International

This week some 17,000 people gathered in Frankfurt to protest against the European Central Bank (ECB). The protest culminated in acts of violence which of course attracted a great deal of publicity. As for the point of the demonstration, what you mostly heard was that it was aimed at the ECB’s flash new headquarters, built at a cost of €1.3 billion. That’s $1.4 billion, or £940,000. The demo was, however, about much more than that. We have created an institution with extensive political power, an institution with no democratic input. That has to change, and soon, was the message from the demonstrators gathered under the name Blockupy, and it is a message with which I wholeheartedly agree.

The European Central Bank is not supposed to be charged with any tasks beyond specifying the rate of interest in the eurozone and ensuring manageable levels of inflation, around 2%, the level seen by economists as the ideal percentage to keep the wheels of the economy turning. The ECB, however, merely pays lip service to these responsibilities, and in reality its influence reaches much further than that. It can create money by buying up government bonds and offer temporary assistance to banks by issuing emergency credits.

That Greece has still not gone bankrupt is primarily due to the ECB’s raising the ceiling for emergency credits to Greek banks ever higher. In February it went up by €10 billion to €70 billion. The Tsipras government was therefore pushed into a corner by the ECB – and others. If they were not prepared to continue the harsh austerity policies of their predecessors, the ECB would simply turn off the tap, the Greek banks would have no longer have any money to buy Greek state bonds and the government would be bankrupt.

Not surprising then that Alexis Tsipras was given short shrift by the other heads of government. They have a straightforward agenda: either Syriza imposes neoliberal policies on Greece, or the country sinks into bankruptcy. With the ECB in the background they can impose their will on Greece, unless the Greeks decide to quit the eurozone, but as things stand Tsipras does not seem to want to do that. He has instead promised to come forward with a package of austerity measures.

Now you could say that the ECB is in this case simply doing what governments also want to do. But say that the heads of these governments weren’t in agreement and some of them had grasped that further massive spending cuts would only drag Greece deeper into the mire and that austerity could lead, for example, to enormous social unrest, presenting the extreme right with fresh opportunities. In such an instance the ECB would be within its powers to decide independently Greece’s fate by extending emergency loans, or by not doing so. Whatever else, there is no formal link between the European Council, in which all EU heads of government sit, and the ECB.

When it comes to surveillance of banks, the ECB has already been obliged to promise that it would transfer responsibilities for this to the European Parliament. This should, however, be broadened to include all tasks with a clear political character, while a role for national parliaments must also be developed. Only then can we ensure that elected representatives of the people determine the member states’ future. At the end of the day, what it comes down to is the survival of our democracy.