home, I felt a warm glow. It is the same kind of warmth I still feel when I hear the words Deutsche Welle. Indeed, back then, in the exciting, bleak years of my childhood, Germany featured in my imagination as a dear friend, a land of democrats that, under Chancellor Willy Brandt, did what was humanly possible to help Greeks rid ourselves of our ugly dictatorship.

Returning home to Athens from my first official visit to Berlin, I was struck by the irony. A continent that had been uniting under different languages and cultures was now divided by a common currency, the euro, and the awful centrifugal forces that it had unleashed throughout Europe.

A week after our first bilateral meeting in Berlin, Schäuble and I were to meet again across the long, rectangular table of the Eurogroup, the eurozone’s decision-making body, comprising the common currency’s finance ministers, plus the representatives of the troika – the ECB, the European Commission, and the International Monetary Fund. After I had recited our government’s plea for a substantial renegotiation of the so-called “Greek economic programme”, which had the troika’s fingerprints all over it, Dr Schäuble astounded me with a reply that should send shivers up the spine of every democrat: “Elections cannot be allowed to change an economic programme of a member state!” he said categorically.

During a break from that 10-hour Eurogroup meeting, in which I had struggled to reclaim some economic sovereignty on behalf of my battered parliament and our suffering people, another finance minister attempted to soothe me by saying: “Yanis, you must understand that no country can be sovereign today. Especially not a small and bankrupt one like yours.”
This line of argument is probably the most pernicious fallacy to have afflicted public debate in our modern liberal democracies. Indeed, I would go as far as to suggest that it may be the greatest threat to liberal democracy itself. Its true meaning is that sovereignty is passé unless you are the United States, China or, maybe, Putin’s Russia. In which case you might as well append your country to a transnational alliance of states where your parliament is reduced to a rubber stamp, and all authority is vested in the larger states.

Interestingly, this argument is not reserved for small, bankrupt countries such as Greece, trapped in a badly designed common currency area. This same noxious dictum is today being peddled in the UK – supposedly as a clinching argument in favour of the remain campaign. As a supporter of Britain remaining in the EU, nothing upsets me more than the enlistment to the “yes” cause of an argument that is as toxic as it is woolly.

The problem begins once the distinction between sovereignty and power is blurred. Sovereignty is about who decides legitimately on behalf of a people – whereas power is the capacity to impose these decisions on the outside world. Iceland is a tiny country. But to claim that Iceland’s sovereignty is illusory because it is too small to have much power is like arguing that a poor person with no political clout might as well give up her right to vote.

To put it slightly differently, small sovereign nations such as Iceland have choices to make within the broader constraints created for them by nature and by the rest of humanity. However limited these choices might be, Iceland’s citizens retain absolute authority to hold their elected officials accountable for the decisions they have reached (within the nation’s external constraints), and to strike down every piece of legislation those elected officials have decided upon in the past.

 An alliance of states, which is what the EU is, can of course come to mutually beneficial arrangements, such as a defensive military alliance against a common aggressor, coordination between police forces, open borders, an agreement to common industry standards, or the creation of a free-trade zone. But it can never legitimately strike down or overrule the sovereignty of one of its member states on the basis of the limited power it has been granted by the sovereign states that have agreed to participate in the alliance. There is no collective European sovereignty from which Brussels could draw the legitimate political authority to do so.

One may retort that the European Union’s democratic credentials are beyond reproach. The European Council comprises heads of governments, while Ecofin and the Eurogroup are the councils of finance ministers (of the whole EU and of the eurozone respectively). All these representatives are, of course, democratically elected. Moreover, there is the European parliament, elected by the citizens of the member states, which has the power to send proposed legislation back to the Brussels bureaucracy. But these arguments demonstrate how badly European appreciation of the founding principles of liberal democracy has been degraded. The critical error of such a defence is once more to confuse political authority with power.

A parliament is sovereign, even if its country is not particularly powerful, when it can dismiss the executive for having failed to fulfil the tasks assigned to it within the constraints of whatever power the executive and the parliament possess. Nothing like this exists in the EU today.

For while the members of the European Council and the Eurogroup of finance ministers are elected politicians, answerable, theoretically, to their respective national parliaments, the Council and the Eurogroup are themselves not answerable to any parliament, nor indeed to any voting citizens whatsoever.

Moreover, the Eurogroup, where most of Europe’s important economic decisions are taken, is a body that does not even exist in European law, that keeps no minutes of its procedures and insists its deliberations are confidential – that is, not to be shared with the citizens of Europe. It operates on the basis – in the words of Thucydides – that “strong do as they please while the weak suffer what they must”. It is a set-up designed to preclude any sovereignty derived from the people of Europe.

While opposing Schäuble’s logic on Greece in the Eurogroup and elsewhere, at the back of my mind there were two thoughts. First, as the finance minister of a bankrupt state, whose citizens demanded an end to a great depression that had been caused by a denial of our bankruptcy – the imposition of new unpayable loans, so payments could be made on old unpayable loans – I had a political and moral duty to say no to more “extend-and-pretend” loan agreements. My second thought was the lesson of Sophocles’s Antigone, who taught us that good women and men have a duty to contradict rules lacking political and moral legitimacy.

Political authority is the cement that keeps legislation together, and the sovereignty of the body politic that engenders the legislation is its foundation. Saying no to Schäuble and the troika was an essential defence of our right to sovereignty. Not just as Greeks but as Europeans.

How ironic that this should also have been the last missive I received from Siemens’ long forgotten man in Athens.


Supporters of a no vote in Greece’s referendum on its bailout, outside the Greek parliament in Athens last summer. Photograph: Nicolas Koutsokostas/Demotix/Corbis

Coming into the highest level of European decision-making from the academic world, where argument and reason are the norm, the most striking realisation was the absence of any meaningful debate. If this was not bad enough, there was an even more painful realisation: that this absence is considered natural – indeed, considered a virtue, and one that newcomers like myself should embrace, or face the consequences.

Prearranged communiques, prefabricated votes, a solid coalition of finance ministers around Schäuble that was impenetrable to rational debate; this was the order to the day and, more often, of the long, long night. Not once did I get the feeling that my interlocutors were at all interested in Greece’s economic recovery while we were discussing the economic policies that should be implemented in my country.

From the day I assumed office I strove to put together sensible, moderate proposals that would create common ground between my government, the troika of Greece’s lenders and Schäuble’s people. The idea was to go to Brussels, put to them our own blueprint for Greece’s recovery and then discuss with them their own ideas and objections to ours.

My own Athens-based team worked hard on this, together with experts from abroad, including Jeff Sachs of Columbia University, Thomas Meyer, a former chief economist at Deutsche Bank, Daniel Cohen and Matthieu Pigasse, leading lights of the French investment bank Lazard, the former US treasury secretary Larry Summers, and my personal friend Lord Lamont – not exactly a group of leftist recalcitrants.

Soon we had a fully-fledged plan, whose final version I co-authored with Jeff Sachs. It consisted of three chapters. One proposed smart debt operations that would make Greece’s public debt manageable again, while guaranteeing maximum returns to our creditors. The second chapter put forward a medium-term fiscal consolidation policy that would ensure the Greek government would never get into deficit again, while limiting our budget surplus targets to levels low enough to be credible and consistent with recovery. Finally, the third chapter outlined deep reforms to public and tax administration, product markets, and the restructure of a broken banking system as well as the creation a development bank to manage public assets at an arm’s length from politicians.

I am often asked: Why were these proposals of your ministry rejected? They were not. The Eurogroup and the troika did not have to reject them because they never allowed me to put them on the table. When I began speaking about them, they would look at me as if I were singing the Swedish national anthem. And behind the scenes they were exerting pressure on the Greek prime minister, Alexis Tsipras, to repress these proposals, insinuating that there would be no agreement unless we stuck to the troika’s failed programme.

What was really going on, of course, was that the troika could simply ignore our proposals, tell the world that I had nothing credible to offer them, let the negotiations fail, impose an indefinite bank holiday, and then force the prime minister to acquiesce on everything – including a massive new loan that is at least double the size Greece would have required under our proposals.

Tragically, despite our prime minister’s acceptance of the troika’s terms of surrender, and the loss of another year during which Greece’s great depression is deepening, the same process is unfolding now. Only a few days ago WikiLeaks revealed the troubling transcript of a telephone conversation involving the International Monetary Fund’s participants in the Greek drama. Listening to their discussion confirms that nothing has changed since I resigned last July.

Once I put it to Schäuble that we, as the elected representatives of a continent in crisis, can not defer to unelected bureaucrats; we have a duty to find common ground on the policies that affect people’s lives through direct dialogue. He replied that, in his perspective, what matters most is the respect of the existing “rules”. And since the rules can only be enforced by technocrats, I should talk to them.

Whenever I attempted to discuss rules that were clearly impossible to enforce, the standard reply was: “But these are the rules!” Once, while I was pushing hard for the argument, resulting from our team’s policy work, that primary budget surplus targets of 4.5% of Greece’s national income were impossible, and undesirable even from the creditors’ perspective, Schäuble looked at me and asked me, perhaps for the first and last time, an economic question. “So, what would you like that target to be?” At last, I rejoiced, a chance to have a serious discussion.

In an attempt to be as reasonable as possible, I replied: “For the target of the government budget primary surplus to be credible and realistic, it needs to be consistent with our overall policy mix. The budget surplus number, when added to the difference between savings and investment, must equal Greece’s current account balance. Which means that we can strive for a higher budget primary surplus if we also put in place a credible strategy for boosting investment and delivering more credit to exporters.

“So, before I can answer your question, Wolfgang, on what the primary surplus target ought to be, it is crucial that we link this number to our policies on non-performing bank loans (that impede credit to exporters) and investment flows (which are reduced when we set the primary budget surplus target too high, scaring investors off with the implicit threat of higher future taxes). What I can tell you at this point is that the optimal target cannot be more than 1.5%. But let’s have our people study this together.”

Schäuble’s response to my point, addressing the rest of the Eurogroup while avoiding my eyes, was remarkable: “The previous government has committed Greece to 4.5% primary surpluses. And a commitment is a commitment!”

A few hours later, the media was full of leaks from the Eurogroup, claiming that “the Greek finance minister infuriated his colleagues in the Eurogroup by subjecting them to an economics lecture”.


 
Wolfgang Schäuble and Yanis Varoufakis before a finance ministers’ meeting in Brussels in 2015 Photograph: Olivier Hoslet/EPA

There is a reason why I began this piece with the story of my Uncle Panayiotis. That reason is a question asked by a journalist towards the end of the press conference after my first meeting with Wolfgang Schäuble in Berlin.

The question was about Siemens and a scandal that had broken out some years earlier, when an investigation initiated in the US found evidence that a certain Michalis Christoforakos, a successor of Panayiotis, was actively pushing bribes into the hands of Greek politicians to secure government contracts on behalf of Siemens. Soon after the Greek authorities began investigating the matter, the gentleman absconded to Germany, where the courts prevented his extradition to Athens.

“Did you, minister,” asked the journalist, “impress upon your German colleague” – that would be Wolfgang Schäuble – “the German state’s obligation to help the Greek government snuff out corruption by extraditing Mr Christoforakos to Greece?” I tried to honour the question with a reasonable answer. “I am sure,” I said, “that the German authorities will understand the importance of assisting our troubled state in its struggle against corruption in Greece. I trust that my colleagues in Germany understand the importance of not being seen to have double standards anywhere in Europe.” Looking terribly put out, Schäuble mumbled that this was not a matter for his finance ministry.

On the aeroplane back to Athens, my mind travelled to the late 1970s. After his release from prison, Panayiotis returned to the helm of Siemens Greece. He was happy in that job, as he kept telling me, and proud of his work. Until he stopped being proud of it – so much so that he resigned in anger.

I remember asking him why he had resigned. His answer still resonates. He told me that he was facing pressure from his superiors in Germany to pay bribes to Greek politicians to ensure that Siemens would maintain its dominant position in Greece, getting the lion’s share of contracts related to the lucrative digitisation of the Greek telephone network.
There is a touching faith in the European north that Europe comprises ants and grasshoppers – and that all the frugal and cautious ants live in the north, while the spendthrift grasshoppers have congregated mysteriously in the south. The reality is much more muddled. A mighty network of corrupt practices has been laid over all of our countries – and the collapse of democratic checks and balances, due in part to our receding sovereignty, has helped hide it from public view.

As legitimate political authority retreats, we fall in the lap of brute force, inertia and demonisation of the weak. Indeed, by the end of June of 2015, the ECB had shut our banks, our government was divided, I resigned my ministry, and my prime minister capitulated to the troika.

The crushing of the Athens spring was a serious blow for an already wounded Greece. But it was also a wholesale defeat for the idea of a united, humanist, democratic Europe.

Our European Union is disintegrating. Should we accelerate the disintegration of a failed confederacy? If one insists that even small countries can retain their sovereignty, as I have done, does this mean Brexit is the obvious course? My answer is an emphatic “No!”

Here is why: if Britain and Greece were not already in the EU, they should most certainly stay out. But, once inside, it is crucial to consider the consequences of a decision to leave. Whether we like it or not, the European Union is our environment – and it has become a terribly unstable environment, which will disintegrate even if a small, depressed country like Greece leaves, let alone a major economy like Britain. Should the Greeks or the Brits care about the disintegration of an infuriating EU? Yes, of course we should care. And we should care very much because the disintegration of this frustrating alliance will create a vortex that will consume us all – a postmodern replay of the 1930s.

It is a major error to assume, whether you are a remain or a leave supporter, that the EU is something constant “out there” that you may or may not want to be part of. The EU’s very existence depends on Britain staying in. Greece and Britain are facing the same three options. The first two are represented aptly by the two warring factions within the Tory party: deference to Brussels and exit. They are equally calamitous options. Both lead to the same dystopian future: a Europe fit only for those who flourish in times of a great Depression – the xenophobes, the ultra-nationalists, the enemies of democratic sovereignty. The third option is the only one worth going for: staying in the EU to form a cross-border alliance of democrats, which Europeans failed to manage in the 1930s, but which our generation must now attempt to prevent history repeating itself.

This is precisely what some of us are working towards in creating DiEM25 – the Democracy in Europe Movement, with a view to conjuring up a democratic surge across Europe, a common European identity, an authentic European sovereignty, an internationalist bulwark against both submission to Brussels and hyper-nationalist reaction.

Is this not utopian? Of course it is! But not more so than the notion that the current EU can survive its anti-democratic hubris, and the gross incompetence fuelled by its unaccountability. Or the idea that British or Greek democracy can be revived in the bosom of a nation-state whose sovereignty will never be restored within a single market controlled by Brussels.

Just like in the early 1930s, Britain and Greece cannot escape Europe by building a mental or legislative wall behind which to hide. Either we band together to democratise – or we suffer the consequences of a pan-European nightmare that no border can keep out.