Sunday, August 26, 2012

26/8/2012: The way of Berlin in Greek drama


"Those whom the gods wich to destroy, they first make mad" is a proverb that is commonly, but possibly mistakenly, attributed to Euripides, who was, by all official accounts, a Greek, to the bone. In modern parlance - a European, more than that, an ancestor to those we now call citizens of a member state of the euro area, and Schengen, the arrangements that distinguish them as being the members of the European Core. That, and, ... oh one of the three fathers of Greek - Athenian - tragedy.

But enough with history. Whether Euripides authored the above statement or not, it pretty certainly came from Greece. Sophocles uses a similar phrase in Antigone, which pre-dates Euripides' plays.

The latest revival of the rather dated by now idea of granting the European Court of Justice (ECJ) the powers to "monitor the budgets of the member states and punish those that run up a deficit" (reported here) is the case proving the above conjecture.

The extension of such powers would make the ECJ the only court system with the power to oversee and directly influence the fiscal policy of the sovereign states. It will also be the only power that will be allowed to impose sanctions on sovereign states. Even the IMF has no power of similar nature vis-a-vis the states.

But there is more to the above equation. The ECJ is a court, here to decide on the matters relating to the law. Giving it any power resting outside its remit both undermines the system of checks and balances that normally constitute the foundation of any state, and, as the result undermines the legitimacy of the court itself. Blending of the boundaries between the executive (fiscal authority), the legislature (power to budget), and the judiciary delegitimizes all three.

And exactly the same, in my view, applies to the fiscal supervision and oversight powers to be vested with the ECB per another recent plan. No Central Bank in the advanced world has such powers of control over the fiscal policies of the state. You can call it a 'Dictator Draghi' case, but humor aside, the remit creep infecting Europe today is worrisome.

The euro area lead states - Germany in particular - are now locked in a frantic drive to build up institutional solutions to the problem created by the poor design of the common currency union over fifteen years ago. These solutions are not only unlikely to work, but the method of arriving at them is now risking to undermine the still-functional institutions of the European Union as a whole.

Irony has it, we have to turn to Greeks to spot the trend in gods work.
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