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The Debtor’s War: A Modern Greek Tragedy

The Debtor’s War: A Modern Greek Tragedy

By: Andrew Gavin Marshall

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Early on Thursday, 7 November 2013, Greek riot police stormed the offices of Greece’s main public broadcaster, which had been under a five-month occupation by workers who opposed the government’s decision to shutdown the broadcaster, firing thousands and destroying a major cultural institution. The broadcast seems to have come to an end.

The long and painful Greek tragedy continues, where society and culture are gutted, people impoverished, driven into a deep depression, with growing political and social conflicts, the rise of fascism, detention camps filled with immigrants from Africa and the Middle East, trying to escape the dictators we arm, or the wars we support, with suicide rates spiking, health and well-being deteriorate, services and support vanish, and all the people are left to be punished, humiliated, oppressed and destroyed… These are called “solutions” to an economic crisis, on the road to “economic recovery”… think about that for a moment.

Why is this done? Because some of the world’s largest banks demand it. The same banks that created the global financial crisis, and the European debt crisis, and the global food crisis (which drives tens of millions more people into hunger, and makes the banks richer in the process)., and which launder hundreds of billions of dollars in drug money, profit from arms sales, war and terror. Those banks want the people of Greece (and Spain, and Italy, Portugal, and Ireland, and everywhere, always, across the world) to pay the interest they feel they are owed.

Let me put this simply: a computer screen somewhere, at some big bank, says that some country owes that bank a certain amount of money, and thus, the people of that country must suffer and even die, so that the government can afford to pay back the bank. That’s what government’s are for, right? To serve banks… right?

Greece needs to pay the bank, because the bank and all the bank’s friends (what we call “financial markets”) have decided to punish the country of Greece by betting against the ability of the country to repay its debts, to crash its credit rating, making its ability to borrow and spend increasingly expensive and impossible. Now Greece is basically broke. Greece needs money, so it turns to the EU, the European Central Bank, and the IMF for “assistance.”

They demand that Greece – in return for the loan(s) – impoverish its population, cut all social services and health care, education, anything of benefit to the population – destroy it! – because it’s “too costly.” These are called “austerity measures.” Then, ensure that the newly-impoverished population has all their ‘benefits’ withdrawn, which were promised to them through the ‘social contract’ between the population and the government (essentially, a social agreement between people and the state which legitimizes the state’s ability to rule over them). These things must be destroyed. So things like pensions, social security, labour rights and regulations, protections and safety, industries, resources, services and anything that again benefits the population, must be dismantled and sold for cheap to foreign banks and corporations. All must be dismantled to ensure that the newly-impoverished population and country can be effectively and efficiently exploited by cosmopolitical corporations. These are called “structural reforms,” presumably because they ‘reform’ the very structure of society.

Then, with the combination of impoverishment and exploitation, comes the saintly glow of the all-encompassing human desire and civilizational drive – our goal and purpose as a species on this planet, what our societies are organized by and for – the highest stage of humanity: “economic growth.” Who wouldn’t want “growth”? Well, unless we’re talking about something like a wart, rash, infection, inflammation, or a tumour, everyone wants “growth”, right? Even if it’s at the expense of entire societies and populations of actual individual and living human beings, like any single one of us. Just so long as they suffer for “growth,” all will be well and happy.

So what does “growth” mean? It means that the banks and corporations – which worked with government agencies and officials in creating the global economic and financial crises in the first place – now have the ability to reap the benefits of destruction: massive profits, and growing global power. Large corporations have more money than most countries on earth. Their power is protected by the state, their influence unquestioned, their domination of the world’s resources, materials, culture and society is rapidly advancing, and they are – institutionally and ideologically – totalitarian. So what’s not to love, really?

They want it all. Profit and power. Our world is dominated and being re-shaped by a tiny global financial, corporate, political and intellectual elite. And all must suffer so that they can have what anyone in their position would want to have: more, they want it all. And they want you to just shut up and let them take it all. If you have a problem with that, well, that’s what riot police, prisons, and fascism are for.

This is why Greece must suffer. This is why we hear the unholy trinity economic mantra of: “austerity,” “structural reform,” and “economic growth.” The modern Greek Tragedy of ‘The Debtor’s War’ is driven by the tyrannical trio known as the ‘Troika’: the European Commission (of unelected, unaccountable supranational elite technocrats who serve the interests of global corporate and financial power), the European Central Bank (of unelected technocrats and economists who serve the interests of “financial markets” and the big banks), and the IMF (of unelected technocrats and economists who serve global financial and corporate interests). This institutional ‘Troika’ (the EC, ECB, and IMF) demanded the implementation of the ideological ‘Troika’: austerity, structural reform, and economic growth.

Together, institutionally and ideologically, they wreak havoc upon humanity.

Welcome to the most completely INSANE point in human history; the all-or-nothing. Welcome to reality.

Now please, kindly help change it.

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Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis

Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis

By: Andrew Gavin Marshall

Originally posted at Occupy.com

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In Part 1 of a Global Power Project exposé on the Institute of International Finance (IIF), I examined the founding the institute as a response by leading world banks to organize and manage their interests in relation to the 1980s debt crisis. When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann.

Josef Ackermann served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF. Ackermann was also, and still remains, a member of the Steering Committee of the Bilderberg Group and continues to serve on the IIF’s Group of Trustees, a board which includes a number of prominent central bankers including Christian Noyer, the Governor of the Bank of France and Chairman of the Bank for International Settlements (BIS); Jamie Caruana, the General Manager of the BIS; and Jean-Claude Trichet, who was the president of the European Central Bank from 2003 to 2011.

During the early stages of the financial crisis, Ackermann served as an “unofficial adviser” to German Chancellor Angela Merkel and her then-Finance Minister Peer Steinbrueck. In December of 2009, Ackermann was speaking at a summit in Berlin attended by Chancellor Merkel and several other German cabinet ministers, corporate CEOs and others, where he explained that while the financial crisis had largely been “abated,” many “time bombs” remained — in particular, Greece, which he referred to as the “problem child” of Europe. Ackermann blamed the debt crisis on people having “lived beyond their means for years, if not decades,” warning that pensions and health care systems would “compound the problem” in the future.

The Financial Times has referred to Ackermann as a “reluctant power broker” who “has the ear of Angela Merkel, Europe’s most powerful politician.” Ackermann not only became one of the most influential bankers in the world, but a major political figure as well. As he himself explained: “Financial markets now are very political – political considerations have to play an important role.” In 2011, Ackermann warned that in terms of Europe’s crisis, “I don’t see a quick economic recovery, so we will have a longer time of somewhat lower growth – certainly three to five years.”

In October of 2011, Ackermann delivered a speech in which he said that Europe had “now entered a period of deleveraging” which “will inevitably entail a long period of austerity as governments, households and firms raise their savings.” At an economic forum in December of 2011, Josef Ackermann stated that Europe had to get its debt under control, “even at the cost of national sovereignty,” suggesting that neither “the pressure of financial markets” nor austerity measures “threaten democracy.” The real threat to democracy, according to Ackermann, was the “excessive debt” of European states.

In 2011, France and Germany agreed to negotiate directly with the “private sector” in the next planned Greek bailout agreement. The lead negotiator for the banks was the Institute of International Finance, which was brought in to discuss the potential for the banks to take a slight loss on their holdings of Greek debt. Ackermann was to be one of the lead negotiators for the IIF (also representing Deutsche Bank,a major private holder of Greek debt).

The Institute of International Finance under Ackermann’s chairmanship in turn became directly involved in major European summits, providing key input and suggestions that led to the Greek bailout. In July of 2011, the IIF warned the Eurozone countries that they would have to conclude a bailout agreement for Greece in order to avoid financial markets “spinning out of control.” The IIF delivered these warnings in a report delivered directly to European finance ministers, stating: “It is essential that euro area member states and the IMF act in the coming days to avoid market developments spinning out of control and risk contagion accelerating.”

The IIF undertook talks with Greek political leaders as well as EU officials, the European Central Bank and the IMF, with the organization noting that its managing director Charles Dallara and an IFF team “had extensive meetings with very senior European government officials over several weeks.” The three main IFF officials involved in discussions and negotiations were Charles Dallara (managing director from 1993-2013), Ackermann and Baudouin Prot, the Chairman of BNP Paribas.

According to one report, Ackermann even attended a meeting of the European Council during the EU summit to discuss the Greek bailout. Dallara was reported to have engaged in a conference call with top EU officials, including the Eurogroup chair Jean-Claude Juncker and the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Dallara also reportedly met with European Council President Herman van Rompuy, then-French President Nicolas Sarkozy and Angela Merkel.

Discussions continued over the following months with little resolution. In an October meeting, EU officials reportedly hit a wall, at which point they summoned Dallara as the representative of the banks to the meeting in order “to break the deadlock.” Dallara met with Sarkozy and Merkel and other leading EU officials. While a general agreement was reached with the banks, negotiations over the technicalities continued into 2012, taking place between the Greek government, the EU, IMF and the IIF.

Ackermann explained that the banks were being “extremely generous” and then warned that failure to agree on a new program would open“a new Pandora’s box” for the debt crisis. Ackermann spoke at the World Economic Forum where he said that any agreement would have to force Greece to adhere to “harsh new austerity measures,” including cuts to wages and pensions, as well as making “the labor market more flexible.”

The final agreement had the banks holding Greek debt to take a 50% “loss” of their holdings of that debt, which would be done through a “bond swap” where they were to exchange their current junk status Greek debt for long-term Greek government bonds (debt) with a higher rating. In other words, the much-touted “write off,” or “loss,” for banks holding Greek debt amounted to a fancy financial method of kicking the can down the road.

After leaving his position as Chairman and CEO of Deutsche Bank as well as Chairman of the IIF, Ackermann spoke at the Atlantic Council, a U.S. think tank where he stated that elections in Greece were “not necessary” and “a big mistake.” What was necessary, he said, was “to make the funding of the banking system more certain,” and claimed it would require between 1 and 2 trillion euros. The European Stability Mechanism’s (ESM) ability to provide banks with $1 trillion was, according to Ackermann, “sufficient,” but he added, “we have to do more” and “we should maintain the pressure on the countries to do the necessary structural reforms and the necessary financial reforms to reduce the debt burden.” However, he noted, “if it comes to the worst,” in terms of a potential collapse of the Eurozone, “everything will be done to bail the Eurozone out.”

When Ackermann was asked why Germany did not simply come out and say that it would guarantee bank debts in the Eurozone, he explained that “it would be very difficult to get parliamentary approval for such behavior or attitude. People would not support it at all.” Further, if Germany did publicly state that it would guarantee bailouts for banks, many countries in the Eurozone would then ask, “Well, why then go on with our austerity programs? Why go on with our reforms? We have what we need.” Thus, Germany was not saying so publicly, based on what Ackermann called “political tactical consideration,” adding: “I think to keep the pressure up until the last minute is probably… not a bad political solution.”

Ackermann has never lacked as a source for controversy. He has been referred to as “a global banker and political power broker” by one financial analyst, and Simon Johnson, former Chief Economist at the IMF, referred to him as “one of the most dangerous bank managers” in the world whose advice not just to Germany and Greece but also to Belgium and Switzerland “shaped talks to bail out German lenders [banks], reduce Greece’s debt, leverage the euro-area’s rescue fund and influence regulation.” Ackermann himself stated, “Financial markets have become highly political over the past years… Politics and finance will become even more intertwined in the future. Accordingly, bankers have to think and act more politically as well.” One financial analyst stated: “He’s the most influential banker in the euro zone.” A German economics professor noted, “Deutsche Bank and its CEO are the target of all the people who feel our social or economic system is unfair or wrong.”

In 2011, Ackermann was targeted by an Italian anarchist group that claimed responsibility for sending a letter bomb to the Deutsche Bank CEO, though it was intercepted by police. When confronted by Occupy protesters during a speech he gave in November of 2011, Ackermann touted his “environmental” credentials, explaining that the UN Secretary General had referred to him as a “visionary.”

When Ackermann left Deutsche Bank and the IIF, he did not leave the world of financial and political power. He continued holding positions as a member of the Steering Committee of the Bilderberg Group; Vice Chairman of the Foundation Board of the World Economic Forum; and as a member of the Group of Trustees of the Principles for the Institute of International Finance. On top of that, he became a board member of Investor AB, Siemens AG, and Royal Dutch Shell, as well as being appointed Chairman of Zurich Insurance Group. Ackermann also sits on the international advisory boards of the China Banking Regulatory Commission, the National Bank of Kuwait, and Akbank, Turkey’s largest bank, as well as sitting on the boards of a number of other corporate and financial institutions.

When Ackermann left his position as CEO of Deutsche Bank and Chairman of the IIF, he was replaced at the IIF by Douglas Flint, the chairman of HSBC Holdings, who also sits on the board of the IIF. Flint is a member of the Mayor of Beijing’s International Business Leaders’ Advisory Council, a member of the Mayor of Shanghai’s International Business Leaders’ Advisory Council, a member of the International Advisory Board of the China Europe International Business School, a former director of BP (from 2005-2011), a participant in Bilderberg meetings (including for the years 2011-2013), a member of the European Financial Services Round Table (a group of CEOs and chairmen from Europe’s top banks), a member of the Financial Services Forum, a member of the European Banking Group (a group of over ten top European bank leaders formed to directly lobby the EU on “regulation” of the financial industry), and a member of the International Monetary Conference (IMC), an annual conference of private bankers formed to “compliment” the annual IMF meetings.

Whether through the leadership of Josef Ackermann, or now under the chairmanship of Douglas Flint, the IIF has been and will remain a major global player within the debt crisis and future financial crises, representing the organized interests of the financial markets. It’s no surprise, then, that even the Financial Times noted in 2010 that, three years after the financial crisis began, “the markets (and the bankers) still rule.”

Or as former Deputy Treasury Secretary Roger Altman noted, in 2011, that financial markets had become “a global supra-government” that “oust entrenched regimes… force austerity, banking bail-outs and other major policy changes,” whose “influence dwarfs multilateral institutions such as the International Monetary Fund” as “they have become the most powerful force on earth.”

We need look no further than the Institute of International Finance to see just how “the most powerful force on earth” is organized.

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Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.

“Human Beings Have No Right to Water” and other Words of Wisdom from Your Friendly Neighborhood Global Oligarch

“Human Beings Have No Right to Water” and other Words of Wisdom from Your Friendly Neighborhood Global Oligarch

By: Andrew Gavin Marshall

Peter Brabeck, Chairman of Nestlé

Peter Brabeck, Chairman of Nestlé

In the 2005 documentary, We Feed the World, then-CEO of Nestlé, the world’s largest foodstuff corporation, Peter Brabeck-Letmathe, shared some of his own views and ‘wisdom’ about the world and humanity. Brabeck believes that nature is not “good,” that there is nothing to worry about with GMO foods, that profits matter above all else, that people should work more, and that human beings do not have a right to water.

Today, he explained, “people believe that everything that comes from Nature is good,” marking a large change in perception, as previously, “we always learnt that Nature could be pitiless.” Humanity, Brabeck stated, “is now in the position of being able to provide some balance to Nature, but in spite of this we have something approaching a shibboleth that everything that comes from Nature is good.” He then referenced the “organic movement” as an example of this thinking, premising that “organic is best.” But rest assured, he corrected, “organic is not best.” In 15 years of GMO food consumption in the United States, “not one single case of illness has occurred.” In spite of this, he noted, “we’re all so uneasy about it in Europe, that something might happen to us.” This view, according to Brabeck, is “hypocrisy more than anything else.”

Water, Brabeck correctly pointed out, “is of course the most important raw material we have today in the world,” but added: “It’s a question of whether we should privatize the normal water supply for the population. And there are two different opinions on the matter. The one opinion, which I think is extreme, is represented by the NGOs, who bang on about declaring water a public right.” Brabeck elaborated on this “extreme” view: “That means that as a human being you should have a right to water. That’s an extreme solution.” The other view, and thus, the “less extreme” view, he explained, “says that water is a foodstuff like any other, and like any other foodstuff it should have a market value. Personally I believe it’s better to give a foodstuff a value so that we’re all aware that it has its price, and then that one should take specific measures for the part of the population that has no access to this water, and there are many different possibilities there.” The biggest social responsibility of any CEO, Brabeck explained:

is to maintain and ensure the successful and profitable future of his enterprise. For only if we can ensure our continued, long term existence will we be in the position to actively participate in the solution of the problems that exist in the world. We’re in the position of being able to create jobs… If you want to create work, you have to work yourself, not as it was in the past where existing work was distributed. If you remember the main argument for the 35-hour week was that there was a certain amount of work and it would be better if we worked less and distributed the work amongst more people. That has proved quite clearly to be wrong. If you want to create more work you have to work more yourself. And with that we’ve got to create a positive image of the world for people, and I see absolutely no reason why we shouldn’t be positive about the future. We’ve never had it so good, we’ve never had so much money, we’ve never been so healthy, we’ve never lived as long as we do today. We have everything we want and we still go around as if we were in mourning for something.

While watching a promotional video of a Nestlé factory in Japan, Brabeck commented, “You can see how modern these factories are; highly robotized, almost no people.” And of course, for someone claiming to be interested in creating jobs, there appears to be no glaring hypocrisy in praising factories with “almost no people.”

 

 

It’s important to note that this is not simply the personal view of some random corporate executive, but rather, that it reflects an institutional reality of corporations: the primary objective of a corporation – above all else – is to maximize short-term profits for shareholders. By definition, then, workers should work more and be paid less, the environment is only a concern so much as corporations have unhindered access to control and exploit the resources of the environment, and ultimately, it’s ‘good’ to replace workers with automation and robotics so that you don’t have to pay fewer or any workers, and thus, maximize profits. With this institutional – and ideological – structure (which was legally constructed by the state), concern for the environment, for water, for the world and for humanity can only be promoted if it can be used to advance corporate profits, or if it can be used for public relations purposes. Ultimately, it has to be hypocritical. A corporate executive cannot take an earnest concern in promoting the general welfare of the world, the environment, or humanity, because that it not the institutional function of a corporation, and no CEO that did such would be allowed to remain as CEO.

This is why it matters what Peter Brabeck thinks: he represents the type of individual – and the type of thinking – that is a product of and a requirement for running a successful multinational corporation, of the corporate culture itself. To the average person viewing his interview, it might come across as some sort of absurd tirade you’d expect from a Nightline interview with some infamous serial killer, if that killer had been put in charge of a multinational corporation:

People have a ‘right’ to water? What an absurd notion! Next thing you’ll say is that child labour is bad, polluting the environment is bad, or that people have some sort of ‘right’ to… life! Imagine the audacity! All that matters is ‘profits,’ and what a wonderful thing it would be to have less people and more profits! Water isn’t a right, it’s only a necessity, so naturally, it makes sense to privatize it so that large multinational corporations like Nestlé can own the world’s water and ensure that only those who can pay can drink. Problem solved!

Sadly, though intentionally satirical, this is the essential view of Brabeck and others like him. And disturbingly, Brabeck’s influence is not confined to the board of Nestlé. Brabeck became the CEO of Nestlé in 1997, a position he served until 2008, at which time he resigned as CEO but remained as chairman of the board of directors of Nestlé. Apart from Nestlé, Brabeck serves as vice chairman of the board of directors of L’Oréal, the world’s largest cosmetics and ‘beauty’ company; vice chairman of the board of Credit Suisse Group, one of the world’s largest banks; and is a member of the board of directors of Exxon Mobil, one of the world’s largest oil and energy conglomerates.

He was also a former board member of one of the world’s largest pharmaceutical conglomerates, Roche. Brabeck also serves as a member of the Foundation Board for the World Economic Forum (WEF), “the guardian of [the WEF’s] mission, values and brand… responsible for inspiring business and public confidence through an exemplary standard of governance.” Brabeck is also a member of the European Round Table of Industrialists (ERT), a group of European corporate CEOs which directly advise and help steer policy for the European Union and its member countries. He has also attended meetings of the Bilderberg group, an annual forum of 130 corporate, banking, media, political and military elites from Western Europe and North America.

Thus, through his multiple board memberships on some of the largest corporations on earth, as well as his leadership and participation in some of the leading international think tanks, forums and business associations, Brabeck has unhindered access to political and other elites around the world. When he speaks, powerful people listen.

Brabeck’s Brain

Brabeck has become an influential voice on issues of food and water, and not surprisingly so, considering he is chairman of the largest food service corporation on earth. Brabeck’s career goes back to when he was working for Nestlé in Chile in the early 1970s, when the left-leaning democratically-elected president Salvador Allende was “threatening to nationalize milk production, and Nestlé’s Chilean operations along with it.” A 1973 Chilean military coup – with the support of the CIA – put an end to that “threat” by bringing in the military dictatorship of Augusto Pinochet, who murdered thousands of Chileans and established a ‘national security state’, imposing harsh economic measures to promote the interests of elite corporate and financial interests (what later became known as ‘neoliberalism’).

In a 2009 article for Foreign Policy magazine, Brabeck declared: “Water is the new gold, and a few savvy countries and companies are already banking on it.” In a 2010 article for the Guardian, Brabeck wrote that, “[w]hile our collective attention has been focused on depleting supplies of fossil fuels, we have been largely ignoring the simple fact that, unless radical changes are made, we will run out of water first, and soon.” What the world needs, according to Brabeck, is “to set a price that more accurately values our most precious commodity,” and that, [t]he era of water at throwaway prices is coming to an end.” In other words, water should become increasingly expensive, according to Brabeck. Countries, he wrote, should recognize “that not all water use should be regarded as equal.”

In a discussion with the Wall Street Journal in 2011, Brabeck spoke against the use of biofuels – converting food into fuel – and suggested that this was the primary cause of increased food prices (though in reality, food price increases are primarily the result of speculation by major banks like Goldman Sachs and JPMorgan Chase). Brabeck noted the relationship between his business – food – and major geopolitical issues, stating: “What we call today the Arab Spring… really started as a protest against ever-increasing food prices.” One “solution,” he suggested, was to provide a “market” for water as “the best guidance that you can have.” If water was a ‘market’ product, it wouldn’t be wasted on growing food for fuel, but focus on food for consumption – and preferably (in his view), genetically modified foods. After all, he said, “if the market forces are there the investments are going to be made.” Brabeck suggested that the world could “feed nine billion people,” providing them with water and fuel, but only on the condition that “we let the market do its thing.”

Brabeck co-authored a 2011 article for the Wall Street Journal in which he stated that in order to provide “universal access to clean water, there is simply no other choice but to price water at a reasonable rate,” and that roughly 1.8 billion people on earth lack access to clean drinking water “because of poor water management and governance practices, and the lack of political will.” Brabeck’s job then, as chairman of Nestlé, is to help create the “political will” to make water into a modern “market” product.

Now before praising Brabeck for his ‘enlightened’ activism on the issue of water scarcity and providing the world’s poor with access to clean drinking water (which are very real and urgent issues needing attention), Brabeck himself has stressed that his interest in the issue of water has nothing to do with actually addressing these issues in a meaningful way, or for the benefit of the earth and humanity. No, his motivation is much more simple than this.

In a 2010 interview for BigThink, Brabeck noted: “If Nestlé and myself have become very vocal in the area of water, it was not because of any philanthropic idea, it was very simple: by analyzing… what is the single most important factor for the sustainability of Nestlé, water came as [the] number one subject.” This is what led Brabeck and Nestlé into the issue of water “sustainability,” he explained. “I think this is part of a company’s responsibility,” and added: “Now, if I was in a different industry, I would have a different subject, certainly, that I would be focusing on.”

Brabeck was asked if industries should “have a role in finding solutions to environmental issues that affect their business,” to which he replied: “Yes, because it is in the interest of our shareholders… If I want to convince my shareholders that this industry is a long-term sustainable industry, I have to ensure that all aspects that are vital for this company are sustainable… When I see, like in our case, that one of the aspects – which is water, which is needed in order to produce the raw materials for our company – if this is not sustainable, then my enterprise is not sustainable. So therefore I have to do something about it. So shareholder interest and societal interest are common.”

Thus, when Brabeck and Nestlé promote “water sustainability,” what they are really promoting is the sustainability of Nestlé’s access to and control over water resources. How is that best achieved? Well, since Nestlé is a large multinational corporation, the natural solution is to promote ‘market’ control of water, which means privatization and monopolization of the world’s water supply into a few corporate hands.

In a 2011 conversation with the editor of Time Magazine at the Council on Foreign Relations, Brabeck referred to a recent World Economic Forum meeting where the issue of “corporate social responsibility” was the main subject of discussion, when corporate executives “started to talk about [how] we have to give back to society,” Brabeck spoke up and stated: “I don’t feel that we have to give back to society, because we have not been stealing from society.” Brabeck explained to the Council on Foreign Relations that he felt such a concept was the purview of philanthropy, and “this was a problem for the CEO of any public company, because I personally believe that no CEO of a public company should be allowed to make philanthropy… I think anybody who does philanthropy should do it with his own money and not the money of the shareholders.” Engaging in corporate social responsibility, Brabeck explained, “was an additional cost.”

At the 2008 World Economic Forum, a consortium of corporations and international organizations formed the 2030 Water Resources Group, chaired by Peter Brabeck. It was established in order to “shape the agenda” for the discussion of water resources, and to create “new models for collaboration” between public and private enterprises. The governing council of the 2030 WRG is chaired by Brabeck and includes the executive vice president and CEO of the International Finance Corporation (IFC), the investment arm of the World Bank, the administrator of the United Nations Development Programme (UNDP), the chief business officer and managing director of the World Economic Forum, the president of the African Development Bank, the chairman and CEO of The Coca-Cola Company, the president of the Asian Development Bank, the director-general of the World Wildlife Fund (WWF), the president of the Inter-American Development Bank, and the chairman and CEO of PepsiCo, among others.

At the World Water Forum in 2012 – an event largely attended by the global proponents of water privatization, Nestlé among their most enthusiastic supporters – Brabeck suggested that the 2030 Water Resources Group represents a “global public-private initiative” which could help in “providing tools and information on best practice” as well as “guidance and new policy ideas on water resource scarcity.”

Brabeck and Nestlé had been in talks with the Canadian provincial government of Alberta in planning for a potential “water exchange,” to – in the words of Maclean’s magazine – “turn water into money.” In 2012, the University of Alberta bestowed an honorary degree upon Peter Brabeck “for his work as a responsible steward for water around the world.” Protests were organized at the university to oppose the ‘honor,’ with a representative from the public interest group, the Council of Canadians, noting: “I’m afraid that the university is positioning themselves on the side of the commodifiers, the people who want to say that water is not a human right that everyone has the right to, but is just a product that can be bought and sold.” A professor at the university stated: “I’m ashamed at this point, about what the university is doing and I’m also very concerned about the way the president of the university has been demonizing people who oppose this.” As another U of A professor stated: “What Nestlé does is take what clean water there is in which poor people are relying on, bottle it and then sell it to wealthier people at an exorbitant profit.”

The Global Water Privatization Agenda

Water privatization is an extremely vicious operation, where the quality of – and access to – water resources diminishes or even vanishes, while the costs explode. When it comes to the privatization of water, there is no such thing as “competition” in how the word is generally interpreted: there are only a handful of global corporations that undertake massive water privatizations. The two most prominent are the French-based Suez Environment and Veolia Environment, but also include Thames Water, Nestlé, PepsiCo and Coca-Cola, among others. For a world in which food has already been turned into a “market commodity” and has been “financialized,” leading to massive food price increases, hunger riots, and immense profits for a few corporations and banks, the prospect of water privatization is even more disturbing.

The agenda of water privatization is organized at the international level, largely promoted through the World Water Forum and the World Water Council. The World Water Council (WWC) was established in 1996 as a French-based non-profit organization with over 400 members from intergovernmental organizations, government agencies, corporations, corporate-dominated NGOs and environmental organizations, water companies, international organizations and academic institutions.

Every three years, the WWC hosts a World Water Forum, the first of which took place in 1997, and the 6th conference in 2012 was attended by thousands of participants from countries and institutions all over the world get together to decide the future of water, and of course, promote the privatization of this essential resource to human life. The 6th World Water Forum, hosted in Marseilles, France, was primarily sponsored by the French government and the World Water Council, but included a number of other contributors, including: the African Development Bank, African Union Commission, Arab Water Council, Asian Development Bank, the Council of Europe, the European Commission, the European Investment Bank, the European Parliament, the European Water Association, the Food and Agricultural Organization, the Global Environment Facility, Inter-American Development Bank, Nature Conservancy, Organisation for Economic Co-operation and Development (OECD), Organization of American States (OAS), Oxfam, the World Bank, the World Business Council for Sustainable Development, the World Health Organization, the World Wildlife Fund; and a number of corporate sponsors, including: RioTinto Alcan, EDF, Suez Environment, Veolia, and HSBC. Clearly, they have human and environmental interests at heart.

The World Bank is a major promoter of water privatization, as much of its aid to ‘developing’ countries was earmarked for water privatization schemes which inevitably benefit major corporations, in co-operation with the International Monetary Fund (IMF), and the U.S. Treasury. One of the first major water privatization schemed funded by the World Bank was in Argentina, for which the Bank “advised” the government of Argentina in 1991 on the bidding and contracting of the water concession, setting a model for what would be promoted around the world. The World Bank’s investment arm, the International Finance Corporation (IFC), loaned roughly $1 billion to the Argentine government for three water and sewage projects in the country, and even bought a 5% stake in the concession, thus becoming a part owner. When the concession for Buenos Aires was opened up, the French sent representatives from Veolia and Suez, which formed the consortium Aguas Argentinas, and of course, the costs for water services went up. Between 1993, when the contract with the French companies was signed, and 1997, the Aguas Argentinas consortium gained more influence with Argentine President Carlos Menem and his Economy Minister Domingo Cavallo, who would hold meetings with the president of Suez as well as the President of France, Jacques Chirac. By 2002, the water rates (cost of water) in Buenos Aires had increased by 177% since the beginning of the concession.

In the 1990s, the amount of World Bank water privatization projects increased ten-fold, with 31% of World Bank water supply and sanitation projects between 1990 and 2001 including conditions of private-sector involvement, despite the fact that the projects consistently failed in terms of providing cheaper and better water to larger areas. But of course, they were highly profitable for large corporations, so naturally, they continued to be promoted and supported (and subsidized).

One of the most notable examples of water privatization schemes was in Bolivia, the poorest country in South America. In 1998, an IMF loan to Bolivia demanded conditions of “structural reform,” the selling off of “all remaining public enterprises,” including water. In 1999, the World Bank told the Bolivian government to end its subsidies for water services, and that same year, the government leased the Cochabamba Water System to a consortium of multinational corporations, Aguas del Tunari, which included the American corporation Bechtel. After granting the consortium a 40-year lease, the government passed a law which would make residents pay the full cost of water services. In January of 2000, protests in Cochabamba shut down the city for four days, striking and establishing roadblocks, mobilizing against the water price increases which doubled or tripled their water bills. Protests continued in February, met with riot police and tear gas, injuring 175 people.

By April, the protests began to spread to other Bolivian cities and rural communities, and during a “state of siege” (essentially martial law) declared by Bolivian president Hugo Banzer, a 17-year old boy, Victor Hugo Daza, was shot and killed by a Bolivian Army captain, who was trained as the U.S. military academy, the School of the Americas. As riot police continued to meet protesters with tear gas and live ammunition, more people were killed, and dozens more injured. On April 10, the government conceded to the people, ending the contract with the corporate consortium and granting the people to control their water system through a grassroots coalition led by the protest organizers.

Two days later, World Bank President James Wolfensohn stated that the people of Bolivia should pay for their water services. On August 6, 2001, the president of Bolivia resigned, and the Vice President Jorge Quiroga, a former IBM executive, was sworn in as the new president to serve the remainder of the term until August of 2002. Meanwhile, the water consortium, deeply offended at the prospect of people taking control of their own resources, attempted to take legal action against the government of Bolivia for violating the contract. Bechtel was seeking $25 million in compensation for its “losses,” while recording a yearly profit of $14 billion, whereas the national budget of Bolivia was a mere $2.7 billion. The situation ultimately led to a type of social revolution which brought to power the first indigenous Bolivian leader in the country’s history, Evo Morales.

This, of course, has not stopped the World Bank and IMF – and the imperial governments which finance them – from promoting water privatization around the world for the exclusive benefit of a handful of multinational corporations. The World Bank promotes water privatization across Africa in order to “ease the continent’s water crisis,” by making water more expensive and less accessible.

As the communications director of the World Bank in 2003, Paul Mitchell, explained, “Water is crucial to life – we have to get water to poor people,” adding: “There are a lot of myths about privatization.” I would agree. Though the myth that it ‘works’ is what I would propose, but Mitchell instead suggested that, “[p]rivate sector participation is simply to manage the asset to make it function for the people in the country.” Except that it doesn’t. But don’t worry, decreasing water standards, dismantling water distribution, and rapidly increasing the costs of water to the poorest regions on earth is good, according to Mitchell and the World Bank. He told the BBC that what the World Bank is most interested in is the “best way to get water to poor people.” Perhaps he misspoke and meant to say, “the best way to take water from poor people,” because that’s what actually happens.

In 2003, the World Bank funded a water privatization scheme in the country of Tanzania, supported by the British government, and granting the concession to a consortium called City Water, owned by the British company Biwater, which worked with a German engineering firm, Gauff, to provide water to the city of Dar es Salaam and the surrounding region. It was one of the most ambitious water privatization schemes in Africa, with $140 million in World Bank funding, and, wrote John Vidal in the Guardian, it “was intended to be a model for how the world’s poorest communities could be lifted out of poverty.”

The agreement included conditions for the consortium to install new pipelines for water distribution. The British government’s Department for International Development gave a 440,000-pound contract to the British neoliberal think tank, Adam Smith International, “to do public-relations work for the project.” Tanzania’s best-known gospel singer was hired to perform a pop song about the benefits of privatization, mentioning electricity, telephones, the ports, railways, and of course, water. Both the IMF and World Bank made the water scheme a condition for “aid” they gave to the country. Less than one year into the ten-year contract, the private consortium, City Water, stopped paying its monthly fee for leasing the government’s pipes and infrastructure provided by the public water company, Dawasa, while simultaneously insisting that its own fees be raised. An unpublished World Bank report even noted: “The primary assumption on the part of almost all involved, particularly on the donor side, was that it would be very hard, if not impossible, for the private operator [City Water] to perform worse than Dawasa. But that is what happened.” The World Bank as a whole, however, endorsed the program as “highly satisfactory,” and rightly so, because it was doing what it was intended to do: provide profits for private corporations at the expense of poor people.

By 2005, the company had not built any new pipes, it had not spent the meager investments it promised, and the water quality declined. As British government “aid” money was poured into privatization propaganda, a video was produced which included the phrase: “Our old industries are dry like crops and privatization brings the rain.” Actually, privatization attaches a price-tag to rain. Thus, in 2005, the government of Tanzania ended the contract with City Water, and arrested the three company executives, deporting them back to Britain. As is typical, the British company, Biwater, then began to file a lawsuit against the Tanzanian government for breach of contract, wanting to collect $20-25 million. A press release from Biwater at the time wrote: “We have been left with no choice… If a signal goes out that governments are free to expropriate foreign investments with impunity,” investors would flee, and this would, of course, “deal a massive blow to the development goals of Tanzania and other countries in Africa.”

The sixth World Water Forum in Marseilles in 2012 brought together some 19,000 participants, where the French Development Minister Henri de Raincourt proposed a “global water and environment management scheme,” adding: “The French government is not alone in its conviction that a global environment agency is needed more than ever.” A parallel conference was held – the Alternative World Water Forum – which featured critics of water privatization. Gustave Massiah, a representative of the anti-globalization group Attac, stated, “Should a global water fund be in control, giving concessions to multinational companies, then that’s not a solution for us. On the contrary, that would only add to the problems of the current system.”

Another member of Attac, Jacques Cambon, used to be the head of SAFEGE’s Africa branch, a subsidiary of the water conglomerate Suez. Cambon was critical of the idea of a global water fund, warning against centralization, and further explained that the World Bank “has almost always financed large-scale projects that were not in tune with local conditions.” Maria Theresa Lauron, a Philippine activist, shared the story of water privatization in the Philippines, saying, “Since 1997, prices went up by 450 to 800 percent… At the same time, the water quality has gone down. Many people get ill because of bad water; a year ago some 600 people died as a result of bacteria in the water because the private company didn’t do proper water checks.” But then, why would the company do such a thing? It’s not like it’s particularly profitable to be concerned with human welfare.

In Europe, the European Commission had been pushing water privatization as a condition for development funds between 2002 and 2010, specifically in several central and eastern European countries which were dependent upon EU grants. Since the European debt crisis, the European Commission had made water privatization a condition for Greece, Portugal, and Italy. Greece is privatizing its water companies, Portugal is being pressured to sell its national water company, Aguas do Portugal, and in Italy, the European Central Bank (ECB) and the Commission were pushing water privatization, even though a national referendum in July of 2011 saw the people of Italy reject such a scheme by 95%.

In this context, among the global institutions and corporations of power and influence, it is perhaps less surprising to imagine the chairman of Nestlé suggesting that human beings having a “right” to water is rather “extreme.” And for a very simple reason: that’s not profitable for Nestlé, even though it might be good for humanity and the earth. It’s about priorities, and in our world, priorities are set by multinational corporations, banks, and global oligarchs. As Nestlé would have us think, corporate and social interests are not opposed, as corporations – through their ‘enlightened’ self-interest and profit-seeking motives – will almost accidentally make the world a better place. Now, while neoliberal orthodoxy functions on the basis of people simply accepting this premise without investigation (like any religious belief), perhaps it would be worth looking at Nestlé as an example for corporate benefaction for the world and humanity.

Nestlé’s Corporate Social Responsibility: Making the World Safe for Nestlé… and Incidentally Destroying the World

As a major multinational corporation, Nestlé has a proven track record of exploiting labour, destroying the environment, engaging in human rights violations, but of course – and most importantly – it makes big profits. In 2012, Nestlé was taking in major profits from ‘emerging markets’ in Asia, Africa, and Latin America. However, some emerging market profits began to slow down in 2013. This was partly the result of a horsemeat scandal which required companies like Nestlé to intensify the screening of their food products.

Less than a year prior, Nestlé was complaining that “over-regulation” of the food industry was “undermining individual responsibility,” which is another way of saying that responsibility for products and their safety should be passed from the producer to the consumer. In other words, if you’re stupid enough to buy Nestlé products, it’s your fault if you get diabetes or eat horsemeat, and therefore, it’s your responsibility, not the responsibility of Nestlé. Fair enough! We’re stupid enough to accept corporations ruling over us, therefore, what right do we have to complain about all the horrendous crimes and destruction they cause? A cynic could perhaps argue such a point.

One of Nestlé’s most famous PR problems was that of marketing artificial baby milk, which sprung to headlines in the 1970s following the publication of “The Baby Killer,” accusing the company of getting Third World mothers hooked on formula. As research was proving that breastfeeding was healthier, Nestlé marketed its baby formula as a way for women to ‘Westernize’ and join the modern world, handing out pamphlets and promotional samples, with companies hiring “sales girls in nurses’ uniforms (sometimes qualified, sometimes not)” in order to drop by homes and sell formula. Women tried to save money on the formula by diluting it, often times with contaminated water. As the London-based organization War on Want noted: “The results can be seen in the clinics and hospitals, the slums and graveyards of the Third World… Children whose bodies have wasted away until all that is left is a big head on top of the shriveled body of an old man.” An official with the United States Agency for International Development (USAID) blamed baby formula for “a million infant deaths every year through malnutrition and diarrheal diseases.”

Mike Muller, the author of “The Baby Killer” back in 1974, wrote an article for the Guardian in 2013 in which he mentioned that he gave Peter Brabeck a “present” at the World Economic Forum, a signed copy of the report. The report had sparked a global boycott of Nestlé and the company responded with lawsuits.

Nestlé has also been implicated for its support of palm-oil plantations, which have led to increased deforestation and the destruction of orangutan habitats in Indonesia. A Greenpeace publication noted that, “at least 1500 orangutans died in 2006 as a result of deliberate attacks by plantation workers and loss of habitat due to the expansion of oil palm plantations.” A social media campaign was launched against Nestlé for its role in supporting palm oil plantations, deforestation, and the destruction of orangutan habitats and lives. The campaign pressured Nestlé to decrease its “deforestation footprint.”

As Nestlé has been expanding its presence in Africa, it has also aroused more controversy in its operations on the continent. Nestlé purchases one-tenth of the world’s cocoa, most of which comes from the Ivory Coast, where the company has been implicated in the use of child labour. In 2001, U.S. legislation required companies to engage in “self-regulation” which called for “slave free” labeling on all cocoa products. This “self regulation,” however, “failed to deliver” – imagine that! – as one study carried out by Tulane University with funding from the U.S. government revealed that roughly 2 million children were working on cocoa-related activities in both Ghana and the Ivory Coast. Even an internal audit carried out by the company found that Nestlé was guilty of “numerous” violations of child labour laws. Nestlé’s head of operations stated, “The use of child labor in our cocoa supply goes against everything we stand for.” So naturally, they will continue to use child labour.

Peter Brabeck stated that it’s “nearly impossible” to end the practice, and he compared the practice to that of farming in Switzerland: “You go to Switzerland… still today, in the month of September, schools have one week holiday so students can help in the wine harvesting… In those developing countries, this also happens,” he told the Council on Foreign Relations. While acknowledging that this “is basically child labor and slave labor in some African markets,” it is “a challenge which is not very easy to tackle,” noting that there is “a very fine edge” of what is acceptable regarding “child labor in [the] agricultural environment.” He added: “It’s almost natural.” Thus, Brabeck explained, “you have to look at it differently,” and that it was not the job of Nestlé to tell parents that their children can’t work on cocoa plantations/farms, “which is ridiculous,” he suggested: “But what we are saying is we will help you that your child has access for schooling.” So clearly there is no problem with using child slavery, just so long as the children get some schooling… presumably, in their ‘off-hours’ from slavery. Problem solved!

While Brabeck and Nestlé have made a big issue of water scarcity, which again, is an incredibly important issue, their solutions revolve around “pricing” water at a market value, and thus encouraging privatization. Indeed, a global water grab has been a defining feature of the past several years (coupled with a great global land grab), in which investors, countries, banks and corporations have been buying up vast tracts of land (primarily in sub-Saharan Africa) for virtually nothing, pushing off the populations which live off the land, taking all the resources, water, and clearing the land of towns and villages, to convert them into industrial agricultural plantations to develop food and other crops for export, while domestic populations are pushed deeper into poverty, hunger, and are deprived of access to water. Peter Brabeck has referred to the land grabs as really being about water: “For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be seen as the most valuable part of the deal.” This, noted Brabeck, is “the great water grab.”

And of course, Nestlé would know something about water grabs, as it has become very good at implementing them. In past years, the company has been increasingly buying land where it is taking the fresh water resources, bottling them in plastic bottles and selling them to the public at exorbitant prices. In 2008, as Nestlé was planning to build a bottling water plant in McCloud, California, the Attorney General opposed the plan, noting: “It takes massive quantities of oil to produce plastic water bottles and to ship them in diesel trucks across the United States… Nestlé will face swift legal challenge if it does not fully evaluate the environmental impact of diverting millions of gallons of spring water from the McCloud River into billions of plastic water bottles.” Nestlé already operated roughly 50 springs across the country, and was acquiring more, such as a plan to draw roughly 65 million gallons of water from a spring in Colorado, despite fierce opposition to the deal.

Years of opposition to the plans of Nestlé in McCloud finally resulted in the company giving up on its efforts there. However, the company quickly moved on to finding new locations to take water and make a profit while destroying the environment (just an added bonus, of course). The corporation controls one-third of the U.S. market in bottled water, selling it as 70 different brand names, including Perrier, Arrowhead, Deer Park and Poland Spring. The two other large bottled water companies are Coca-Cola and PepsiCo, though Nestlé had earned a reputation “in targeting rural communities for spring water, a move that has earned it fierce opposition across the U.S. from towns worried about losing their precious water resources.” And water grabs by Nestlé as well as opposition continue to engulf towns and states and cities across the country, with one more recent case in Oregon.

Nestlé has aroused controversy for its relations with labour, exploiting farmers, pollution, and human rights violations, among many other things. Nestlé has been implicated in the kidnapping and murder of a union activist and employee of the company’s subsidiary in Colombia, with a judge demanding the prosecutor to “investigate leading managers of Nestle-Cicolac to clarify their likely involvement and/or planning of the murder of union leader Luciano Enrique Romero Molina.” In 2012, a Colombian trade union and a human rights group filed charges against Nestlé for negligence over the murder of their former employee Romero.

More recently, Nestlé has been found liable over spying on NGOs, with the company hiring a private security company to infiltrate an anti-globalization group, and while a judge ordered the company to pay compensation, a Nestlé spokesperson stated that, “incitement to infiltration is against Nestlé’s corporate business principles.” Just like child slavery, presumably. But not to worry, the spokesman said, “we will take appropriate action.”

Peter Brabeck, who it should be noted, also sits on the boards of Exxon, L’Oréal, and the banking giant Credit Suisse, warned in 2009 that the global economic crisis would be “very deep” and that, “this crisis will go on for a long period.” On top of that, the food crisis would be “getting worse” over time, hitting poor people the hardest. However, propping up the financial sector through massive bailouts was, in his view, “absolutely essential.” But not to worry, as banks are bailed out by governments, who hand the bill to the population, which pays for the crisis through reduced standards of living and exploitation (which we call “austerity” and “structural reform” measures), Nestlé has been able to adapt to a new market of impoverished people, selling cheaper products to more people who now have less money. And better yet, it’s been making massive profits. And remember, according to Brabeck, isn’t that all that really matters?

This is the world according to corporations. Unfortunately, while it creates enormous wealth, it is also leading to the inevitable extinction of our species, and possibly all life on earth. But that’s not a concern of corporations, so it doesn’t concern those who run corporations, who make the important decisions, and pressure and purchase our politicians.

I wonder… what would the world be like if people were able to make decisions?

There’s only one way to know.

Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project, Research Director of Occupy.com’s Global Power Project, and has a weekly podcast show with BoilingFrogsPost.

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Austerity, Adjustment, and Social Genocide: Political Language and the European Debt Crisis

Austerity, Adjustment, and Social Genocide: Political Language and the European Debt Crisis

By: Andrew Gavin Marshall

Angela Merkel, Jose Manuel Barroso, and Mario Monti: Europe’s champions of austerity and adjustment

 

The following is a sample analysis from my upcoming book on the global economic crisis and global resistance movements. Please consider donating to The People’s Book Project to help support the effort to finish this book.

Political language… is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

– George Orwell, “Politics and the English Language,” 1946

Political language functions through euphemism, by employing soft-sounding or simply meaningless words to describe otherwise monstrous and vicious policies and objectives. In the European debt crisis, political language employed by politicians, economists, technocrats and bankers is designed to make policies which create poverty and exploitation appear to be logical and reasonable. The language employed includes the words and phrases: fiscal austerity/consolidation, structural adjustment/reform, labour flexibility, competitiveness, and growth. To understand political language, one must translate it. This requires four steps: first, you look at the rhetoric itself as inherently meaningless; second, you examine the policies that are taken; third, you look at the effects of the policies. Finally, if the effects do not match the rhetoric, yet the same policies are pursued time and time again, one must translate the effects as the true meaning of the rhetoric. Thus, the rhetoric has meaning, but not at face value.

The debt crisis followed the 2007-2009 financial crisis, erupting first with Greece, then Ireland, Portugal, Italy and Spain, and threatens even to spread elsewhere. Of those mentioned, only Italy has not received a bailout. Though whether “bailed out” or not, Europe’s people are being forced to undergo “austerity measures,” a political-economic euphemism for cutting social spending, welfare, social services, public sector jobs, and increased taxes. The aim, they are told, is to get their “fiscal house in order.” The people protest, and go out into the streets. The state responds by meeting the people with riot police, batons, tear gas, pepper spray, and rubber bullets. This is called “restoring order.”

The effects of austerity are to increase poverty, unemployment, and misery. People are fired from the public sector, welfare and social benefits are reduced or lost, retirement ages are increased to keep people in the work force and off the pension system, which is also cut. Cuts to health care and education take a social and physical toll; as poverty increases the need for better health care, that very system is dismantled when it is needed most. Taxes are increased, and wages are decreased. People are deeper in debt, and destined for destitution. The objective, we are told, is to reduce public spending so that the government can reduce its deficit (the yearly debt).

In Europe, austerity has been the siren call of all the agencies, organizations, and individuals who represent the interests of elite financial control. In March 2010, the OECD (Organisation for Economic Co-operation and Development) suggested Europe undertake a program of austerity lasting for no less than six years from 2011 to 2017, which the Financial Times referred to as “highly sensible.” In April of 2010, the Bank for International Settlements (BIS) – the central bank to the world’s central banks – called for European nations to begin implementing austerity measures. In June of 2010, the G20 finance ministers agreed: it was time to enter the age of austerity! German Chancellor Angela Merkel, the European midwife of austerity, set an example for the EU by imposing austerity measures at home in Germany. The G20 leaders met and agreed that the time for stimulus had come to an end, and the time for austerity poverty was at hand. This was of course endorsed by the unelected technocratic president of the European Commission, José Manuel Barroso. The unelected president of the European Council, Herman Van Rompuy, also agreed, explaining in his unrelenting economic wisdom that austerity “has no real effect on economic growth.” Jean-Claude Trichet, president of the European Central Bank (ECB), also hopped on the austerity train, writing in the Financial Times that, “now is the time to restore fiscal sustainability.” Jaime Caruana, General Manager of the Bank for International Settlements (BIS) stated in June of 2011 that the need for austerity was “more urgent” than ever, while BIS chairman, Christian Noyer, also the governor of the Bank of France (and board member of the ECB), stated that apart from austerity, “there’s no solution possible” for Greece.

In April of 2011, the two president of the EU – Barroso and Van Rompuy – felt it was necessary to clarify (just in case people were getting the wrong idea), that: “Some people fear this work is about dismantling the welfare states and social protection… Not at all … It is to save these fundamental aspects of the European model… We want to make sure that our economies are competitive enough to create jobs and to sustain the welfare of all our citizens and that’s what our work is about.” However, the following year, the new European Central Bank president, Mario Draghi (former governor of the Bank of Italy), stated in an interview with the Wall Street Journal that, “there was no alternative to fiscal consolidation,” meaning austerity, and that Europe’s social contract was “obsolete” and the social model was “already gone.” However, Draghi explained, it was now necessary to promote “growth,” adding, “and that’s why structural reforms are so important.”

Thus, “austerity packages” will then prepare the state and economy for the next phase, which, we are told, would make the country “competitive” and create “growth.” This is how the country would pay off its total debt, which deficits merely add to. This process is called “structural adjustment” (or “structural reform”) and it requires “competitiveness” to facilitate “growth.”

As we can loosely translate “austerity” into poverty, we may translate “structural adjustment” into exploitation. After all, nothing goes better with poverty than exploitation! How does “structural adjustment” become exploitation? Well through competitiveness and growth, of course! Structural adjustment means that the state liberalizes the economy, so everything is deregulated, all state-owned assets are privatized, like roads, hospitals, airports, rivers, water systems, minerals, resources, state-owned companies, services, etc. This, as the story goes, will encourage “investment” in the country when it “needs it most.” This idea suggests that foreign banks and corporations will enter the “market” and purchase all these wonderful things, explaining that they work better when they are “competitive” in the “free market,” and then with their new investments, they will create new industries, employ local people, revive the economy, and with the “trickle down” from the most productive and profitable, all of society will rise in living standards and opportunity.

But first, other “structural adjustment” measures must be simultaneously employed. One of the most important ones is called “labour flexibility.” This means that if you have protected wages, hours, benefits, pensions… well, now you don’t! If you are a member of a union, or engage in collective bargaining (which has at its disposal the threat of a strike), soon you won’t. This is done because, as the story goes, wages must be decreased to increase the competitiveness of the labour force. Simply put, if less money goes into labour during the process of production, what is ultimately being produced will be cheaper on “the market,” and thus, will become more attractive to potential buyers. Thus, with lower wages comes greater profits. ECB president Mario Draghi himself emphasized that the “structural reforms” which Europe needs are, “the product and services market reform,” and then “the labour market reform which takes different shapes in different countries.” He added that the point was “to make labour markets more flexible and also fairer than they are today.” Isn’t that nice? He wants to make labour markets “fairer.” What this means is that, since some countries have protections for various workers, this is unfair to the workers who have no protections, because, as Draghi explained, “in these countries there is a dual labour market: highly flexible for the young part of the population… [and] highly inflexible for the protected part of the population.” Thus, “labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.” So to make the labour markets “fair,” everyone should be equally exploitable, and thus, equally flexible.

Labour flexibility will then help “specialize” your country in producing one or a few select goods, which you can produce better, cheaper, and more of than anywhere else. Then your economy will have success and the lives of all will prosper and grow… just not their wages. That is left to the “trickle down” from those whose wages are increased, the corporate, banking, and government executives and managers. That is because they take all the risk (remember, you are not risking anything when you passively accept your wages and standards of living to be rapidly decreased), and thus, they should get all of the reward. And because their rewards are so huge, large scraps will fall off of their table and onto the floor, which the wage-slaves below can fight over. By the laws of what I can only assume is “magic,” this will eventually lift the downtrodden from a life of poverty and labour and all will enjoy the fruits of being in a modern, technological, democratic-Capitalist paradise! Or so the fable goes.

The actual, predictable, and proven results of “structural adjustment” aimed at achieving “growth” through “competitiveness” is exploitation. The privatization of the economy allows foreign banks and corporations to come in and buy the entire economy, resources, commodities, infrastructure and wealth. Because the country is always in crisis when it does this, everything is sold very cheaply, pennies on the dollar kind of cheap. That is because the corporations and banks are doing the government and people a favour by investing in a country which is a large risk. The money the state gets from these sales is recorded as “revenue,” and helps reduce the yearly debt (deficit). The result for the people, however, is that mass layoffs take place, commodity prices increase, service costs increase, and thus, poverty increases. But privatization has benefits, remember; it encourages “competitiveness.” If everything was privatized, everyone would compete with each other to produce the best goods for the lowest costs, and everyone can subsequently prosper together in a society of abundance.

What actually takes place is that multinational corporations and banks, which already own most of the world’s resources, now own yours, too. This is not competitive, because they are ultimately all cartels, and collude together in exploiting vast resources and goods from around the world. They do compete in the sense of seeing which one can exploit, produce, and control more than the other. But at the bottom of this system, everyone else gets poorer. This is called “competitiveness,” but what it actually means is control. So if the economy needs to become more competitive, what is really being said is that it needs to come under more control, and of course, in private corporate and financial hands.

State owned industries are simply closed down, employees fired, and the product or resource which that industry was responsible for producing is then imported from another country/corporation. A corporation takes over that domestic good/resource and then extracts/produces it for itself. But this requires labour. It’s a good thing that the labour force has had its back broken through austerity and adjustment, because now there are no protected jobs, wages, hours, unions, or workers’ rights in general. Thus, the population is free to be exploited for long hours and minimal wages. This makes what they are producing to be cheaper, and thus, more “competitive.” This can become extremely profitable for corporations and banks which took all the risk in this entire process (remember: you don’t count; you had very little to begin with, so you lost very little. They have a lot, and thus, a lot more to lose. That’s what risk means). If workers attempt to form unions or organize and demand higher wages, the corporation can simply threaten to close down the plant, and move the jobs to somewhere else with a more “flexible” labour force. Or, the corporation could simply hire local immigrant populations (or ship in others) and pay them less for more hours, and leave you without any jobs. This is called “labour flexibility.” Labour flexibility translates as cheap labour: to bring everyone down to an equally low level of worker standards, and thus, to encourage “utilization,” which means exploitation.

In the ‘Third World,’ this has been best achieved through what are called “Export Processing Zones (EPZs),” a term used to describe a designated area outside of state control in which corporations may establish factories to freely exploit labour as they choose. Commodities are shipped in, goods are produced in the EPZs, from where they are then exported abroad, free of pesky national taxation and regulation. Ultimately, EPZs are mini corporate colonies. In late May of 2012, it was reported that Germany was looking for “alternatives” to its exclusive focus on austerity, and subsequently came up with a six-point plan for “growth.” One of the most notable points from Berlin was to establish “special economic zones to be created in crisis-plagued countries at the periphery of the euro zone,” as “foreign investors could be attracted to those zones through tax incentives and looser regulations.” Essentially, they are EPZs for the eurozone. The plan also calls for establishing trusts which would organize the sell-off of state assets in massive privatization schemes. Further, what is needed, according to Berlin, was to establish a “dual education system, which combines a standardized practical education at a vocational school with an apprenticeship in the same field at a company in order to combat high youth unemployment.” In other words, no more academic or intellectual education for youth, but rather “vocational” or labour-oriented education, to not allow the expectations of the youth to rise too far, and to simply prepare them for a life of ‘work’ by attaining the necessary vocational skills. And of course, the plan for “growth” from Germany also includes more efforts at establishing “labour flexibility,” which would include “a loosening of provisions that make it difficult to fire permanent employees and to create employment relationships with lower tax burdens and social security contributions.” In other words: make it easy to fire workers, have lower wages, and eliminate benefits.

Economists and politicians often talk about the need to “utilize labour flexibility to increase competitiveness and achieve growth.” What they are really saying is that they need to exploit cheap labour to increase control and achieve profits and power. Lucas Papademos was installed (unelected) as the “Technocratic” prime minister of Greece in November of 2011, in order to “help” Greece undertake the mandatory “reforms.” Papademos was the perfect candidate for the job: he was an economist educated in the U.S., served on the board of the Federal Reserve Bank of Boston, was chief economist at the Bank of Greece, he became Governor of the bank in 1994, where he oversaw the conversion of Greece into the euro, and in 2002, he joined the European Central Bank board, where he became a Vice President under Jean-Claude Trichet.

In a 2005 interview with the Financial Times while he was Vice President at the European Central Bank (ECB), Lucas Papademos said that European “growth” potential was looking good, but added: “There is a risk that, unless there are changes in policies – more reforms in labour and product markets – as well as in the behaviour of private economic agents, this [growth] range may have to be revised downwards.” He explained: “the main way that potential growth could increase is through policies that boost productivity growth and raise labour utilization by increasing the average hours worked and the participation rate in the labour market and by making this market more flexible and adaptable.” In May of 2010, Bank of England governor Mervyn King stated that the eurozone needed “structural reforms, changes in wages and prices in the countries that need to regain competitiveness.” Former ECB president Jean-Claude Trichet had also emphasized that what was needed was a program of fiscal austerity, “accompanied by structural reforms to promote long-term growth.” In other words, what was needed was impoverishment, accompanied by exploitation to promote long-term profits.

The European Financial Stability Facility (EFSF), the Euro-area bailout fund, was headed by a man named Klaus Regling. In an article he wrote for The Banker, Regling emphasized that funds from the EFSF would come with conditions, including of course, austerity measures, but also, “structural reforms, such as modernizing public administrations, improving labour market performance and enhancing the tax systems, with the aim of increasing a country’s competitiveness and growth potential.” In other words, the conditions imposed on countries receiving a bailout would amount to an impoverishment program (“austerity”), combined with increased exploitation (“structural reforms”), through privatization of state industries and assets (“modernizing public administration”), creating a cheap labour force (“improving labour market performance”), extracting all remaining domestic wealth (“enhancing the tax systems”), designed to increase control (“competitiveness”) and profits (“growth”).

Mario Draghi, as president of the ECB, called for a “growth pact” (or a “profit pact”) for Europe, to go alongside the “fiscal pact” (or “poverty pact”). This received quick endorsements from France’s new president Francois Hollande, Angela Merkel, and José Manuel Barroso. Merkel was sure to emphasize, however, that growth would be “in the form of structural reforms.

The combination of “fiscal austerity” and “structural adjustment” are generally referred to as a “comprehensive structural adjustment program” or a “restructuring of the economy.” This language is important to understand because “restructuring” as a word is used to describe two processes: one, is that it is what is needed to prevent a country from defaulting on its debt and to return the country to a period of growth; and, on the other hand, “restructuring” is used to describe what takes place after a country defaults. The words in both situations are the same, and so are the policies, though in a default they are inflicted more severely. The very process we are told we must undergo to prevent a default, is the very same process that we undergo after a default. Thus, the combination of fiscal austerity and structural adjustment is, in actuality, a slow and painful default.

This combination of austerity and adjustment amounts to a program and effect of social devastation. Thus, the words “structural adjustment program,” “restructuring,” and “default” in actuality translate into social genocide. These three terms provide further insight into their use: the class system is what is being restructured, as middle classes are wiped out and pushed into poverty, the poor are made destitute, and the elite become concentrated and in total control; the political and economic system is being adjusted to fit this restructuring; and the promise that people everywhere were told, that their leaders and society exists to serve their interests, is what is being defaulted on. The state does not default; it is the ‘social contract’ that is defaulted. Just as Mario Draghi told the Wall Street Journal, “the European social model has already gone… Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms.” Thus, social genocide.

As George Orwell wrote in his 1946 essay, “political language has to consist largely of euphemism,
question-begging and sheer cloudy vagueness.” But there remains intent and meaning behind the words that are used. When we translate the political language of the European debt crisis, it reveals a monstrous agenda of impoverishment and exploitation. Thus, we also see the necessity of political language for those who use it: one cannot argue openly for programs of impoverishment and exploitation for obvious reasons, so words like “fiscal consolidation” and “structural reform” are used, because they are vague and obscure.

Ultimately, one can get away with saying, “we need a comprehensive austerity package augmented by structural reforms, such as labour flexibility, designed to increase competitiveness and facilitate growth,” as opposed to: “We need to rapidly impoverish our populations, whom we will then exploit to the fullest, such as by creating a cheap labour force, which would increase elite control and generate private profits.” Such honesty and bluntness would lead to revolt, so, political language is used instead. In Europe, political language is part of a ‘power dialectic’ which supports policies and agendas that aim to take more for those who already have the most, and to take from all the rest; to impoverish, exploit and oppress; to plunder, profit and punish.

Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.

Please donate to The People’s Book Project to help this book be finished by the end of summer:

Italy in Crisis: The Decline of the Roman Democracy and Rise of the ‘Super Mario’ Technocracy

Italy in Crisis: The Decline of the Roman Democracy and Rise of the ‘Super Mario’ Technocracy

Part 1 of “Italy in Crisis”, a series of excerpts from a chapter in an upcoming book.

By: Andrew Gavin Marshall

The “Super-Marios”: Mario Draghi (left), President of the European Central Bank, and Mario Monti (right), the Technocratic Prime Minister of Italy. [photo credit: Silvia Azzari / Milestone Media / ZUMAPRESS.com]

The European debt crisis continues into its third year, with four government bailouts – of Greece, Ireland, Portugal, and Spain – and having imposed harsh austerity measures upon the people of Europe, forcing them to pay – through reduced standards of living and increased poverty – for the excesses of their political and financial rulers. Italy, as Europe’s third largest economy, with one of the largest debt-to-GDP ratios, plays a central role in the unfolding debt crisis across Europe. Part 1 of this excerpt from a chapter on the economic crisis in my upcoming book covers the “suspension” of democracy in Italy and the imposition of a ‘Technocracy’ – an unelected government led by academics and bankers – with a mandate to punish the people, facilitate the financial elite, and serve the interests of the supranational, unelected, technocratic European Union. Power centralized, power globalizes, power plunders and profits on the punishment and impoverishment of people everywhere. This is the story of Italy’s debt crisis.

This is an unedited, rough draft excerpt from my upcoming book – the Preface to the People’s Book Project – which is due to be finished by the end of the summer, and covers the following subjects: the origins, evolution, and consequences of the global economic crisis; the expansion and effects of global imperialism and war; the elite-driven social engineering project of establishing an institutional structure of ‘global governance’; and the rising resistance of people around the world to this system, as well as the attempts of the imperial powers to co-opt, control, or destroy these socio-political movements – the embodiment of the ‘Global Political Awakening’ – from the Arab Spring, to the anti-austerity movements across Europe, the Indignados in Spain, the Occupy Movement, the Chilean Winter and the Maple Spring in Quebec, among others. This project needs your support: I am attempting to raise $2,500 in donations to support the efforts to finish this book by the end of the summer, with $530 raised so far, and $1,970 left to go. Please donate today!

Bilderberg, Berlusconi, and Italian Austerity

The Italian Finance Minister, Giulio Tremonti had attended the Bilderberg meeting in early June of 2011, alongside other notable Italian participants, including Franco Bernabe, CEO of Telecom Italia (and Vice Chairman of Rothschild Europe); John Elkann, the Chairman of Fiat; Mario Monti, the president of Bocconi university and a former EU Commissioner; and Paolo Scaroni, the CEO of Eni, an oil and gas company and Italy’s largest industrial corporation. The Bilderberg meeting for 2011 took place from June 9-12 in Switzerland, and of course was attended by a host of other major European elites, including: Josef Ackermann, Chairman and CEO of Deutsche Bank; Marcus Agius, Chairman of Barclays Bank; the Swedish Ministers for Foreign Affairs and Trade; Luc Coene, the Governor of the National Bank of Belgium; Frans van Daele, Chief of Staff to the President of the European Council; Werner Faymann, the Federal Chancellor of Austria; Douglas J. Flint, Group Chairman of HSBC Holdings; Neelie Kroes, Vice President of the European Commission; Bernardino Leon Gross, Secretary General of the Spanish Presidency; George Papaconstantinou, the Greek Minister of Finance; Herman Van Rompuy, President of the European Council; and Jean-Claude Trichet, President of the European Central Bank, among many others.[1]

In July of 2011, Silvio Berlusconi’s government announced a package of austerity measures hoping to calm markets, seeking to reduce the deficit by 40 billion euros. The package, largely designed by finance minister Giulio Tremonti, only attempted to address Italy’s debt, but markets were also concerned about the country’s “ultra-low-growth,” which has been consistent since Berlusconi returned to office in 2001. Once the austerity measures would be signed into law, several opposition politicians were suggesting the formation of a cross-party “technical government” without Berlusconi in office.[2] The Finance Minister Tremonti announced a wave of privatizations. Apparently, the privatizations and various liberalizations were urged into the austerity package by the main opposition party, the Democratic Party (PD), not Berlusconi’s Freedom People Party. The central bank governor of Italy, Mario Draghi, who was poised to become the next President of the European Central Bank (ECB) following the end of the term of Jean-Claude Trichet, warned the Italian government that “it would have to raise taxes or make further spending cuts” if it wanted to calm markets.[3] By July 14, the Italian Senate approved an increased austerity package worth 70 billion euros (or $99 billion), “aimed at convincing investors that the eurozone’s third-largest economy won’t be swept into the debt crisis.” Italy’s bonds (government debt) saw its borrowing rates (interest) hit record highs as investors were not calmed by the proposed austerity measures.[4]

Even as the austerity measures were being passed, market confidence was still lacking, which was largely credited to the fact that a rift emerged between Berlusconi and his Finance Minister Tremonti, who as a Bilderberg attendee, no doubt has the confidence of markets. Berlusconi reportedly viewed Tremonti as a “rival” and has “repeatedly attacked [Tremonti] as a traitor in newspapers owned by the Berlusconi family.”[5] After Tremonti, who was facing his own corruption charges, was caught on camera calling a colleague a “cretin,” Berlusconi told an Italian newspaper, “You know, he thinks he’s a genius and that everyone else is stupid… I put up with him because I’ve known him for a long time and one has to accept the way he is. But he’s the only one who is not a team player.” It was opined, then, that markets reacted to this rift between the Prime Minister and the Finance Minister, as articulated by an official at F&C Investments, who stated that markets view Tremonti as the “steady counterweight to the unpredictable and capricious” Berlusconi.[6]

In July of 2011, Nichi Vendola, a popular leftist opposition political figure in Italy, wrote an article for the Guardian, in which he critiqued the austerity measures imposed by the Berlusconi government. Vendola wrote that, “Italy will not survive this crisis by listening to the very people who got us into it, especially not when they demand that the middle class and poor foot the bill for their failures.” Vendola also put blame on the European managing of the crisis, as “governments now have an obsessive fixation on employing tighter control of budget deficits to satisfy the European stability pact.” Vendola referred to Tremonti’s austerity package as a “social catastrophe,” and that instead, he suggested, what Italy must do “is turn this policy on its head,” noting that, “Italy’s problem is as much about growth as it is debt.” To do this, Vendola wrote, it “will require a new government,” and that, “Italy needs elections, because only a completely new governing class can achieve the political consensus to design and implement a plan to tackle the crisis.” He suggested that the European stability pact would need to be re-negotiated, and concluded: “It does us little good to please the out-of-touch elite of our capitals while the people have to tighten their belts and our youth are robbed of their future.”[7]

Mario Monti, President of Bocconi University and a former European Commissioner, also agreed that Italy needed a new government, though for different reasons (and a different type of government). He wrote an article in a major Italian paper in August of 2011 in which he advocated – as a solution to Italy’s problems – the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.”[8] Vendola wanted a new government to help the people, and Monti wanted a new government to help “Europe” (read: banks and elites). Guess who became the next leader of Italy!?

Berlusconi Bows Down to the Bankers and Punishes the People

In August, Silvio Berlusconi had to approve a new austerity package, the second in less than a month. In a letter which was leaked to the Italian press, it was revealed that Jean-Claude Trichet, the President of the European Central Bank, and Mario Draghi, the President of the Italian Central bank (from 2006 to 2011, who was set to secede Trichet at the ECB in October of 2011), put pressure on Berlusconi to “implement significant austerity measures.” The letter, written by the two central bankers, demanded “pressing action… to restore the confidence of investors.” Dated August 5, 2011, it was issued just days before the ECB announced its new programme to buy Italian bonds (debt), designed to reduce the country’s borrowing costs (interest on future debt). One of the measures mentioned in the letter instructed Berlusconi to take “immediate and bold measures to ensuring the sustainability of public finances,” to achieve a balanced budget in 2013. This was adopted in the subsequent austerity package put forward by Berlusconi in August. The letter also stated that, “it is possible to intervene further in the pension system, making more stringent the eligibility criteria for seniority pensions and rapidly aligning the retirement age of women in the private sector to that established for public employees.” Further, the “borrowing, including commercial debt and expenditures of regional and local governments should be placed under tight control, in line with the principles of the ongoing reform of intergovernmental fiscal relations.”[9]

In economic-speak, the letter asked for privatizations of public services: “Key challenges are to increase competition, particularly in services to improve the quality of public services and to design regulatory and fiscal systems better suited to support firms’ competitiveness and efficiency of the labour market.” This would require three key actions, the first of which was that, “a comprehensive, far-reaching and credible reform strategy, including the full liberalization of local public services and of professional services is needed,” and that, “this should apply particularly to the provision of local services through large-scale privatizations.” The second major step was “a need to further reform the collective wage bargaining system [meaning: undermine unions] allowing firm-level agreements to tailor wages and working conditions to firms’ specific needs and increasing their relevance with respect to other layers of negotiations.” In other words, destroy the unions so that companies can exploit labour to whatever degree they choose. And thirdly, according to Trichet and Draghi, what was needed was a “thorough review of the rules regulating the hiring and dismissal of employees [which] should be adopted in conjunction with the establishment of an unemployment insurance system and a set of active labour market policies capable of easing the reallocation of resources towards the more competitive firms and sectors.”[10]

In other words, labour rights and laws and the rights of workers need to be dismantled so that companies can do as they please. It’s not simply the unions that need to be destroyed, but the laws for worker security in general. Of course, no advice from central bankers would be complete if it didn’t advocate that the government “immediately take measures to ensure a major overhaul of the public administration in order to improve administrative efficiency and business friendliness.” Trichet and Draghi wrote that it was “crucial” that the government take these actions “as soon as possible with decree-laws, followed by parliamentary ratification,” or, in other words: skip the democratic process because it takes too long, rule by decree, something Italy has a “proud” history of. All of this was demanded to be done before the end of September 2011. In an interview with an Italian paper, Trichet admitted that this was not the first time the ECB had sent such letters to governments (such as Greece), saying, “We have sent messages and we do that on a permanent basis, through various means, addressed to individual governments. We do not make them public.”[11]

Indeed, the European Central Bank had demanded austerity measures be implemented by the governments of Greece, Ireland, Portugal, and Italy, and when Berlusconi submitted to the mandate from the central bankers, he complained that it made his administration look like “an occupied government.” A leading liberal MP in Italy, Antonio Di Pietro, said that, “Italy is under the tutelage of the EU, and a country under tutelage is not a free and democratic one.” An Irish MEP (Member of the European Parliament), Paul Murphy, stated that there had been a “massive shift away from democratic accountability since the start of the crisis,” and that: “There needs to be a check on the enormous power of the ECB, which is unelected, and has basically held a government to ransom.” Europe’s largest trade union federation, the European Public Sector Union, “accused the ECB of directing Italian fiscal and labour policy in secret,” which is, of course, true. The Deputy General Secretary of the federation, Jan Willem Goudriaan, said, “Europe cannot be governed through secret letters of bankers, officials or an unaccountable body.” EU officials, from Angela Merkel, Nicolas Sarkozy, to Herman Van Rompuy and Jean-Claude Trichet, have been increasing their calls for an “economic government” of Europe, tightening and deepening fiscal integration and proposing the creation of new council’s and organizations to impose sanctions on countries and “police the austerity measures of governments,” and even the creation of a European finance ministry. Paul Murphy stated that, “All these proposals, discussions about economic government, are about undermining democracy in order to impose a European shock doctrine… EU elites need to remove points of pressure that can be mounted on governments. If the mass of people are opposed to austerity, they can mount pressure on governments to hold that in check. So the only way it can then be imposed s undemocratically.” The head of a Belgian pro-transparency group stated that, “European powers [are] distancing themselves from voters while at the same time [there is] a growing tendency towards building closer relationships with corporate and specifically financial lobbies… These two trends are explosive and can only lead to a loss of legitimacy for the EU institutions.”[12]

Shortly after, on August 12, the Berlusconi government was meeting to approve the new austerity package to meet the ultimatum from the ECB, amounting to a package of “fiscal adjustments” (i.e., spending cuts) of 20 billion euros in 2012 and 25 billion euros in 2013, with the spending cuts and tax increases to be “enacted immediately by decree, but subject to approval by parliament later,” just as Draghi and Trichet instructed. The rapid tax increases did much to damage even long-time supporters of Berlusconi who had promised that he would “never put their hands in the pockets of the Italian people.” Fiscal federalism was the policy of giving the various regions in Italy more control over their finances. With the new austerity package, the governor of Lombardy, Roberto Formigoni, stated, “It seems clear [fiscal] federalism has vanished.”[13]

In mid-September, Berlusconi won final parliamentary approval for the 54 billion euro ($74 billion) austerity package, while police outside the parliament in Rome had to disperse protesters with tear gas. The German Economy Minister Phillip Roesler told a news briefing in Rome that, “The approval of the austerity package sends a signal of stability… I have respect for what Italy has done with its budget adjustment as this will benefit the whole euro area.” The legislation simply made legal the measures that Berlusconi’s government enacted through un-democratic decree the month before, and were formalized in exchange for the European Central Bank bond purchases which helped to reduce Italy’s borrowing costs. Silvio Peruzzo, an economist at the Royal Bank of Scotland, stated that the plan’s passage is a “very welcome step,” but that the slowing global economy still cast doubts on whether Italy could “meet its fiscal targets and will also render additional corrective measures [austerity packages] very likely.” Even with the endorsement and backing of the ECB, said Peruzzo, Italy’s debt remained “under pressure, which is indicative of a well-rooted lack of confidence in Italy and in the European policies to tackle the crisis.” One the plan was approved, said Italian Finance Minister Tremonti on September 10, “If there are things to change in our growth measures we will, and if there are things to add, we will.”[14]

The Economist reported on the new austerity package, noting that while Berlusconi had approved the austerity package in Italy, designed to cut roughly 45.5 billion euros from the deficit by the end of 2013, he almost immediately back-peddled on 7 billion euros worth of spending cuts and tax increases, “notably a tax on high earners that would have hurt his natural supporters,” meaning, rich people. Thus, even as the package went to the Senate in early September, Berlusconi was fine-tuning the details. Thus, noted the Economist, “the markets [were] again registering alarm,” and at the same time, Italy’s largest and most militant trade union federation, the CGIL, called for a one-day strike in opposition to the austerity package, “protesting over a clause making it easier to dismiss workers and, more generally, over a budget that the CGIL’s leader, Susanna Camusso,” referred to as “unjust because it attacks the weakest.” This further worried “the market” and “investors.” The Economist wrote that: “Mr. Berlusconi had consistently failed to react unless bullied. His first emergency budget in July followed a telephone call from the German chancellor, Angela Merkel,” while the second was of course at the prompting of the ECB.[15]

By October of 2011, the austerity measures in Italy had been wreaking havoc, as non-profit organizations lose their funding and had major bureaucratic obstacles put in their way for community projects, such as the Associazione Obiettivo Napoli, which ran two programs working with children in difficulty in Naples since 1998, helping them clean up local communities and provide counseling. As central government funding to town halls had been cut, organizations like Obiettivo Napoli, “which sit uneasily somewhere between education, welfare and rehabilitation budgets, have been the first to suffer.” Pietro Varriale, who works with the organization, commented on further obstacles put in their way: “They’re saying we need a second degree in education science to be able to do this work… It’s crazy. I have 15 years experience in this field, most of the team likewise, and we all have first degrees. A second degree is going to cost people a fortune, really a lot of money, and there’s no help or grant for that kind of thing. We’ve been given till 2013 to conform.” To add to that, the city of Naples simply stopped paying the bills for the organization, which had to then borrow money from a bank, forcing the employees such as Pietro to have to take on jobs working at bars, waiting tables, picking tomatoes and other piecemeal projects while they continue to work with the association being unpaid: “You keep going because of the kids, the relationships you build up.”[16]

Giancarlo Di Maio, a 23-year old university graduate in Naples working at a secondhand bookshop told the Guardian that, “University here is like a car park. You stay there as long as you can, because there’ll be nothing to do when you come out,” referring to the lack of jobs for youth. As he was employed, he explained: “Every morning, I wake up with a smile… How fortunate am I? Because otherwise, the only other work around here is black. The black economy is a huge, monumental issue for Italy.” His friends might make 30 euros for 10 hours working in a bar, or 20 euros for a night waiting tables in a restaurant. Di Maio, who works at a bookshop owned by his father, said that, “I know plenty of people in their 30s, even some in their 40s, still living with their parents… That’s not normal. For me, that’s one of the biggest problem [sic] in Italy – opportunities, any kind of prospects for young people.” When asked about Italian politics, he replied, “We have the worst political class in Europe, no question… Twenty years of Berlusconi, and not a single reform, nothing for the unemployed, nothing to address the economic crisis. Instead we talk about his sex life… we have a political class who do nothing. They don’t have solutions, and even if they did they wouldn’t try to do anything. They just speak air, it’s all they can do. Posturing.” Expressing some hope at the Occupy movement, though lamenting how it turned to violence in Italy, he explained that people were “finally starting to get angry. They are beginning to see that really, we can’t carry on like this. Italy really is sick. We can’t pretend to be the doctor any more; we need curing ourselves.”[17]

The Technocratic Coup

By early October 2011, it was clear that the “markets” were not satisfied with Berlusconi’s efforts at implementing a program of social genocide (fiscal austerity) which was to their liking. Thus, on October 5, the international ratings agency Moody’s cut Italy’s credit rating for the first time in two decades, adding to the downgrading from Standard & Poor’s two weeks prior. The Italian government responded that the actions of the ratings agencies were “politically motivated.” Even Moody’s acknowledged that the political situation within Italy played a part in its decision, including Berlusconi’s sex scandals, and the growing protests against the austerity measures.[18]

The effect of the downgrades is to make Italian bonds (government debt) less attractive to buy (as it is a riskier investment), and thus, Italy would have to pay higher interest rates. As a result of that, as we have seen with Greece, this makes the country’s overall debt larger (as it amounts to borrowing money to pay back borrowed money), except with the higher yields (interest rates), the future payments will be even more costly, likely to create potential for a bailout (again, just taking more debt to pay interest on older debts). All the while, the overall debt to GDP ratio increases, and austerity measures become the “conditions” for receiving bailouts, and the country is essentially taken over by the IMF, the ECB, and the EC (named the “Troika”), as occurred in Greece. This creates a permanent spiral of expanded debt, economic crisis, and social genocide. This is what is often called “market discipline.”

In mid-October, opposition to Berlusconi’s harsh austerity measures from within Italy was increasing, just as “market pressure” and EU-opposition from outside Italy was building against Berlusconi for his austerity measures being perceived as ‘too little, too late.’ Nine members of Berlusconi’s own coalition said the austerity package “unfairly targets the middle class and fails to tackle Italy’s massive tax evasion problem.” Susanna Camusso, the head of Italy’s largest and most militant labour federation, CGIL, said that a strike is the only way to “change the inequity of this package.”[19] During a global “day of rage” partly inspired by the Occupy Wall Street movement in the United States and the Indignados movement in Spain, October 15 saw various Occupy and other protests erupt around the world, in 950 cities in 80 different countries. In Italy, Rome saw roughly 200,000 protesters come out into the streets, protesting against the austerity measures, the government, the EU, the ECB and the IMF. The protests erupted into violence as hundreds of those assembled began fighting with riot police, who were using tear gas and water cannons against the protesters, and several hundred erupted in urban rebellion (what is often called “riots”) in which banks were destroyed, they set cars and garbage bins on fire, hurled rocks, bottles, and fireworks at the police who continually charged the crowd. Roughly two dozen demonstrators were injured, with one reported to be put in critical condition, and at least 30 riot police were injured.[20]

As Berlusconi’s own government began to fracture in the face of the austerity package, disagreeing on what and how and if to cut, one of Berlusconi’s main coalition partners, the center-right Northern League, hinted that new elections were a possibility. Considering the popularity of the anti-austerity leftist leader Nichi Vendola, this was perhaps too much to bear. European leaders Angela Merkel and Nicolas Sarkozy lost their patience, and in late October, demanded that Berlusconi move forward with the austerity package. In a series of EU summits in late October on handling the economic crisis, discussing specifically the plan to boost the funds of the European Financial Stability Facility (EFSF), there was concern, reported Der Spiegel, “that the current size of the (recently expanded) fund isn’t sufficient should additional countries, particularly Spain and Italy, be infected with debt contagion.”[21]

Following these meetings, it was made “abundantly clear” to the Italians that their “leadership is no longer taken seriously.” Italian papers and TV shows were overwhelmed with covering the “condescending smile” of Angela Merkel to Berlusconi, and comments made by Sarkozy. Merkel and Sarkozy and other EU leaders told Berlusconi in the talks that he had to present a plan within three days “for reducing Italian debt more quickly than current plans call for.” European Council President Herman Van Rompuy said that Berlusconi had “promised to do so.” The following evening, Berlusconi stated, “No one is in a position to be giving lessons to their partners.” European leaders were frustrated that even the austerity package passed earlier in the summer had not been fully implemented, and the government’s stability was continually threatened over debating each new measure. The European Commissioner for Economic and Monetary Affairs, Olli Rhen, said that all the details of the new plan were “unclear.” With the EU summits proposing increasing the EFSF bailout fund from 440 billion euros to 1 trillion, a central feature to the demands of the EU leaders was that countries like Italy impose more stringent austerity measures. As Der Spiegel reported, “A clear Italian commitment to austerity is a key component of that plan.” There was then a good deal of conjecture over the possible departure of Berlusconi. The Italian paper Corriere della Serra reported that Angela Merkel called the Italian President Giorgio Napolitano the previous week “to discuss concerns about Italy’s political leadership.”[22]

In fact, Angela Merkel did make such a phone call to Italy’s president Napolitano in October, violating “an unwritten rule” for Europe’s leaders “not to intervene in one another’s domestic politics.” But this is a new, changing EU, one in which democracy – even the withering façade Western governments maintain – simply no longer matters. Merkel was “gently prodding Italy to change its prime minister, if the incumbent – Silvio Berlusconi – couldn’t change Italy.” The Wall Street Journal reported on the events that led to this incident, explaining that at the annual meeting of the IMF in September, China, Brazil, and the U.S. “berated” Europe for its small bailout fund, and told Europe to borrow “hundreds of billions of euros from the ECB,” something Merkel had long been against, and which was refused by Jens Weidmann of the German central bank, explaining that the bailout fund “was an arm of the governments… and lending to governments was against the ECB’s charter.” On October 19, Sarkozy left his wife who was in labor at a clinic in Paris to fly to Frankfurt to confront Jean-Claude Trichet at a party being held for the President of the ECB to honour him as he prepared to leave the ECB at the end of the month (to be replaced by the president of the Central Bank of Italy, Mario Draghi). Sarkozy argued that the ECB needed to intervene in the bond markets (buying government debt), stating that, “Everything else is too small.” Trichet said that it wasn’t “the ECB’s job to finance governments.”[23]

The ECB had engaged already in certain bond purchases, which “had caused a political backlash in Germany,” and as Trichet said, “I did a bit, and I was massively criticized in Germany.” Merkel, who was present during the shouting match between Trichet and Sarkozy, was frustrated at Sarkozy’s pressure on Trichet, as she had always opposed the ECB printing money to handle the crisis, telling Trichet, “You’re a friend of Germany.” It was the following day, on October 20, that Merkel made her “confidential” phone call to the Italian President in Rome, “the man with authority to name a new prime minister if the incumbent were to lose parliament’s support.” President Napolitano informed Merkel that it was “not reassuring” that Berlusconi had only “recently survived a parliamentary vote of confidence by just one vote.” Merkel then thanked Napolitano for doing what was “within your powers” in promoting reform. Within days, Napolitano began “sounding out Italy’s political parties to test the support for a new government if Mr. Berlusconi couldn’t satisfy Europe and the markets.”[24] It no doubt did not help Berlusconi when he wrote in an Italian paper in late October that the word austerity “isn’t in my vocabulary.”[25]

In early November, at a G20 meeting in Cannes, President Obama and other leaders were “effectively ordering Silvio Berlusconi to accept surveillance of Italy’s austerity measures by the International Monetary Fund,” reported the Guardian. Berlusconi was advised by Merkel, Sarkozy, Herman Van Rompuy and other EU leaders the previous week to come to the G20 with “a specific austerity package,” but due to divisions within his cabinet, Berlusconi “arrived empty-handed.” It was reported that Berlusconi would likely not survive a vote of confidence in the Italian parliament set for the following week. The ECB had been purchasing Italian bonds since August in order to push the yields lower, which dropped to below 5%, but by early November they had been driven up to 6.5%, “levels that make it difficult to pay back debt.” Italian President Napolitano had been holding meetings with party leaders to discuss the possibility of “constructing an interim government if Berlusconi’s collapses.” The G20, which was discussing the possibility of adding $300 billion to the IMF’s bailout fund of $950 billion, and G20 leaders pressured Italy “to sign up to a more specific austerity package or else the US and other countries would not put extra funds into the IMF.”[26]

Just prior to heading to the G20 meeting, Berlusconi had attempted to issue a decree which would pass various austerity measures, “thus bypassing the parliament,” but, reported the EUobserver, he “was held back by [President] Giorgio Napolitano,” as well as the Finance Minister Giulio Tremonti. Instead, Berlusconi was pressured to attempt an amendment to a “law for stability” to be approved the following week, at which time he would likely face a vote of confidence. Enrico Letta, the deputy general secretary of the center-left Democratic Party (PD), the main opposition party, said that, “We think that next week will be a week in parliament where we try to force the situation if Berlusconi does not resign before.”[27]

As Jean-Claude Trichet retired from the ECB at the end of October, and Mario Draghi left the Bank of Italy to take up his new job as President of the ECB, the newly-appointed governor of the Bank of Italy, Ignazio Vasco, said that Italy “needed to take urgent action to boost confidence in the economy and initiate structural reforms,” insisting that the commitments already given to the EU in a “letter of intent” in late October (following Berlusconi being castigated by Merkel and Sarkozy), “must be honoured quickly and consistently.”[28] At the G20 conference, Berlusconi agreed under pressure to have the IMF oversee Italy’s implementation of austerity measures, following late-night talks with G20 leaders. Jose Manuel Barroso, President of the European Commission (EC), said that, “Italy had decided on its own initiative to ask the IMF to monitor. I see this as evidence of how important Italy’s commitment to reform is.” The EC would also monitor Italy’s progress, and was set to visit Italy the following week to undertake a more detailed study. One EU source told the Telegraph that, “We need to make sure there is credibility with Italy’s targets – that it is going to meet them. We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that.” The chief financial officer of Commerzbank, Eric Strutz, said that, “The whole stability of Europe depends on whether Italy gets its act together.”[29]

On November 8, Berlusconi suffered a party revolt in parliament which failed to deliver him a majority, and would likely lead to a vote of non-confidence a few days later. Upon this defeat, Berlusconi announced that he would resign as Prime Minister “as soon as parliament passed urgent budget reforms demanded by European leaders.” President Napolitano announced that he would begin consultations on the formation of a new government, and stated that he would prefer a “technocrat or national unity government.” At the same time, the “markets” had pushed Italy’s bond yields (debt interest) to nearly 7%, figures that saw Greece, Ireland, and Portugal getting bailouts. The leader of the main opposition Democratic Party (PD), Pier Luigi Bersani, said, “I ask you, Mr. Prime Minister, with all my strength, to finally take account of the situation… and resign.” Berlusconi and some of his close allies, however, warned that appointing a technocratic government, the option which was said to be favoured by “markets,” would amount to an “undemocratic coup.”[30] Naturally, that’s just what happened.

Writing for the Guardian, John Hooper suggested that one of four scenarios would take place upon the event of Berlusconi’s resignation: one envisions Berlusconi leaving but the right gaining a broader majority, specifically under Umberto Bossi’s Northern League, who was in Berlusconi’s coalition but had advised him to resign, and was pushing for him to be replaced with the next in command in Berlusconi’s party, Angelino Alfano; another scenario envisioned a “grand coalition,” or a “government of national emergency or salvation,” bringing together all the parties; a third scenario had Italy calling an election, urged by both Berlusconi and Bossi; or the fourth option, “a cabinet of technocrats,” which Hooper wrote was “favoured by the markets and the Italian centre left,” which would consist of “a government filled with specialists who could pass the unpalatable legislation needed to revive Italy’s flagging economy without having to worry about re-election.” This happened before in Italy, when Berlusconi’s government fell in 1994, at which time he was replaced by Lamberto Dini, a central banker, who headed a government of “professors, generals and judges.” In this scenario, suggested Hooper, the likely prime minister would be Mario Monti.[31]

Upon Berlusconi’s failure to achieve a minority during the budget vote on November 8, many officials from the financial community began making their observations, such as Jan Randolph, the head of sovereign risk analysis at HIS Global Insight, who said that, “Berlusconi has effectively lost political capital to carry the country through a period of austerity and structural reform,” and that, “Berlusconi will have to resign.” He went on to suggest that it was possible “that a broad National Unity government headed by a respected technocrat like ex-EU commissioner Mario Monti could be formed.”[32]

As Berlusconi officially resigned on the night of November 12, 2011, he left the president’s palace through a side door as a crowd of over 1,000 people outside yelled, “buffoon,” “Mafioso,” and for him to “face trial.” A poll from early November reported that 71% of Italians favoured his resignation, and upon hearing of his official resignation, the crowd erupted in roars of “Halleluja.”[33]

On November 16 of 2011, Mario Monti was appointed as Prime Minister of Italy. Monti accepted the mandate to form a new government, and was expected to appoint technical experts as opposed to politicians to his cabinet. President Napolitano told Italian politicians that, “it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work.” Berlusconi’s political party, the People of Liberty, said it would accept a Monti government for a short while before elections would have to be scheduled, and Berlusconi referred to his resignation as “an act of generosity.”[34]

Mario Monti is an economist and academic who served as European Commissioner for the Internal Market, Services, Customs and Taxation from 1995 to 1999, and European Commissioner for Competition from 1999 to 2004. Monti is founder and Honorary President of Bruegel, a European think tank he launched in 2005, based in Belgium, and which represents the interests of key European elites. Monti has also been a member of the advisory board of the Coca-Cola Company, and was an international advisor to Goldman Sachs, was a former member of the Steering Committee of the Bilderberg Group, having previously attended the meeting in Switzerland in June of 2011, and was European Chairman of the Trilateral Commission until he resigned when he became Prime Minister of Italy.

Monti’s think tank, Bruegel, represents key elite European interests. The Chairman of the Board of Bruegel is Jean-Claude Trichet, the former President of the European Central Bank (ECB) from 2003 to 2011, who is also a member of the board of directors of the Bank for International Settlements (BIS), and has joined the boards of a number of major corporations, including EADS. Other board members of Bruegel include: Jose Manuel Campa Fernandez, who was the Spanish Secretary of State for Economic Affairs at the Ministry of Economy and Finance from 2009 to 2011, and has been a consultant for the European Commission, the Bank of Spain, the Bank for International Settlements (BIS), the Federal Reserve Bank of New York, the Inter-American Development Bank, the International Monetary Fund and the World Bank; Anna Ekström, the president of the Swedish Confederation of Professional Associations, Saco, and formerly the Swedish State Secretary for the Ministry of Industry, Employment and Communication; Jan Fisher, Vice President of the European Bank for Reconstruction and Development (EBRD), former Prime Minister of the Czech Republic; Vittorio Grilli, the Deputy Minister of the Ministry of Economy and Finance of Italy (whom Monti appointed to his technocratic government in November of 2011), and a former Managing Director at Credit Suisse First Boston; Wolfgang Kopf, Vice President at Deutsche Telekom AG; Rainer Münz, head of Research and Development at Erste Group and Senior Fellow at the Hamburg Institute of International Economics (HWWI), former consultant to the European Commission, the OECD, and the World Bank; Jim O’Neill, Chairman of Goldman Sachs Asset Management; Lars-Hendrik Röller, the Director General of the Economic and Financial Policy Division of the German Federal Chancellery, and is President of the German Economic Association; Dariusz Rosati, former consultant economist at Citibank, former Minister of Foreign Affairs for Poland, former adviser to the President of the European Commission, and was a member of the European Parliament from 2004 to 2009; and Helen Wallace, a British academic expert on European integration.

In October of 2009, Mario Monti was asked by the President of the European Commission Manuel Barroso to draw up a report on how the EU should re-launch its single market. Barroso advised that the report, “should address the growing tide of economic nationalism and outline measures to complete the EU’s currently patchy single market.” Mario Monti was President of the Bocconi University at the time he was asked to write the report.[35] In May of 2010, Monti produced the report and officially handed it in to European Commission President Barroso. The report recommended ways to fight the potential of economic nationalism and to preserve and protect the regional bloc and to advance the process of integration, with Monti arguing that, “There is now a window of opportunity to bring back the political focus of the single market.”[36] The report eventually became the EU’s Single Market Act of 2011.[37]

After becoming the technocratic and unelected Prime Minister of Italy, Monti quickly appointed his new cabinet, of which more than a third of the 17-member cabinet consisted of professors and other technocrats. The cabinet position of Minister of Economic Development, Infrastructure and Transport was given to Corrado Passera, the chief executive of Italy’s largest bank, Intesa Sanpaolo. Passera told the Financial Times upon his appointment as “superminister” that, “If you want to build the wide consensus that is needed, we have to share sacrifices and benefits among all the segments of society with a balanced set of actions and with the right mix of austerity and development programmes.” British hedge fund manager Davide Serra stated, “Monti and Passera are the right guys for the job. They are the dream team.”[38] Upon appointing his new technocratic government, Monti declared: “We feel sure of what we have done and we have received many signals of encouragement from our European partners and the international world. All this will, I trust, translate into a calming of that part of the market difficulty which concerns our country.” On the lack of party representatives in his cabinet, Monti commented, “The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement.”[39]

A former ambassador who worked with Monti when he was an EU Commissioner recalled Mario’s style of governance, stating, “He didn’t have a very Italian way of going about things… His nickname in those days was ‘The Italian Prussian’.” An article in Reuters described Monti as “a convinced free marketeer with close connections to the European and global policy making elite, Monti has always backed a more closely integrated euro zone,” and went on to mention his leadership positions within the Bilderberg Group of “business leaders” and “leading citizens” and the Trilateral Commission, which “brings together the power elites of the United States, Europe and Japan.” Monti’s government would be given roughly 18 months to push through “reforms” and austerity measures, as another election would not be due until 2013. However, as one outgoing minister commented in November of 2011, “The decisions which Monti will take must pass in parliament and I think that with such a heterogeneous majority he will have many problems. I believe this solution will lead to many problems.”[40]

Monti of course received abundant praise from Europe’s leaders on becoming the new unelected technocratic Prime Minister of Italy. An article by Tony Barber in the Financial Times explained that Italian party politics was simply too problematic, as: “Even a centre-left government with a mandate from the voters would find it hard to maintain the unity and resolution required to implement the unpopular austerity measures and structural economic reforms demanded by Germany, France, the European Commission, the European Central Bank and the International Monetary Fund.” And with the prospect of labour resistance from workers and pensioners, “it is easy to see why Europe’s leaders were eager for Mr Monti to inherit the premiership.” Thus, wrote Barber, “technocracy has an irresistible appeal.”[41] Mario Monti  himself had acknowledged that “irresistible appeal” in August of 2011, when he wrote an article in a major Italian paper advocating the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.”[42] And as it turned out, a great help to Monti.

In early December of 2011, after forming his cabinet and being approved by Italy’s lower chamber of Parliament with a rare majority, Mario Monti received the endorsement of Angela Merkel and Nicolas Sarkozy, declaring their “absolute trust” in Monti and in “his structural changes” to his governing of Italy. Monti, upon assuming power, warned Italians in a speech that, “It is not going to be easy, sacrifice will be required.” As Monti’s “technocratic government” is full of appointments from the ruling class, including bankers and other executives, many in Italy were raising concerns that this suggested an inherent conflict of interest in his government, as those who helped create the crisis are brought in to solve it, a highly political government, despite all the claims of an apolitical ‘technocracy’ (technocracies are always political entities, but instead of pushing party ideologies, they push ultra-elite ideologies in the management and maintenance of society). Monti replied that, “There is no conflict of interests… The fact that many of us have played a role in the institutions before doesn’t mean that we will not be totally transparent.” And with that note, Monti appointed Carlo Malinconic as undersecretary for publishing affairs, after having previously served as president of the Italian Federation of Publishing and Newspapers.[43]

Writing in the journal of the Council on Foreign Relations, Foreign Affairs, Jonathan Hopkin, a professor of comparative politics at the London School of Economics, commented that the replacement of Berlusconi with Monti “marks a new stage in the European financial crisis,” in which “the crisis now seems to be wiping out democratically elected governments.” Largely under pressure from bond markets, “Italian politicians have opted to hand power to technocrats, expecting that they will somehow enjoy greater legitimacy as they impose painful measures on an angry population.” Hopkin stated: “This will not work.”[44]

In early November, as democratically-elected governments in Greece and Italy were replaced with unelected and unaccountable technocratic governments, essentially run by and for the European Union and global banks, Tony Barber, writing in the Financial Times, suggested that this is but one of several responses to the economic crisis. Specifically, this response “involves the surgical removal of elected leaders in Greece and Italy and their replacement with technocratic experts, trusted within the EU to pass economic reforms deemed appropriate by policymakers in Berlin, the bloc’s top paymaster, and at EU headquarters in Brussels.” Barber referred to the “sidelining of elected politicians in the continent that exported democracy to the world” as a “momentous development.” In short, “eurozone policymakers have decided to suspend politics as normal in two countries because they judge it to be a mortal threat to Europe’s monetary union.” Thus, these policymakers “have ruled that European unity, a project more than 50 years in the making, is of such overriding importance that politicians accountable to the people must give way to unelected experts who can keep the show on the road.” In Greece, the government was put under the technocratic leadership of Lucas Papademos, a former vice president of the European Central Bank, and upon accepting his appointment, stated: “I am confident that the country’s participation in the eurozone is a guarantee of monetary stability.” In Italy, Mario Monti came to power, a technocrat who “is revered in Brussels as one of the most effective commissioners for competition and the internal market that the EU has known.” One prominent Italian banker commented: “We need a strong national unity government for one to one and a half years to do what the politicians haven’t had the courage to do.”[45]

Running the ECB can be such a ‘Draghi’

In late October of 2011, at a gala event to mark the end of Jean-Claude Trichet’s eight years as president of the European Central Bank, Mario Draghi, the governor of the Bank of Italy, who was selected to take over for Trichet at the start of November, was “working the room” of high-powered European elites, including Angeal Merkel, and IMF Managing Director Christine Lagarde. Between 1984 and 1990, Draghi was the Italian Executive Director at the World Bank, and in 1991, he became the director general of the Italian Treasury until 2001. Between 2002 and 2005, Draghi was the Vice Chairman and Managing Director of Goldman Sachs International, thereafter becoming the governor of the Bank of Italy from 2006 until 2011, also putting him on the Governing Board of the European Central Bank and the Bank for International Settlements (BIS). Draghi is not simply one of the individuals who has been most responsible for handling and managing the economic crisis, but he also played an important role in causing it. As Vice Chairman of Goldman Sachs, and in Italy at the Treasury and the central bank, “Draghi was a proponent of nations and other institutions like pension funds using derivatives to more efficiently manage their liabilities.” This means that Draghi advised that governments should essentially hide their debts in the derivatives market, where they would not be viewed as liabilities, but rather, transactions. These “transactions” were very popular in Greece and Italy, and had a great deal to do with accumulating and hiding the massive debts of these countries.[46]

When Draghi led the Italian Treasury in the 1990s, he “oversaw one of the largest European privatization efforts ever and paved the way for Italy’s entry into the euro,” earning him the nickname, “Super Mario.” Italy liberalized its financial markets, allowing for massive speculation, derivatives, and other banking excesses, and he privatized roughly 15% of Italy’s economy. While Italian governments came and went during this period, Draghi always remained. While both Draghi and Goldman Sachs said that “Super Mario” did not have anything to do with the especially controversial Greece-Goldman Sachs transactions, one Goldman Sachs executive in Europe, “who was not authorized to speak publicly,” told the New York Times that, “Mr. Draghi had discussed similar initiatives with other European governments.” When asked about his involvement at Goldman Sachs, Draghi once replied, “I was not in charge of selling stuff to the governments… In fact, I worked in the private sector even though Goldman Sachs expected me to work in the public sector when I was hired.” However, in a paper which Draghi wrote in 2002 just a couple months after being hired by Goldman Sachs, at which his job description was “to win investment banking business from European governments,” Draghi argued in favour of governments using derivatives “to stabilize tax revenue and avoid the sudden accumulation of debt,” which the New York Times politely described as “faithful to the spirit” of the Goldman-Greece deal.[47]

In an interview with the Financial Times in December of 2011, European Central Bank president Mario Draghi reflected upon the financial crisis and the actions taken to manage it. He explained that the ECB’s long-term refinancing operation (a half-trillion euro bank bailout) was not designed to give banks an incentive to buy government bonds from the “periphery” nations, but rather, that, “the objective is to ease the funding pressures that banks are experiencing,” and that the banks “will then decide what the best use of these funds is.” Draghi stated that, “we don’t know exactly” what banks were doing with the money, but that, “the important thing was to relax the funding pressures.” Draghi reiterated that the banks “will decide in total independence what they want to do.”[48]

It’s interesting to note that when governments get bailouts, they are told what and how to spend the money, and are forced to impose austerity measures that destroy the social fabric and punish the populations of their countries, and then, of course, have to pay back the money at exorbitant interest rates; but when banks get a half-trillion euro bailout, the banks will “decide what the best use” of the money is, and where it goes is not important, it’s only important to “relax” the pressure on the banks, who will repay the debt over a long-term period (3 years) with extremely low interest (averaging 1%). So people get pressure, and banks get pressure “relaxed.”

Draghi told the Financial Times that what is needed most is to “restore confidence,” and for this, there are four answers. The first one “lies with national economic policies, because this crisis and this loss of confidence started from budgets that had got completely out of control.” The second answer, explained Draghi, “is that we have to restore fiscal discipline to the euro area,” which means to impose austerity, “and this is in a sense what last week’s EU summit started [in mid-December 2011], with the redesign of the fiscal compact.” The third answer “is to have a firewall in place which is fully equipped and operational,” meaning a massive bailout fund, which “was meant to be provided by the EFSF.” The fourth answer, according to Draghi, is for countries “to undergo significant structural reforms that would revamp growth,” implying things like liberalization, privatization, and further deregulaiton. When Draghi was asked about the critics of the fiscal compact who suggest that it amounts to a “stagnation and austerity union,” Draghi replied that, “they are right and wrong at the same time.” Draghi repeated the mantra of pro-austerity voices, who always suggest with no historical evidence to support, that there is “no trade-off between fiscal austerity, and growth and competitiveness.” However, Draghi contended, “I would not dispute that fiscal consolidation [austerity] leads to a contraction in the short run.” The correspondent with the Financial Times asked: “But these austerity programmes are very harsh. Don’t [you] think that some countries are really in effect in a debtor’s prison?” Draghi replied: “Do you see any alternative?”[49]

In an interview with the Wall Street Journal in February, Mario Draghi warned European countries “that there is no escape from tough austerity measures and that the continent’s traditional social contract is obsolete.” Draghi said that Europe’s social model was “already gone,” and that the only way to return to “long-term prosperity” was “continuing economic shocks [that] would force countries into structural changes in labor markets and other aspects of the economy.” As European people were suffering through the increased austerity measures, Draghi warned that, “Backtracking on fiscal targets would elicit an immediate reaction by the market.” This of course implies that the market has the ‘right’ to determine the fate of Europe’s people. For Draghi, “austerity, coupled with structural change, is the only option for economic renewal.” The European Commission, headed by Jose Manuel Barroso, agreed with Draghi, stating that despite forecasting a deepened recession brought on by austerity measures, governments “should be ready to meet budgetary targets.” Simon Johnson, the former chief economist of the IMF, said that Draghi was “just sugarcoating the message.” Johnson explained: “A lot of this structural reform talk is illusory at best in the short run… but it’s a better story than saying you’re going to have a terrible 10 years.”[50]

In the interview, Draghi commented on the “positive changes” which had been taking place in the previous few months: “There is greater stability in financial markets. Many government shave taken decisions on both fiscal consolidation and structural reforms. We have a fiscal compact where the European governments are starting to release national sovereignty for the common intent of being together.” When Draghi was asked what his view was “of these austerity policies in the larger strategy right now, forcing austerity at all costs,” Draghi replied: “There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term.” Then, he added, it was necessary to promote growth, “and that’s why structural reforms are so important.” The interviewer asked Draghi what the “most important structural reforms” were for Europe at that time. Draghi replied:

In Europe first is the product and services market reform. And the second is the labour market reform which takes different shapes in different countries. In some of them one has to make labour markets more flexible and also fairer than they are today [in other words: more easily exploited]. In these countries there is a dual labour market: highly flexible for the young part of the population where labour contracts are three-month, six-month contracts that may be renewed for years. The same market is highly inflexible for the protected part of the popuation where salaries follows seniority rather than productivity. In a sense labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.[51]

When central bankers and politicians and others talk about “labour flexibility,” what they really mean is “worker insecurity.” This was bluntly stated by Alan Greenspan back when he was Governor of the Board of the Federal Reserve System, when in testimony before the US Senate in 1997, he discussed how America’s “favorable” economy was constructed. Greenspan discussed how wage increases for workers did not keep pace with inflation, which was, he explained, “mainly the consequence of greater worker insecurity.” He elaborated: “the willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented.” Greenspan credited the creation of “worker insecurity” with technological changes, corporate restructuring and downsizing, as well as “domestic deregulation.”[52] The New York Times reported on this, stating that Greenspan described “job insecurity” as “a powerful recent force in the American economy,” and that Greenspan, “clearly elevated this insecurity to major status in central bank policy.” How does worker insecurity influence central bank policy? The article explained: “Workers have been too worried about keeping their jobs to push for higher wages… and this has been sufficient to hold down inflation without the added restraint of higher interest rates.” However, Greenspan warned that even though job insecurity continues to rise, once “workers become accustomed to their new level of uncertainty, their confidence may revive and the upward pressure on wages resume.”[53]

In his interview with the Wall Street Journal, Mario Draghi was asked if “Europe will become less of the social model that has defined it,” to which Draghi replied: “The European social model has already gone.” Draghi, repeating the mantra of so many in power, stated that, “there is no feasible trade-off between” austerity and growth: “Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms. Backtracking on fiscal targets would elicit an immediate reaction by the market.” In terms of “progress” – as Draghi defines it – throughout the crisis, he praised the fiscal compact treaty as “a major political achievement because it’s the first step towards a fiscal union. It’s a treaty whereby countries release national sovereignty in order to accept common fiscal rules that are especially binding, and accept monitoring and accept to have these rules in their primary legislation so they are not easy to change. So that’s a beginning.”[54]

In further testimony in 2000, Alan Greenspan again addressed the issue of “worker insecurity,” which he stipulated was the “consequence of rapid economic and technological change,” which in turn created a “fear of potential job skill obsolescence.” Greenspan stated that, “more workers currently report they are fearful of losing their jobs than similar surveys found in 1991 at the bottom of the last recession,” and that, “greater workers insecurities are creating political pressures to reduce fierce global competition that has emerged in the wake of our 1990s technology boom.” While Greenspan admitted that “protectionist policies” would “temporarily reduce some worker anxieties,” he felt this was a bad idea, as “over the longer run such actions would slow innovation and impede the rise in living standards.” Greenspan elaborated:

Protectionism might enable a worker in a declining industry to hold onto his job longer. But would it not be better for that worker to seek a new career in a more viable industry at age 35 than hang on until age 50, when job opportunities would be far scarcer and when the lifetime benefits of additional education and training would be necessarily smaller?.. These years of extraordinary innovation are enhancing the standard of living for a large majority of Americans. We should be thankful for that and persevere in policies that enlarge the scope for competition and innovation and thereby foster greater opportunities for everyone.[55]

This is called “labour market flexibility.” Of course, as Greenspan was full of praise for the fact that “job insecurity” is a necessary factor in “enhancing the standard of living for a large majority of Americans,” which “fosters greater opportunities for everyone,” what he really meant was that it benefits a tiny minority and creates better opportunities for exploitation. Ironically, this wonderful “boom” in the economy turned out to be a bubble, and it popped within a year of his giving this speech, and then of course, he resorted to building up the housing bubble thereafter… and we know how that went: more worker insecurity, more labour market flexibility, and thus, more benefits to a tiny minority and more opportunities for exploitation and profits. Isn’t the “free market” wonderful?

In April of 2012, Mario Draghi advised the eurozone to adopt a “growth compact” in order to boost economic prospects as he “scaled back his hopes for an early economic rebound,” stating that the eurozone bloc was “probably in the most difficult phases” in which the austerity measures were “starting to reverberate its contractionary effects,” he told the European Parliament. Austerity had, according to Draghi, “taken a larger than expected toll.” A “growth pact” was promoted by the front-runner in the French presidential elections, Francois Hollande, who would go on to win the May 6 elections against Sarkozy. Hollande had called for a “new Europe” stressing “solidarity, progress and protection,” warning against a North-South split in the EU countries. Angela Merkel also approved of Draghi’s call for a “growth pact,” agreeing that austerity was not “the whole answer” to the crisis, but insisted that growth would be “in the form of structural reforms,” which implies liberalization and privatization. She added: “We need growth in the form of sustainable initiatives, not simply economic stimulus programmes that just increase government debt.” While acknowledging the “economic weakness” created by the austerity packages across Europe, Draghi continued to say that, “Europe’s leaders should stay the course on fiscal consolidation.”[56]

European leaders were quick to endorse the calls from Draghi for a “growth pact” for Europe, including Angela Merkel in Germany, and France’s new Socialist president, Fancois Hollande, as well as EC President José Manuel Barroso. Following Draghi’s suggestion, Barroso stated that, “Growth is the key, growth is the answer.” Francois Hollande commented in references to Draghi’s proposal, “He doesn’t necessarily have the same measures in mind as me to foster growth,” as Draghi’s position was closer to that of Angela Merkel, who viewed the pact as consisting of “structural reforms,” not a stimulus which would “again increase national debt.” An analyst at the Cutch bank ING said: “For the ECB, a growth compact does not mean more fiscal stimulus,” which is, of course, only reserved for banks, not people. Instead, stated the analyst, Carsten Brzeski, it entails “structural reforms with a vision.”[57]

In May, this vision was publicly endorsed by Jorg Asmussen, the governor of the Bundesbank (the German central bank), and a member of the Executive Board of the European Central Bank, and was just previously the deputy finance minister of Germany. In a speech on May 21, Asmussen stated that, “we need both” austerity and growth, but that: “Talking about more growth does not mean moving away from the fiscal policy strategy pursued so far. It is not a matter of boosting growth over the next one to two quarters with credit-financed spending programmes, but of increasing potential growth. No one is against growth. The crucial and rather difficult question to answer is how, in ageing societies, to increase potential growth.” As to the question of ‘how’, Asmussen suggested three main components: product market reforms, labour market reforms, and financing of reforms. Product market reforms could include, according to Asmussen, “the completion of the internal market for services… [as] 70% of the EU’s GDP comes from services, but only 20% of services are provided on a cross-border basis.” As for labour market reforms, Asmussen suggested they should be “inspired by the Agenda 2010 programme in Germany,” and that, ultimately: “labour mobility needs to be increased in the euro area (the theory says, we remember, that an optimal currency area requires full mobility of labour). Mobility could be increased through broader recognition of qualifications within Europe, greater portability of pension rights, language courses and a European network of job centres.”[58] The Agenda 2010 programme was, explained Der Spiegel, “a series of labor market and social welfare reforms introduced by former Chancellor Gerhard Schröder that completely restructured Germany’s welfare state,” which included, “easing job dismissal protections, lowering bureaucratic hurdles for starting businesses, setting a higher retirement age and lowering non-wage labor costs,” all of which are “typical examples of structural reforms.”[59]

The Crisis Continues…

And so the European debt crisis continues, and so the austerity measures continue to punish the populations of Europe, and so Italy remains at the forefront of a growing global power grab: a ‘Technocratic Revolution’ in which even the trappings of formal democracy are pushed aside in favour of a government subservient to unelected councils of supranational institutions and global financial interests. In Par 2 of this excerpt on the Italian debt crisis, we examine the austerity programs and structural adjustments undertaken by the technocratic government of Mario Monti.

Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.

Please donate to The People’s Book Project to help this book be finished by the end of summer:

Notes

[1]            Bilderberg Meetings, Participants, 2011:

http://www.bilderbergmeetings.org/participants_2011.html

[2]            John Hooper, “Italy’s politicians rally round to prevent market’s slide,” The Guardian, 12 July 2011:

http://www.guardian.co.uk/business/2011/jul/12/italy-rallies-financial-meltdown-austerity

[3]            Phillip Inman and John Hooper, “Italy hopes privatisations will calm markets,” The Guardian, 13 July 2011:

http://www.guardian.co.uk/business/2011/jul/13/italy-hopes-privatisations-will-end-run-on-shares

[4]            AP, “Italian Senate passes key austerity package,” The Independent, 14 July 2011:

http://www.independent.co.uk/news/world/europe/italian-senate-passes-key-austerity-package-2313765.html

[5]            Rachel Donadio, “Italy to Adopt Austerity Plan to Fend Off a Debt Crisis,” The New York Times, 14 July 2011:

http://www.nytimes.com/2011/07/15/world/europe/15italy.html

[6]            Emma Rowley, “Silvio Berlusconi v. Giulio Tremonti: a clash that spooked the markets,” The Telegraph, 14 July 2011:

http://www.telegraph.co.uk/finance/economics/8637058/Silvio-Berlusconi-v.-Giulio-Tremonti-a-clash-that-spooked-the-markets.html

[7]            Nichi Vendola, “Italian debt: Austerity economics? That’s dead wrong for us,” The Guardian, 14 July 2011:

http://www.guardian.co.uk/commentisfree/2011/jul/14/italian-debt-austerity-berlusconi

[8]            Mario Monti, “Il podestà forestiero,” Corriere della Sera, 7 August 2011, [original in Italian, translation provided by Google Translate]:

http://www.corriere.it/editoriali/11_agosto_07/monti-podesta_1a5c6670-c0c4-11e0-a989-deff7adce857.shtml

[9]            Central Banking Newsdesk, “Leaked letter reveals ECB austerity demands on Italy,” Central Banking, 29 September 2011:

http://www.centralbanking.com/central-banking/news/2113272/leaked-letter-reveals-ecb-austerity-demands-italy

[10]            Ibid.

[11]            Ibid.

[12]            Leigh Phillips, “ECB austerity drive raises fears for democratic accountability in Europe,” The Guardian, 22 August 2011:

http://www.guardian.co.uk/business/2011/aug/22/debt-crisis-europe

[13]            John Hooper, “Italy’s government meets to approve new austerity package,” The Guardian, 12 August 2011:

http://www.guardian.co.uk/business/2011/aug/12/berlusconi-italy-austerity-cuts-protest

[14]            Lorenzo Totaro, “Berlusconi’s Austerity Package Wins Final Approval in Italian Parliament,” Bloomberg, 14 September 2011:

http://www.bloomberg.com/news/2011-09-14/berlusconi-s-austerity-package-wins-final-approval-in-italian-parliament.html

[15]            “Italy’s Austerity Budget – Needed: A New Broom,” The Economist, 10 September 2011:

http://www.economist.com/node/21528674

[16]            Jon Henley, “Austerity in Italy: cuts compound bureaucratic obstacles,” The Guardian, 18 October 2011:

http://www.guardian.co.uk/world/blog/2011/oct/18/austerity-italy-cuts-bureaucratic-obstacles

[17]            Jon Henley, “Europe on the breadline: hopelessness and Berlusconi,” The Guardian, 18 October 2011:

http://www.guardian.co.uk/world/blog/2011/oct/18/jon-henley-breadline-europ-hopelessness-berlusconi

[18]            Bruno Mascitelli, “As Moody’s trashes Italy, voters can’t count on Berlusconi,” The Conversation, 5 October 2011:

http://theconversation.edu.au/as-moodys-trashes-italy-voters-cant-count-on-berlusconi-3486

[19]            The Canadian Press, “Italy Debt Crisis: Berlusconi Austerity Package Sets Up Showdown With Labour,” The Huffington Post, 14 October 2011:

http://www.huffingtonpost.ca/2011/08/14/italy-austerity-showdown_n_926389.html

[20]            Reuters, “Violent protests in Italian capital,” The Irish Times, 15 October 2011:

http://www.irishtimes.com/newspaper/breaking/2011/1015/breaking23.html;

Antonio Padellaro, “Come previsto,” Il Fatto Quotidiano, 16 October 2011, (original in Italian, translation courtesy of Google Translate):

http://www.ilfattoquotidiano.it/2011/10/16/come-previsto/164205/;

“Rome counts cost of violence after global protests,” BBC News, 16 October 2011:

http://www.bbc.co.uk/news/world-europe-15326561;

Alessandra Rizzo and Meera Selva, “Rioters hijack Rome protests; police fire tear gas,” The Denver Post, 16 October 2011:

http://www.denverpost.com/nationworld/ci_19123516

[21]            Spiegel Online, “German Parliament Expected To Hold Full Vote on EFSF,” Der Spiegel, 24 October 2011:

http://www.spiegel.de/international/europe/controversial-leveraging-plan-german-parliament-expected-to-hold-full-vote-on-efsf-a-793656.html

[22]            Hans-Jürgen Schlamp, “Berlusconi’s Government Wobbles in Face of EU Pressure,” Der Spiegel, 25 October 2011:

http://www.spiegel.de/international/europe/crumbling-coalition-berlusconi-s-government-wobbles-in-face-of-eu-pressure-a-793884.html

[23]            MARCUS WALKER, CHARLES FORELLE, and STACY MEICHTRY, “Deepening Crisis Over Euro Pits Leader Against Leader,” The Wall Street Journal, 30 December 2011:

http://online.wsj.com/article/SB10001424052970203391104577124480046463576.html

[24]            Ibid.

[25]            Armorel Kenna, “Austerity ‘Isn’t in My Vocabulary,’ Berlusconi Tells Il Foglio,” Bloomberg, 29 October 2011:

http://www.bloomberg.com/news/2011-10-29/austerity-isn-t-in-my-vocabulary-berlusconi-tells-il-foglio.html

[26]            Patrick Wintour and Larry Elliott, “G20 leaders press Italy to accept IMF checks on cuts programme,” The Guardian, 4 November 2011:

http://www.guardian.co.uk/world/2011/nov/04/g20-italy-imf-checks-cuts

[27]            Philip Ebels, “Berlusconi heads to G20 amid mutiny at home,” EUObserver, 3 November 2011:

http://euobserver.com/9/114156

[28]            Nick Squires, “Eurozone crisis: Italian coalition fails to reach austerity deal,” The Telegraph, 3 November 2011:

http://www.telegraph.co.uk/news/worldnews/europe/italy/8866954/PIC-AND-PUB-PLEASE-Eurozone-crisis-Italian-coalition-fails-to-reach-austerity-deal.html

[29]            Emily Gosden, “Italian Prime Minister Silvio Berlusconi agrees to IMF oversight of austerity measures,” The Telegraph, 4 November 2011:

http://www.telegraph.co.uk/finance/financialcrisis/8869346/Italian-Prime-Minister-Silvio-Berlusconi-agrees-to-IMF-oversight-of-austerity-measures.html

[30]            Barry Moody and James Mackenzie, “Berlusconi to resign after parliamentary setback,” Reuters, 8 November 2011:

http://www.reuters.com/article/2011/11/08/us-italy-idUSTRE7A72NG20111108

[31]            John Hooper, “What happens if Berlusconi resigns?” The Guardian, 8 November 2011:

http://www.guardian.co.uk/world/2011/nov/08/italy-after-berlusconi-scenarios

[32]            Graeme Wearden and Alex Hawkes, “Eurozone debt crisis: Berlusconi to resign after austerity budget passed,” The Guardian, 8 November 2011:

http://www.guardian.co.uk/business/blog/2011/nov/08/berlusconi-debt-greece#block-35

[33]            “The end of Berlusconi: Hallelujah,” The Economist, 13 November 2011:

http://www.economist.com/blogs/newsbook/2011/11/end-berlusconi

[34]            Rachel Donadino, “With Clock Ticking, an Economist Accepts a Mandate to Rescue Italy,” The New York Times, 13 November 2011:

http://www.nytimes.com/2011/11/14/world/europe/mario-monti-asked-to-form-a-new-government-in-italy.html

[35]            Andrew Willis, “Mario Monti to draw up single market report,” EUObserver, 21 October 2009:

http://euobserver.com/19/28856

[36]            “EU must put single market ‘back on stage’, says Monti,” EurActiv, 11 May 2010:

http://www.euractiv.com/priorities/eu-put-single-market-back-stage-news-494013

[37]            “Twelve projects for the 2012 Single Market: together for new growth,” The European Commission, 13 April 2011:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/469

[38]            Rachel Sanderson, “‘Superminister’ emerges from Italy’s business elite,” The Financial Times, 16 November 2011:

http://www.ft.com/intl/cms/s/0/22c46df8-1060-11e1-8010-00144feabdc0.html#axzz1yY37v49b

[39]            John Hooper, “Mario Monti appoints technocrats to steer Italy out of economic crisis,” The Guardian, 16 November 2011:

http://www.guardian.co.uk/world/2011/nov/16/mario-monti-technocratic-cabinet-italy

[40]            James Mackenzie, “”Italian Prussian” Monti enters political storm,” Reuters, 13 November 2011:

http://www.reuters.com/article/2011/11/13/italy-monti-idUSL5E7MD0DO20111113

[41]            Tony Barber, “Why Europe’s leaders welcome Monti,” The Financial Times, 23 November 2011:

http://www.ft.com/intl/cms/s/0/ce6f96cc-15bb-11e1-8db8-00144feabdc0.html#axzz1yY37v49b

[42]            Mario Monti, “Il podestà forestiero,” Corriere della Sera, 7 August 2011, [original in Italian, translation provided by Google Translate]:

http://www.corriere.it/editoriali/11_agosto_07/monti-podesta_1a5c6670-c0c4-11e0-a989-deff7adce857.shtml

[43]            Viola Caon, “Mario Monti’s Italian technocracy reveals its true political colours,” The Guardian, 6 December 2011:

http://www.guardian.co.uk/commentisfree/2011/dec/06/mario-monti-technocracy-europe

[44]            Jonathan Hopkin, “How Italy’s Democracy Leads to Financial Crisis,” Foreign Affairs 21 November 2011:

http://www.foreignaffairs.com/articles/136688/jonathan-hopkin/how-italys-democracy-leads-to-financial-crisis

[45]            Tony Barber, “Eurozone turmoil: Enter the technocrats,” The Financial Times, 11 November 2011:

http://www.ft.com/intl/cms/s/0/93c5cb36-0c92-11e1-a45b-00144feabdc0.html#axzz1z1dPgKJf

[46]            Landon Thomas Jr. and Jack Ewing, “Can Super Mario Save the Day for Europe?” The New York Times, 29 October 2011:

http://www.nytimes.com/2011/10/30/business/mario-draghi-into-the-eye-of-europes-financial-storm.html?pagewanted=all

[47]            Ibid.

[48]            Lionel Barber and Ralph Atkins, “FT interview transcript: Mario Draghi,” The Financial Times, 18 December 2011:

http://www.ft.com/intl/cms/s/0/25d553ec-2972-11e1-a066-00144feabdc0.html#axzz1yY37v49b

[49]            Ibid.

[50]            Brian Blackstone, Matthew Karnitsching and Robert Thomson, “Europe’s Banker Talks Tough,” The Wall Street Journal, 24 February 2012:

http://online.wsj.com/article/SB10001424052970203960804577241221244896782.html

[51]            Brian Blackstone, Matthew Karnitschnig and Robert Thomson, “Q&A: ECB President Mario Draghi,” The Wall Street Journal, 23 February 2012:

http://blogs.wsj.com/eurocrisis/2012/02/23/qa-ecb-president-mario-draghi/

[52]            Alan Greenspan, “Testimony of Chairman Alan Greenspan: The Federal Reserve’s semiannual monetary policy report,” Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 26, 1997:

http://www.federalreserve.gov/boarddocs/hh/1997/february/testimony.htm

[53]            Louis Uchitelle, “Job Insecurity of Workers Is a Big Factor in Fed Policy,” The New York Times, 27 February 1997:

http://www.nytimes.com/1997/02/27/business/job-insecurity-of-workers-is-a-big-factor-in-fed-policy.html?pagewanted=all&src=pm

[54]            Brian Blackstone, Matthew Karnitschnig and Robert Thomson, “Q&A: ECB President Mario Draghi,” The Wall Street Journal, 23 February 2012:

http://blogs.wsj.com/eurocrisis/2012/02/23/qa-ecb-president-mario-draghi/

[55]            Alan Greenspan, “Remarks by Chairman Alan Greenspan: The revolution in information technology,” Before the Boston College Conference on the New Economy, Boston, Massachusetts, March 6, 2000:

http://www.federalreserve.gov/boarddocs/speeches/2000/20000306.htm

[56]            Ralph Atkins, Hugh Carnegy, and Quentin Peel, “Draghi calls for Europe ‘growth compact’,” The Financial Times, 25 April 2012:

http://www.ft.com/intl/cms/s/0/fc894164-8ead-11e1-ac13-00144feab49a.html#axzz1yY37v49b

[57]            Stefan Kaiser, “Austerity Backlash Unites European Leaders,” Spiegel Online, 17 April 2012:

http://www.spiegel.de/international/europe/european-austerity-backlash-leaders-back-draghi-s-growth-pact-a-830185.html

[58]            Jörg Asmussen, “WELT-Währungskonferenz,” Berlin, 21 May 2012:

http://www.ecb.int/press/key/date/2012/html/sp120521.en.html

[59]            Stefan Kaiser, “Austerity Backlash Unites European Leaders,” Spiegel Online, 17 April 2012:

http://www.spiegel.de/international/europe/european-austerity-backlash-leaders-back-draghi-s-growth-pact-a-830185.html