Monnet's Last Stand

Monnet’s Last Stand: The Dutch Canary in the Coal Mine Points out the Fatal Limits of the German Austerity Project By Dr. John C. Hulsman and Teun van Dongen Introduction: June 25, 1876 ; Another Fantasy Meets Its End The Indians called him Yellow Hair (because of his fashionably long blond locks) or Son of the Morning Star (because of his propensity to attack at daybreak). His own people saw Lt. Col. George Armstrong Custer, Indian fighter extraordinaire, as the exemplar of Manifest Destiny ; the symbol that technological superiority wedded with dash meant that America coming to dominate the North American continent was a foregone conclusion. Certainly, nothing could go wrong, as the primitive Stone Age people he was grappling with could not possibly stand up to his state-of-the-art troops. Or in the mistaken, ahistorical, modern words of the current American president, ‘things always get better.’ Only on June 25, 1876, they didn’t. Lazily convinced of his men’s innate superiority (Custer had already booked a speaking tour back east for when this final Indian campaign came to an end, so confident was he of cashing in on his soon-to-be revived glory), he ignored the advice of his Crow Indian scouts, who said the Lakota Sioux/Cheyenne enemy village they spied was the largest any of them had ever seen. Certain that they were wrong (or that it simply did not matter) he insanely divided his small 7th Cavalry force into three, personally commanding a remnant of around 210 men. Custer was about to ride into the history books, though certainly not in the way he intended. Late on the afternoon of that sunny June day, Chief Gall and Crazy Horse (perhaps the greatest cavalry genius ever produced on the North American continent)--inspired by their paramount leader Sitting Bull--quickly surrounded the beleaguered Yellow Hair, and within the amount of time ‘it takes for a hungry man to eat a meal’ overwhelmed him. I have been to the top of Last Stand Hill in eastern Montana, where the final 80 of Custer’s men attempted to stand and fight. I wondered then as now what must Custer have been thinking as Crazy Horse led the flanking maneuver that finished him off. Perhaps that history is not inevitable, that a Plan B is always necessary, and that the greatest sin of man since the time of the Greeks has been hubris, the inability to think about what happens if things actually do not go according to one’s misconceived world view. So it is with the European Union. In the decade-plus that we have been analysts, all our intellectually skeptical efforts to question the inevitable success of the euro experiment have been met with lazy, quasi-religious derision, as though it was so self-evident that the whole process would inevitably amount to a rousing success that to think otherwise was half-witted. In essence, we have been dealing not with analysts, but with cheerleaders. For what has truly gone wrong here is the failure to accept the limits of the Monnet method, the skillful model by which post-war Europe helped put itself back together following the charnel house of World War II. Nationalism was to be slowly eradicated, the passions of the mob (ie democracy) to be tempered with real power being handed to an unelected, technocratic elite, the product of Europe’s finest universities. Process would take the place of policy outputs, decisiveness replaced by a glacial- forming but enduring consensus, with real decisions being taken out of the immediate public realm. For a long time, this whole edifice worked just fine, but not for the reasons this peculiar religion’s adherents would ever have acknowledged. With America almost wholly taking care of Western Europe’s defense concerns—supplying a form of continental life insurance—Europe could confidently concentrate on rebuilding itself, with its geopolitical underwriting secured. Given no immediate strategic concerns (having outsourced these to the Americans) and assured of stability, both foreign and domestic European investment soared, the process of economic revitalization succeeding beyond anyone’s wildest dreams. It was here that hubris began to creep in. For this unique model obviously could not be replicated (despite recent cheerleaders’ claims to the contrary), given that the historical background to the EU’s success was a one-off. The project and the Monnet method had the other glaring limitation that productivity levels had to stay at postwar highs (ie the growth rates of western Europe in the 1950s and 1960s) to continue to pay for the lavish corporatist safety net that had been established--the opulent lifestyle that western Europeans have come to fiercely embrace—to keep the masses quiescent. No one stopped to think what might happen if either demography of productivity began to let them down. The EU has always been a unique, fair weather project, but that did not stop the devotees of the Monnet method from claiming that they—as Colonel Custer believed— were at the cutting edge of modernity. The idea--as is true for religious thought--that what had worked in 1950 would necessarily prove effective forevermore, now looks as wrongheaded as Yellow Hair’s breezy conviction that the Indians would simply roll over and cede the western portion of North America to their betters. Frankly, well over 80 percent plus of present European analysts ought never to work again, so lazy have they been in actually looking at the limitations of Monnet’s philosophy, so blind as to Europe’s obvious and growing problems. They have committed the first error of analysis in Edmund Burke’s eyes, as they have merely posited the world they wanted to see, rather than seeing what actually is. More German Than the Germans The most telling quote of the present, calamitous euro crisis was uttered by Jean-Claude Juncker, Prime Minister of tiny, well-run Luxembourg and Head of the Eurogroup. ‘We all know what to do,’ he complained, ‘we just don’t know how to get re-elected once we’ ve done it.’ For the policy path for euro salvation will certainly involve changes that have been only hinted at up to now to the increasingly skeptical general European public. Eurobonds (ie Germany primarily guaranteeing a portion of overall European debt), common European deposit insurance, with the European Central Bank backstopping national banking losses to prevent a run, and common and far more intrusive European- wide regulations to prevent the whole thing from happening again, seems about the minimum of increased centralization that is necessary to keep the euro show on the road. But the problem here is democratic ; has anyone asked the north European creditor publics how much sovereignty and treasure they are prepared to surrender to save the euro? Has anyone asked the fraught and frightened people of southern Europe for how long they are prepared to accept undemocratic diktats from other countries, primarily but not limited to Germany? This glaring moment of truthfulness highlights the Achilles Heel of the whole Monnet philosophy that has dominated and guided the European experiment over the past six decades: the vast democratic deficit that lies at the heart of the world view. Mr. Jefferson would certainly know better ; political legitimacy (particularly in testing times) is not a luxury, but the absolutely key ingredient in making tough policy decisions stick. But it has been Chancellor Merkel’s monomania about austerity that illustrates better than anything that the Monnet method has reached the end of the road, as it is its ultimate exemplar. Devised by technocrats, seemingly impervious to local democratic wishes, and hoping to subsume the whole notion of democratic consent under the umbrella of an economics-first, process-driven mantra, such a policy alternative was always bound to fail. Here the Netherlands--Germany’s constant political and economic ally--becomes the canary in the coalmine, signaling the end of the road for German- imposed austerity. For if even the Dutch cannot swallow such German stipulations it is a safe bet that the rest of Europe will not be following suit. Politics cannot be so easily abolished, after all. In the Dutch case, seeming to be one thing and then being forced to do something quite different has a crushing effect on preserving the vital elixir of political legitimacy. For in terms of fiscal probity, of sticking to austerity come what may, up until now the Dutch have been more German than the Germans, unbendingly believing that austerity alone was the key to containing the euro crisis. While much attention has been rightfully given over to the immediate travails of the southern debtor states (Greece, Spain, Portugal, Italy), an equally alarming metric of the whole project’s decline is the increasing difficulties of the Netherlands, the only other significantly-sized country of note other than Germany to still possess (for the moment) a AAA credit rating. But even in prosperous, economically liberal, the Netherlands, the austerities required to bring all the euro zone economies into cost equilibrium with Germany are breaking the back of democracy. Things began to go wrong as the weak, center-right government of Prime Minister Rutte--ostensibly a Liberal-Christian Democrat tie-up, but one propped up from outside by the populist Geert Wilders’ Freedom Party--met to cobble together a budget that would cut the Dutch deficit from 4.6% in 2012 to 3% in 2013, in line with the just agreed (and German sponsored) EU-wide fiscal compact. This was a treaty change the Rutte premiership had enthusiastically supported, as it provided for far greater oversight of the miscreant southern Europeans, providing that they would not keep spending Europe into oblivion.

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