March 23, 2013

The New Soviet Union: Cyprus shows how the EU destroys democracy


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Here is my Saturday Essay in the Irish Daily Mail. It is a lengthy piece, but then in the countries caught in the eurozone, interest in what is happening in Cyprus is intense. British readers can be happy they are not trapped in the single currency. But they are still trapped in the EU...which is why they may want to read on.

Soviet state emblem wikiBefore I can explain what this Cyprus crisis means to Ireland, I have to dust off some Soviet-era vocabulary: nothing else will do.
First, nomenklatura. This was the name given to the self-propagating Communist Party elite who controlled Soviet government, industry, finance and most of the caviar.

Next, apparatchiks. These were the unquestioning loyal subordinates of a Communist apparat or administrative system.

As for other words from the USSR era – transnational, class betrayal and colonialism – you already know those, so now I can get started and explain what Ireland must learn from what the European Union nomenklatura did to Cyprus and its president in the early hours of March 16th.

Picture the scene. We can do that because three reporters from the Wall Street Journal, one in Brussels, the others in Berlin and Nicosia, have managed to piece together an hour by hour account of events leading up to the announcement that eurozone finance ministers would force the Cypriot government to confiscate €5.8bn from bank deposits.

What has happened since that night remain other issues: the rush to Moscow by the Cypriot finance minister desperate for a loan, the attempts by Cypriots to find a Plan B, the possibility of Cyprus leave the euro.


But above all, there is what happened over the night of the 15th on the sealed-off upper    floors of the European Council building. It was the best illustration yet of why a former senior European Commission economist now refers to the EU as the New Soviet Union: the treatment of the President of Cyprus that night showed just how the power over the member states has shifted away from democratic control and into the hands of the unelected elite of a transnational European empire. And what happened to the Cypriot president that night could happen to any Taoiseach.

Berlin propaganda

So, as I say, picture the scene. That night there were ten hours of negotiations trying to put together a deal that would keep the banks in Cyprus solvent. What the Cypriot banks needed was €17.5bn. But the Germans were unwilling to allow such a bail-out. Already the Berlin propaganda machine had been pumping out stories that the Cypriot banks were stuffed with Russian hot money, and decent Germans were not going to protect the deposits of Russian oligarchs.

Which was racial stereotyping by the Germans. There plenty of legit Russian businessmen in Euro burning dmEurope. A lot of such businessmen may have shifted their money into Cyprus to get it away from banks controlled by Putin and Medvedev. Such businessmen clearly thought that EU banking played straight. Now they know different. But that is another story with other implications for how investors from outside the EU will now regard the safety of eurozone banks, including Irish banks.

It also has implications for anyone in the EU who thought that the EU law forcing all member states to guarantee bank deposits up to €100,000 meant something.

This week some of us sat in the press room at the European Commission and listened to Olli Rehn’s apparatchiks deny that confiscation of a percentage of Cypriot bank deposits under 100k was in breach of this legal guarantee. They insisted that this wasn’t confiscation, it was a tax. Since taxes are the ‘competence’ of member states, it didn’t breach the law.

The apparatchiks insisted that, anyway, this was a one-off because the case of Cyprus was ‘special.’ By last Wednesday night however, news had leaked out that the Spanish government now plans to ‘tax’ bank deposits by up to 0.2 percent. You might say that’s not much. But whether it is 0.2 percent or 20 percent doesn’t matter. The precedent of raiding bank deposits with the Troika’s blessing has been set.

Cypriot president alone

Back to the move against Cyprus. It started on the Friday evening when Jeroen Dijsselbloem, president of the eurogroup, called an emergency meeting after the European summit. According to the Journal, ‘Just after 5 p.m., finance ministers, IMF Managing Director Christine Lagarde, ECB executive board member Jorg Asmussen and the EU’s economic-affairs commissioner, Olli Rehn, filed into a meeting room on the fifth floor of the Justus Lipsius, which houses the EU’s ministerial meetings and summits.’

Now, this is significant: ‘Cyprus’s newly elected President Nicos Anastasiades stayed behind in the country’s delegation on the seventh floor.’ The democratically-elected president was not allowed in the room as the unelected Olli Rehn began with his plans for how to get €5.8bn out of Cypriot bank depositors.

Mr Rehn wanted a straight ‘haircut’ on all deposits in all banks. But then Christine Lagarde said they must gouge between 30 percent and 40 percent from all deposits over €100,000 in the two main Cypriot banks.

Congo wikiThe horrified Cypriot finance minister said this couldn’t happen. He began the first of several scrambles upstairs to where President Anastasiades was being kept in isolation. Of course he was. This is how an empire treats uncooperative colonial natives. In the 19th century, Belgian colonial gang-masters would lock Congolese wives alone in windowless sheds until their husbands harvested the right amount of rubber.

In the end, as a representative of Mr Anastasiades told the German newspaper Bild, ‘the Germans held a gun to our chest.’ It was at some time after a meeting of the inner core of the nomenklatura which began in another room at 1 a.m. that Mr Asmussen of the ECB pulled out the gun. He told Mr Anastasiades that either he agreed to the deal on bank deposits, or EU funds would be cut off to the country’s two main banks.

Just to ramp up the 3 a.m. terror, Mr Asmussen then rang Mario Draghi, president of the ECB, in front of Mr Anastasiades. The German warned Mr Draghi that the ECB might have to deal with the collapse of the Cypriot banks on Monday.

You know the rest. The eurogroup came out and announced that the Cypriot president had agreed that there would be a levy on all bank deposits.
Again, this is significant. The EU system of government operates by keeping in place the institutions of the governments over which it has taken power. The public had to be told that it was the president of Cyprus himself who had decided to seize deposits.

Power out of view

Two British historians, Christopher Booker and Richard North, identified this system in their history of the EU, The Great Deception: ‘It is central to the nature of the “project” that the parliaments, officials and judiciaries of each of the member states should all be left in place. But behind them [the project] erected a new supranational power structure which worked through these national institutions, controlling them and enlisting their active collaboration in a way that remained largely out of view.’

If you go through the statements of Monnet and other founders of the project as long ago as the 1920s, ‘the one thing above all the “project” could never be, because by definition it had never been intended to be, was in the remotest sense democratic. The whole purpose of a supranational body is to stand above the wishes of individual nations and peoples.

It would be supranational government by technocrats, ‘unsullied by any need to resort to all the messy, unpredictable business of elections.’
‘The only useful role left to the politicians in this process was to lend it a veneer of democratic legitimacy.’

Defiance

Which is why the nomenklatura were in such a fury when the Cypriot parliament refused to cast a single vote in favour of the deal: the members of parliament were not being ‘European.’ Indeed, in a top level conference call among eurozone officials on Wednesday – notes from which were leaked to Reuters – the Cypriot parliament’s democratic defiance was denigrated as ‘emotional.’

In fact, the parliament’s defiance was magnificent. But I did not cheer. I know that in the EU, a Yes vote is forever, but a No vote is only ever temporary. The Troika apparatchiks immediately delivered the message that the parliament must keep voting until they get the right answer.

This technique is familiar to anyone who remembers the politics of the USSR: vote all you want, but there is just one possible result.

I am not the only one to see that Soviet similarity. I go back to that former senior commission economist I mentioned at the top. He is Bernard Connolly. I have quoted before from the new edition of his book, The Rotten Heart of Europe.

Mr Connolly was infamously forced out of his job in 1995 when he wrote the book questioning the prospects of monetary union. From his vantage point as one of the nomenklatura, Mr Connolly saw the truth of the ambitions of this elite. They wanted ‘to complete the elimination of sovereignty, law and political legitimacy in Europe, freeing elites – a European nomenklatura – from any residual constraints either of democratic control or law.’

To do this, they have persuaded the ‘useful idiots’ across the member states to suppress the results of referenda and to topple democratically-elected governments ‘in manoeuvres reminiscent of Stalin’s tactics in Eastern Europe after the war.’

What Mr Connolly means, first, are the results of referenda not just in Ireland, but in the Netherlands and France. In 2001, the then-president of the European Commission, Romano Prodi, and other members of the elite made a decision behind closed doors to draw up an EU constitution. They promised that it would not come into effect unless it had the unanimous consent of all member states.

Fifty ways to win

Within a single week in 2005, both the French and the Dutch voters rejected the constitution. Here is how Nigel Farage, MEP and leader of the UK Independence Party, recalled the moment in a recent interview in the Financial Times: He was drinking champagne in the Brussels press bar to celebrate the Dutch rejecting the EU constitution in a referendum when a German MEP came by and said, ‘You may have your little celebration tonight but we have 50 different ways to win.’

Indeed they have. By 2007 they had produced the Lisbon Treaty, which was the constitution in everything but the title on the front page. You know the rest: in 2008 the Irish people rejected the treaty. The nomenklatura rejected the democratic result.

In 2011 the nomenklatura pulled off two Soviet-style coups. They toppled the elected        Budapest 1956 wikigovernments of both Greece and Italy. It was Hungary 1956 without the tanks.

That year George Papandreou, then prime minister of Greece, announced he would hold a referendum on the further austerity demanded by the Troika. But the nomenklatura would not allow a democratic vote. They demanded Mr Papandreou abandon the referendum. The humiliated prime minister was forced to resign.

The Troika then manoeuvred in one of the nomenklatura, Lucas Papademos, former vice-president of the ECB, as prime minister.

The EU elite also toppled the government of Silvio Berlusconi. Following a secret telephone call – later leaked to the Press – Chancellor Merkel told President Giorgio Napolitano of Italy she was worried that Prime Minister Berlusconi wasn’t strong enough to deliver the kind of reforms in Italy that ‘Europe’ wanted. The old Communist Napolitano got the message. He destabilised the prime minister at home, while the ECB got busy rocking the market in Italian bonds. Mr Berlusconi was forced out of office, and President Napolitano parachuted in the unelected choice of the nomenklatura, again one of their own, former European Commissioner Mario Monti.

Would topple Ireland too

If you think the nomenklatura has not been willing to topple an Irish Government, remember the pressure Jean-Claude Trichet, then president of the ECB, put on Finance Minister Brian Lenihan to force him to accept a bailout against the wishes of the Irish people. The pressure was of course applied in secret, we learned about it only from letters and notes of telephone calls released last year.

Mr Trichet pushed Mr Lenihan to accept the terms being offered by the Troika, threatening that the ECB would otherwise cut all emergency funding: that would have toppled the Government.

The finance minister resisted. But he was finally pushed into the deadly deal after Patrick Honohan, governor of the Irish Central Bank, said publicly a bail-out was necessary. That statement finished Mr Lenihan.

What is important to note is the Dr Honohan, though always referred to in Ireland the governor of our central bank, is something else in the EU. He is a member of the Governing Council of the ECB: that makes him a member of the European nomenklatura.

It is now clear the nomenklatura intend they should be without any constraints of democratic control. Mr Connolly notes that they have transferred powers to ‘unelected, unaccountable and explicitly anti-democratic bodies.’ 

These include the eurogroup, the ECB, the bail-out funds, in particular the new European Stability Mechanism, ‘which, astonishingly, has complete legal immunity for itself and its officers.’

He notes the undemocratic powers of the IMF and the G20. Then there are the banking and supervisory bodies, and the economic government of the euro area which is meant to ensure economic ‘discipline.'

Humiliation

This ‘discipline’ is why the democratically-elected members of our Dail must suffer the humiliation of knowing that a German parliamentary committee now sees our Budget before they do: the committee, free from Irish democratic control, acts for the nomenklatura.

On their trips to Brussels, the Taoiseach and Finance Minister pose as part of this ruling elite. If they were to put Ireland first it would be a class betrayal of their colleagues in the nomenklatura. Alas the Irish people are so submissive that they allow this evil idiocy by our Government.

But the Mediterranean peoples are not submissive. Judging by the mood of the peoples of    Lenin wikiCyprus, Greece and Italy in particular, they have had all the pain they can take. The crowds are already on the streets in their thousands. Now all they need are leaders.
Which is why Cyprus gives me hope. Like that old Soviet villain Lenin, I know that worse is better.


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