The ongoing IMF attack on European Democracy


by David Malone

In December of last year I wrote an article called “The cost of the bail out – Just your Democracy.” In it I referenced an IMF document called “Lifting Euro Area Growth: Priorities for Structural Reforms and Governance.” What prompted me to look at that IMF publication was the injudicious way the IMF publicly told Portugal that it should cut its unemployment payouts.

The document in question, I argued, was nothing short of the IMF’s blue-print for how to ensure the public in every country were forced to bear austerity measures in order to pay off their bankers’ debts.  The paper detailed how collective wage bargaining had to be curtailed, wages lowered and laws over hiring and firing made more business friendly.  It laid out how taxes should be moved from labour to consumption which is disguised way of saying shift taxes from graduated income taxes to flat rate VAT – shifting from high earners and businesses to ordinary consumers.  And last and most fundamentally, how these ‘essential reforms’ could only be achieved if decision about them were removed from democratic control.  Leaving such decisions too near to the electorate and their representatives was why they had not happened yet.

The document, I felt, was a thinly disguised argument for elevating finance above democracy – a direct attack on sovereignty and democracy.  At the time all I could point to were the unfolding events in Ireland – the way the IMF with the EU’s support was throwing its weight around in Dublin.

The IMF has been busy since then.

In Hungary the Right Wing Fidesz has pushed through a re-write of the Constitution.  The new constitution was largely written by one man, József Szajer, who is a Fidesz MEP.  In the European Parliament Mr Szajer sits on the Internal Market and Consumer Protection Committee which is dedicated to “identification and removal of potential obstacles to the functioning of the internal market”.  He is also vice chair of something called the American Institute on Political and Economic Systems which was set up, “to introduce the foundations of democracy and free market economics to young leaders from nations that have emerged as newly independent nations”.  Not the foundations of democracy, but democracy and free market economics linked.  As if the purpose of democracy was the support of free market economics.  It is only a certain mind set which seeks to inculcate the belief that the two are inseparable:  A Washington DC and Wall Street mind set.

Among donors to the institute are the US Air Force Academy Foundation, J P Morgan International Limited and the United States Military Academy Scholarship Fund.  Among the alumni it has turned out are:

Alexandra Caracoti, Chief Press Officer, Office of the President of Romania,
Ilmars Rimsevics, Deputy Governor, Bank of Latvia,
Szabolcs Foldvari, ING Bank, Hungary,
Sandor Gallai, Assistant Professor, Budapest University of Economics,
Naomi Koranyi, Staff Director, Foreign Affairs Committee, Hungarian Parliament

The institute and Mr Szajer have fairly clear notions about the right and might of the American free market way of life.  Such clear ideas that even the commission which advises the EU itself on constitutional matters was forced to admit Mr Szajer and the Hungarian government’s re-write of Hungary’s Constitution “had shown a lack of transparency, had failed to consult adequately with the opposition and had rushed the whole process.”  In fact there was hardly any parliamentary discussion at all.

So what was it that Mr Szajer and the Fidesz party have forced through with as little discussion as possible?  I think it is the IMF blue print from last December.  Article 43 of the new constitution creates an entirely new and non-democratic entity within the government, the Fiscal Council, which the new constitution says,

“… will have a right of veto over the budget, giving it a strong say on fiscal policy.”

The veto here is a veto of parliament.  This council will have three members who will all be unelected.  They will be the Chairman who will be appointed for a six year term by the President, the Governor of the central bank and the Chair of the State Audit Office.  All people whose likely world view and professional training, the IMF would approve of.  So an unelected council of three all drawn from and sharing the world view of free market economics – no labour representation, no civil representation and no public accountability at all – who will have the right to veto what elected members of parliament might think.  Economic decision making removed from democratic control – check!

And if the parliament should try to stand against what the Council thinks, let’s say because … people asked their Parliament to do so for example, the constitution, as written by Mr Szajer, also,

“gives the president the right to dissolve parliament if it fails to pass a budget by the end of March. (Article 3)”

Not only a veto but the right to get rid of the whole democratic charade if necessary.  IMF 2, the people of Hungary 0.

In Hungary last week in the run up to the vote on adopting the new constitution Reuters reported,

“Around 10,000 Hungarian police, firefighters, soldiers and customs officers protested on Saturday against the centre-right government’s austerity measures at a union rally in Budapest.”

The constitution was adopted, the people can protest all they like, vote for who they like.  The ‘Council’ will decide what’s best now.

That is Hungary.  The IMF has also been busy in Romania.

Back in March Balkan Insight ran the headline, New Labour Code Fast-tracked through Romanian Parliament.  The article explained how,

“The centre-right government of Emil Boc officially ‘took responsibility’ for the adoption of new, IMF-approved labour legislation in parliament on Tuesday.”

The government decision to ‘take responsibility’ for the law is a procedural move which allows the legislation to pass into law without a parliamentary vote.

The Labour Code, agreed with the International Monetary Fund, allows more flexible work contracts and part-time employment …”

Exactly as per the IMF blue-print: curb or curtail democracy.  Erode labour laws.

Two countries down.  The IMF will now set its sights upon getting its teeth in to Ireland and then Portugal.

Surely the signs are now clear. This is not just a  financial crisis.  It is a crisis of, and a direct attack on, our democracy.  If we do not wake up soon it will be too late.