This week, the European Central Bank will officially open its new headquarters in Frankfurt. To mark the occasion, up to ten thousand protesters — united under the Blockupy banner — will converge upon Europe’s financial capital from all corners of the continent. Organizers have declared that they intend to “take over [the bankers’] party and turn it into an articulation of transnational resistance against European crisis policies and their catastrophic consequences, especially for the people in the European south.”
The German state, in turn, is mobilizing one of the country’s largest-ever police forces to protect the ECB and make the constitutional act of public protest next to impossible. As in previous years, Frankfurt will be on lock-down — and it is not difficult to understand why: the authorities are adamant on insulating the central bankers from any form of popular pressure whatsoever. The ECB, after all, is supposed to answer to the markets, not to the people. Just consider the career trajectory of its president, Mario Draghi, who used to be a managing director at Goldman Sachs: it does not take a trained political economist to figure out what this tells us about the ECB’s allegiances.
In this sense, the Blockupy organizers could not have chosen a more appropriate date for this year’s demonstration. The launch of the ECB’s new headquarters symbolizes practically everything that’s wrong with Europe’s neoliberal project today. As the Eurozone fell into its never-ending crisis in 2008 and the ECB imposed life-wrecking austerity measures from Athens to Dublin, an ostentatious 185 meter tall glass and steel skyscraper quietly arose along the river Main. Surrounded by a large fence and castle moat, activists point out how the “intimidating architecture of power is a perfect symbol of the distance between the political and financial elites and the people.”
At an estimated cost of 1.4 billion euros, the searing twin towers — appropriately designed in the postmodern architectural style of deconstructivism — now stand tall as a shining beacon of the new Europe: impersonal, unaccountable and thoroughly anti-democratic. From these commanding heights of monetary and financial control, the ECB has already deposed several elected governments, imposed utterly disastrous austerity measures, and recently proposed to pump another 1 trillion euros into the Eurozone’s morally bankrupt financial system. In the meantime, it is squeezing the Greek government to neutralize the leftist challenge emanating from Athens.
Many EU scholars still euphemistically refer to this institutionalized disdain for popular interference as a sign of the EU’s “democratic deficit.” They will point at the ECB’s lack of “input legitimacy” and call for greater parliamentary control over its governing board. What many of these scholars fail to observe, however, is that the anti-democratic nature of the ECB has been inscribed into its structural role. As a central bank without a state, the ECB is anti-democratic not by fault but by design. Its supposed “independence” from national governments is in reality a cover for its deliberate insulation from popular pressures and its structural interdependence with private financial interests.
Needless to say, the onset of the crisis has only led to a further hollowing out of democratic processes. To give just one example: a number of letters have recently surfaced revealing the full extent of the blackmail deployed by Draghi’s predecessor, Jean-Claude Trichet, at the height of the crisis in 2011-’12. In his communications with the governments of Ireland, Greece, Spain and Italy, the ECB president explicitly threatened to cut off emergency credit if the governments in question refused to abide by a set of deeply unpopular market reforms and austerity measures that had been drafted up, word for word, by unelected bureaucrats in Brussels and Frankfurt
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This outright blackmail was but the tip of the iceberg. While some may have heard of Trichet’s letters in the news, few Europeans are likely to know about arcane policies like the securities markets program (SMP) or long-term refinancing operations (LTRO) through which the ECB effectively bailed out the banks and socialized Greece’s public debt. Likewise, some may have read about the ECB’s decision to embark upon quantitative easing (QE), but few are likely to understand what this means in practice: namely that the ECB will now start subsidizing private banks to the tune of 1 trillion euros even as millions of Europeans languish in poverty and unemployment.
The fact that there is no widespread public outcry over such blatantly anti-social moves just goes to show to what extent the architects of the Eurozone have succeeded in de-politicizing the EU’s neoliberal project and the ECB’s monetary policies, insulating the ECB from open criticism and allowing it to systematically favor the interests of private investors without ever having to face meaningful opposition. The ECB itself actively cultivates this apolitical image. Two weeks ago, Mario Draghi — just moments after threatening to cut off Greece’s credit if the country’s leftist government fails to comply with the EU’s and ECB’s bailout conditions — straight-facedly declared that “the ECB is a rule-based institution, not a political one.”
Of course it was a blatant lie. Central banks are profoundly political institutions. For one, they can create money out of thin air — which is precisely what the ECB is doing right now with its expanded assets purchase program. If you can create money, you get to decide how to spend it. And once you start creating 60 billion euros per month, such decisions obviously have redistributive implications. One option would have been for the ECB to simply transfer cash to ordinary European citizens, in order to counter the social consequences of the crisis and stimulate aggregate demand. Instead, the ECB is using its money-creating powers to buy up toxic assets from private banks and lend the same money back to them at ultra-low interest rates, sanitizing their balance sheets in the process.
According to the official narrative, such monetary stimulus is supposed to re-start private lending and bring about a lasting recovery. But the reality is that very little of this money will ever find its way to ordinary people. As long as growth remains elusive, private banks will be fearful of investing in productive activities and will be much more inclined to divert their capital into the same type of speculative high-risk activities that caused the crisis to begin with. Unsurprisingly, this is precisely what has happened with quantitative easing in the US and the UK. Why else would US stock marketsand the London property market be at record highs in the midst of a protracted economic slump?
From the looks of it, the world is already witnessing the inflation of yet another series of epic and potentially catastrophic asset bubbles, this time fueled directly by central bank intervention. The ECB’s decision to pile in on this dangerous game, and to do so in such extremely anti-social fashion (maintaining the austerity thumbscrews on the periphery while at the same time refusing to even consider meaningful debt cancellation or progressive fiscal transfers) reveals the deeply politicized character not only of the ECB but of the EU’s neoliberal project more generally. And this is precisely why Blockupy is such a crucial initiative right now.
Not only do the demonstrations in Frankfurt serve to re-politicize the ECB and lay the groundwork for a transnational movement against the rule of finance; they also bring the resistance against austerity right into the heart of the European crisis regime. Suddenly this is no longer just about a debtors’ rebellion in the periphery. Now, when the bankers’ party look down from their towering edifice, they will find the ground trembling beneath their feet. The skyscraper’s majestic glass walls, meant to convey a false sense of openness and transparency, will prove to be a poor cover for the steady decay of the single currency.
Yes, the Eurozone is running itself into the ground. And no, it cannot be reformed. For European democracy to thrive, it must be torn asunder.
Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter @JeromeRoos.
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1 Comment
I understand that the largest confederation of trade unions in Germany (the DGB) is playing an
active role in Blockupy; can you comment on this?