"Why Europe Needs a New Deal, Not a Breakup"

[Illustration by Curt Merlo.]

"The EU is facing a crisis of legitimacy—but retreating to the nation-state will only benefit the far right.

By Yanis Varoufakis and James K. Galbraith

The American New Deal of Franklin Roosevelt’s first two terms combined the goals of financial stabilization, reconstruction, conservation, and employment—jobs for the jobless; public works; power systems and new industries, especially in the South; soil conservation and reforestation to battle the Dust Bowl; and a potent mix of regulations and insurance to assert public power over high finance.

Europe today needs all of these. Its overgrown banks, haunted by the specter of insolvency, are pushing households into foreclosures and evictions across the continent, and at an accelerating scale in the most depressed countries. 

States are bankrupt and will only become more so as the European Central Bank begins to tighten under pressure from German savers crushed by negative interest rates. 

Like America 80 years ago, Europe has a vast periphery. In its South, there is a semi-permanent Great Depression, whereas in the East there is great need for new and renewed industries, transport networks, housing, and social investments. Above all, Europeans need jobs.

Unlike the United States in the 1930s, Europe is also facing the menace of disintegration, as the absence of a democratic federal system has spawned a crisis of legitimacy. 

Paralysis in the face of deindustrialization and chronic unemployment is breeding a toxic politics throughout Europe, with a postmodern form of fascism threatening some countries and a sense of hopelessness elsewhere. 

Europe has not yet suffered ecological calamities comparable to those in the past few weeks in Texas, Florida, and Puerto Rico; but they are coming, in the form of droughts, rising sea levels, and (most immediately) unstoppable waves of refugees from conflict and climate change in the Middle East and Africa.

The Democracy in Europe Movement 2025 (DiEM25) has therefore proposed a European New Deal (END), inspired by FDR but designed for European conditions. 

Chief among these is the sad fact that the European Union is a weak and limited thing—a confederacy, more or less. The crisis has made it virtually impossible even to discuss the creation of a US-style federation in Europe, with full powers to budget and mobilize for the emergencies at hand. 

European polities are so alienated by the authoritarian incompetence of the current leadership—exemplified by the crushing of the Greek government in 2015 and the heavy-handed approach of the European Commission to Brexit—that an increase in central powers (“more Europe,” as they say) would almost certainly meet heavy resistance. 

So it is necessary to work within existing charters and treaties to bring about stabilization by means of a European New Deal before hope is restored and the creation of new, democratic, federal, pan-European institutions—even a proper European Constitution—can be discussed sensibly and with cool heads.

To this END, we have proposed the following programs for all European countries, independent of whether they are in the European Union or the eurozone..."

Read more from source at The Nation here.