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08/12/2016

Die Linke attacks EU institutions

Euro & Finance

Die Linke attacks EU institutions

Bernd Riexinger

[DIE LINKE/Flickr]

After Sahra Wagenknecht attacked the EU and the euro, Die Linke leader Bernd Riexinger warned that institutions like the ECB have more power than elected governments. EurActiv Germany reports.

European institutions such as the European Central Bank (ECB) does not have democratic legitimacy, but “hold more power than elected governments, as we have seen in Greece”, said Die Linke leader Bernd Riexinger in Monday’s (24 August) edition of the German newspaper Welt.

His statement came shortly after Sahra Wagenknecht, designated chairwoman of the party’s Bundestag faction, harshly criticised the EU institutions and the euro.

“If one looks at the role of the ECB in Greece, which blackmailed Syriza because it threatened to stop the cash flow to Greece, it means we have got to discuss a radical reformation of the EU institutions,” Riexinger emphasised.

“Immense power” has built up in the institutions, he warned, and “we should not accept that”. For this reason, he said, his party is calling for “a fresh start in Europe”, including “democratic reconstruction of the European institutions”.

“As the left, we must have this discussion,” Riexinger stressed.

In her statement for Welt, Wagenknecht questioned the euro itself. Riexinger responded, saying the faction leader was “correct in her assessment that the structure of the euro makes the stronger countries stronger and the weaker countries weaker”.

The left politician also said he is convinced that without a fundamental change in policy, this constellation will lead to even larger currency crises.

Riexinger shared Wagenknecht’s analysis that elected governments in the eurozone no longer have any room for manoeuvre, because the ECB could always threaten to cut liquidity injections.

“In this way, it is blackmailing the Greek government and endangering democracy in Europe as a whole,” hen said. If the Troika, comprised of the European Commission, the ECB and the International Monetary Fund (IMF), can dictate the kind of policy that is made – regardless of whether the population has elected a left-wing, right-wing or moderate government – this promotes nationalist tendencies, he argued. Riexinger added that it also leads to a widespread loss of trust, among the population, in a democratic Europe.

>>Read: Dutch vote gives final go-ahead to Greek bailout

Katja Kipping, who leads Die Linke, alongside Riexinger, criticised “the political orientation of the institutions”.

A recent study of 1,000 German citizens by Deutsche Welle found that 39% believed the unelected ECB was the most influential structure in the EU, ahead of the European Commission and the state of Germany itself. 

Neoliberal policy in Europe is not codified in the euro but, instead, has ultimately resulted from the political balance of power in Europe, she stated. The euro, as a common currency, is not the main problem, Kipping explained, but rather the political orientation of the institutions.

Kipping said that one of the most important reasons for the current imbalance of power in the currency union is the “total breakdown of social democracy throughout Europe”.

In the negotiation conflict between centre-right German Finance Minister Wolfgang Schäuble and the leftist Greek Prime Minister Alexis Tsipras, if there had been “a strong social democracy, that actually assumed its role, one could have easily found a Keynesian path out of the crisis”, Kipping argued.

>>Read: Varoufakis: Greek deal was a coup d’état

Though he had long been opposed to such policies, Tsipras announced in July that he was prepared to apply far-reaching reform and austerity measures in Greece. In return, Greece is would receive €86 billion in loans over the next three years.

Background

Eurozone leaders reached an agreement on a programme to save Greece from bankruptcy after 17 hour talks on 13 July.

>>Read: Eurozone reaches ‘laborious’ tentative deal on Greece

If approved by parliaments, this will be the third rescue programme for Greece in five years. It will be managed by the European Stability Mechanism (ESM), the eurozone permanent crisis resolution fund that was initially set up five years ago in an effort to save Athens from bankruptcy.

In return for the bailout, Greece's obligations include:

  • Request continued support from the International Monetary Fund after its current IMF program expires in early 2016.
  • Streamline consumer tax and broaden the tax base to increase revenue.
  • Multiple reforms to the pension system to make it financially viable.
  • Safeguard the independence of the country's statistics agency.
  • Introduce laws that would ensure "quasi-automatic spending cuts" if the government misses its budget surplus targets.
  • Overhaul the civil justice system to make it more efficient and reduce costs.
  • Carry out product market reforms that include allowing stores to open on Sundays, broadening sales periods, opening up pharmacy ownership, reforming the bakeries and milk market and opening up closed and protected professions, including ferry transport.
  • Privatise the electricity transmission network operator unless alternative measures with the same effect can be found.
  • Overhaul the labour market. This includes reviewing collective bargaining, industrial action and collective dismissal regulations.
  • Tackle banks' non-performing loans and strengthen bank governance.
  • Significantly increase the privatization program, transferring 50 billion euros worth of Greek assets to an independent fund, based in Greece, to carry out the privatizations.
  • Modernize, strengthen and reduce the costs of Greek administration.
  • Allow members of the three institutions overseeing Greece’s reforms - the European Central Bank, IMF and European Commission, previously known as the 'troika" - to return to Athens. The government must consult with the institutions on all relevant draft legislation before submitting it to public consultation or to parliament.
  • Reexamine, with a view to amend, legislation passed in the last six months that is deemed to have backtracked on previous bailout commitments.