Plan B in Copenhagen in November 2016

November 26, 2016

Each of the three Plan B “summits” in 2016 has echoed the viewpoint of its organizers. In Paris in January 2016, left-wing parties favouring euro-exit dominated the discussions. In Madrid in February 2016, also DiEM25 and many other non-governmental organizations and movements such as Attac were a visible part of the main programme (my report in Finnish here and talk in English here). As a result, conversations in Madrid were more diverse than in Paris, often involving the development of mixed and complex ethico-political positions. Madrid was also by far the largest of these events.

On 19-20 November 2016, more than two hundred European activists and politicians came to Copenhagen for the latest Plan B summit. The Copenhagen conference was organized by two political parties, the Danish Red-Green Alliance (Enhedslisten) and the Swedish Left Party (Vänsterpartiet). Neither country is in the Eurozone; both parties have always been against the euro; and the Left Party also wants Sweden to leave the EU. The programme of the Copenhagen conference was built on this ideological basis. Nearly all the speakers favoured rapid euro-exit (as a side remark I may mention that I offered to contribute to the programme, but was ignored politely).

The failure of the Syriza experiment taught a lesson to many on the Left. The hard will of the German government, the Commission and the European Central Bank amounts to brute force. The EU is unreformable. As Cristina Asensi from Democracia Real Ya and Money Sovereignty Commission, Spain, put it: “Now we know, there is no more space for abstract arguments”. “No left government can deviate from austerity without consequences, and it needs to be prepared for facing those consequences.” The Copenhagen Statement for a Standing Plan B in Europe expresses these points in a clear fashion:

The steamrolling of the Greek left wing experiment in 2015 has shown the need for a platform that specifically addresses the blackmail and the attempt to impose neoliberal policies via the Economic and Monetary Union (EMU). An alternative is needed urgently, as the EMU is set to become even more dangerous in the coming years. By imposing austerity, the political and financial oligarchy has created insecurity and mistrust throughout Europe, and thereby paved the way for the rise of right wing nationalism, which seeks to create hatred and disunity between people of Europe.

Actually the concern about a further rise of the nationalist right wing is used as an argument on both sides, among those who favour reforming the EU as well as among those who advocate leaving the euro (or even the EU) as soon as possible. It goes without saying that the neoliberal EU has contributed to the currently prevailing circumstances, facilitating the rise of nationalist right-wing parties and movements. It does not follow, however, that a further disintegration of the EU could not benefit the nationalist right-wing. The question is: what are the likely consequences of disintegration under current circumstances, as they have so far evolved? How confidentially can we predict the future? As Philip Tetlock and other researchers on the topic have revealed, the more fixed on a single idea (the more ideological) our position is, the more likely we are to be wrong in our anticipations.

Luka Mesec, a young member of parliament from Slovenia, was the virtually only speaker expressing concern about the likely consequences of further European disintegration. In his view we can now see many similarities to the developments in Yugoslavia in the 1980s. When the economic troubles began, and when the IMF structural adjustments programmes started to have effect in Yugoslavia, many disputes were similar to what we hear today in the EU. “Lazy Serbs and Bosnians are preventing our development”, complained the Slovenians. “You get three times our salaries, you’re stealing money from the Serbian workers”, responded the Serbs. Things got out of hands quickly. Soon rampant nationalism held sway over all future developments. In 1985, no-one imagined Slovenia out of Yugoslavia; by 1990, no-one in Slovenia imagined staying in Yugoslavia. Mesec concluded that although Plan B may be needed for credible intra-EU bargaining and as the last resort of the left, in general the dismantlement of the euro (or the EU) is not a good idea.

Plan B presupposes that there is a plan A. Plan B is an action or set of actions for doing or achieving something that can be used if the preferred plan A fails. At the minimum, a left plan for a better EU would consist of a common fiscal policy, drastically revised central bank mandate and redistributive mechanisms in the Union. These kinds of reforms could, however, aggravate the legitimation problems of the Union, unless they are accompanied by further democratization. Thus plan A consists of drastic transformations of EU’s economic policies and systematic democratisation of its institutions. We know, of course, that this is difficult to achieve.

What is important, however, is that any contingency plan must be specified in terms particular actors and geo-historical circumstances. In the first half of 2015, the Syriza government was all alone in its post-austerity stance against the rest of the EU. It clearly needed a plan B. In late March 2015, Yanis Varoufakis asked James Galbraith to begin preparation for such a plan B (see Galbraith’s book Welcome to the Poisoned Chalice). While Galbraith and others came to the conclusion that the introduction of a new Greek currency would take some 18 months, already in July 2015 Galbraith wrote that “we were looking at the problem wrongly”. A much more rapid exit from the euro would have been possible. A further reason for the abandonment of the plan was Alexis Tsipras’s rejection of it.

It is important to understand that Greece’s political situation in 2015 was unique: a single left-government of a small crisis-ridden euro-country on a collision course with other EU-governments, EU-institutions and the IMF. Nothing like this could ever happen to, say, Sweden or Denmark, as they are not in the Eurozone. Moreover, the prospect of a left party forming a government in any EU country is rather bleak. In most countries the left can only hope to become a minor partner in a coalition government led by a social-democratic party (or a centre party). As Asbjørn Wahl, the Director of Campaign for the Welfare State from Norway stressed in Copenhagen, typically participation in such a coalition government has implied the acceptance of not only the euro but also the basic contours of the currently prevailing EU economic policies. Also for this reason, such participation has usually meant a political disaster for the party in question – or at least a further gradual decline, as in Finland.

All plans concern possible and (more or less) likely futures. By assessing systematically the odds in favour or against a possible outcome, we can develop more credible plans. For instance, a controlled and cooperative dismantlement of the euro seems less likely than an uncontrollable surge of events through unilateral decisions. Peter Wahl from WEED in Germany agrees that this can be dangerous. He also accepts that we do need common systems of governance both in Europe and globally.

In Copenhagen, Wahl summarised the basic arguments of his recent article “Between Eurotopia and Nationalism: A Third Way for the Future of the EU”. He argues that there is a third way: flexibilisation through selective integration in certain areas and selective disintegration in others, based on variable coalitions of the willing. Perhaps flexible re-arrangements of the EMU is the way to go, but is this process any more controllable than a full dismantlement of the euro?

Will differentiated integration not lead to a total disruption at the end? I do not think so, because the existing links, in particular in the economy and the respective interests are so strong, that cutting them would lead to economic suicide. Furthermore, neighbouring countries have common interests per se: in trade, in infrastructure, movement of people, etc. Of course, much would also depend from an appropriate set up of the remaining institutions. If they succeed to really serve as a facilitator in the new framework and prove to be beneficial for all, such a type of European Union would find more acceptance than the present model.

Wahl’s idea is that if a country opts for austerity, it can do this for itself, but austerity cannot be imposed anymore to others. Opening the EU treaty in order to selectively disintegrate the Union may nonetheless spell trouble. The problem is twofold. First, also Wahl’s third way seems to require treaty changes, which are difficult to achieve and would take a large coalition of the willing, including Germany and other surplus countries. Second, unintended consequences could easily dominate the process, despite Wahl’s appeal to the common sense (“everyone should and will avoid economic suicide”). Countries do not always avoid suicides or catastrophes. It is not that long ago when Germany chose, through multiple elections, political manoeuvring and violence, and finally referendum, a path that led to a total moral, military and economic disaster.

There seems to be a need for many plans, each for different contingencies. The left can try to build coalitions, both in national and European elections, either for plan A or for Wahl’s model of selective disintegration. Both cannot be achieved simultaneously. Treaty changes could, in turn, be achieved in two different ways. The conservative way consists of first organizing an intergovernmental convention and then having the outcome ratified in national parliaments. The process involves at least some national referenda. This way accords with the principles and procedures of classical international law. It is also the hardest possible way to change anything. To get the simultaneous support of all the 27 member states (or their representatives) for any particular reform proposal is difficult at best. Any change to any direction is likely to trigger wide resistance in one or more countries. Meanwhile the rise of rampant nationalism and the process of disintegration may well continue unabated.

But there is an alternative. A more cosmopolitan and democratic way is to convene an assembly of directly elected citizens’ representatives. The outcome would be a constitution legitimised through an EU-wide referendum. This constitution can be made implementable by setting up adequate democratic procedures, where also national parliaments (or a new second chamber of the European Parliament) play(s) an important role. This possibility is fully consistent only with plan A.

As I have argued elsewhere (see also our introduction to the Brexit special forum), the main problem for the cosmopolitan project appears to be time and timing. Even if a strong political drive to transform the EU develops, perhaps as a result of the next economic crisis, it is likely that the transformation process will take years. Moreover, until such a collective will forms, the process of ‘completing the EMU’ is likely to proceed in accordance with the scheme of the five presidents’ report (this might change only if the social-democrats and greens withdraw their support from these plans). This means that the Union must muddle through something like a decade or more before the effects of the transformation could become tangible in the everyday lives of European citizens. Meanwhile new crises are likely to erupt and new shifts in the political landscape to occur.

I thus agree with Jonas Sjöstedt, the chair of the Swedish Left Party, who argued in his closing speech that tumultuous and regressive times seem to lie ahead of us.

Heikki Patomäki