Harnessing the financial system to put democracy back at the heart of Europe

The break between technocrats and peoples bears a real risk for European democracy. Those responsible for the crisis, have seen their past employees take over positions of power in Europe, for instance Mario Draghi as director of the European Central Bank, Mario Monti as Italian Prime Minister or Petros Christodoulos as manager of the Greek sovereign debt.

Economic constitutionalism is the other result of European neoliberalism. By enshrining it in Europe’s constitutional rules, the ability to choose and implement economic policies according to the particular state of the economy is taken away from democratically elected governments. This dangerous infringement on the sovereignty of the people lets liberals free to take apart the Welfare State piece by piece; all the while wealth is increasingly used to pay off shareholders instead of workers. This is the strategy of neoliberals: transferring powers to the EU first, and then preventing it from using them for anything other than their own policies.

On the contrary, it is the people that should be put back at the heart of European policies. As showed by the 2005 debates on the European Constitutional Treaty on the future of Europe, this crisis must allow us to rethink European construction, especially regarding people’s participation, the role of the European Parliament and the question of federalism. Similarly the renegociating the Treaty on Stability, Coordination and Governance (TSCG) must enable us to impose more solidarity between states and thus between peoples.

Instead of considering a low rate of inflation as a goal in and of itself, monetary policies should be used as a tool for attaining goals that should be determined through political debate. The European Central Bank must have its role completely redefined. It is today free from any kind of democratic or political control, and refuses to act in accordance with goals determined by the European Parliament. A reform needs to address its aimed inflation rates, in order to allow for their adaptation to the state of the economy, and its goals must be expanded to include full employment and a sustainable growth with low carbon emissions. ECB’s role should also be redefined so it can buy state obligations on markets or directly to the states at rates similar to those offered to private banks in order to break the speculative attacks from financial powers on European countries. We support private banks political take over when the public power recapitalised them. The creation of Eurobonds will increase the EU’s financial capacity, which can be used for big investment programs. But while Eurobonds are a precious tool to counter markets’ pressure on sovereign debts, they cannot be the one and only solution to pull Europe out of the crisis.

At the same time, the financial sector needs to be reined in, so that politics can resume its rightful role. European countries will have to impose a tax on financial transactions in order to limit out-of-control speculation and find a new source of revenue for the EU. Part of it could be dedicated to development aid which is necessary to build a fairer world. Deposit banks and investment banks must be separated, in order to protect the savings of private citizens from speculation. This will also favour loans to the « real » economy, which many banks have drastically cut back because of the higher profits that pure speculation produces.

Europe will also have to make sure practices and tools enabling speculation on sovereign debts, such as CDS, are forbidden. Corporate tax has never been as low as it is today in Europe, and with the creation of a new, European corporate tax, we will begin the journey toward a positive fiscal, social and environmental harmonisation. This tax will allow for a common budget that would not depend on Member State contributions, and be big enough to implement autonomous policies in accordance with the will of the peoples of Europe.

Finally, a people’s Europe will only be possible through democracy. Major political decisions, notably those in the fiscal or social fields should require a qualified majority of a stronger European Parliament.

It should appoint the Commission according to the majority which emerged in the European elections, which should be held on the same day in all member states under a transnational list system. Therefore the Commission will be politically accountable towards the the European Parliament. The Commission and the European Council should be put on an equal footing in the ordinary legislative procedure. The European Parliament should share the legislative initiative right with the Commission which is actually monopolizing it. Finally, citizens’ initiative should be strengthen by making the Commission’s opinion a consultative decision. This is how we will build the Europe of humanist values that we want.

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