Mr. Paul Murphy, MEP:

The Chairman asked the MEPs to reply to three questions and I shall focus on the first two due to time constraints. The first question was about the financial, budgetary and economic policy integration in the EU. The second was about democratic accountability, legitimacy and political union.

I contend that a profound change is happening in the European Union without enough discussion, debate or awareness taking place. As President Barroso stated:

What is going on is a silent revolution - a silent revolution in terms of strong economic governance by small steps. The member states have accepted - and I hope they understood it exactly - but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of public finances.

In my opinion it is revolution or a counter-revolution that is well under way. It has already made significant strides in the direction that it wants to go but a lot further remains to be done. The model it is driving towards can be summed up by the phrase "authoritarian neo-liberalism" which comprises three aspects. First, the technocratisation of economic policy-making. That means that economic policy is no longer a matter for political debate between left and right, between neo-liberals and Keynesian socialists. Instead there is a right and a wrong answer and the right answer happens to be the answer favoured by the Thatcherites and the neo-liberals. It is an ideological assault that takes place with the raising of economists to high priests and cannot be questioned.

Second, making neo-liberalism law. That is what I have seen so far and I shall explain. It imbeds neo-liberalism in law in the European Union and its member states in national legislation. At the same time, and in the words of Mr. Martin Callanan, MEP, and leader of the British Conservatives in the European Parliament, it is "making socialism illegal". In reality it makes Keynesianism illegal. It makes significant State expenditure, running deficits, etc., illegal under the rules of the European Union and the process of economic governance. Third, it involves a significant transfer of power which is real and cannot be disputed. It is a transfer of power from elected governments to unelected bodies, in particular the European Commission and the European Central Bank.

One wonders why this is happening. Is it in response to the crisis? Is it taking advantage of the crisis? In my opinion it is both. It is partly in response to the crisis in the neo-liberalism framework that the political establishments across Europe know. It is also an example of what Naomi Klein calls a shock doctrine. That means one uses a shock, in this case it was clearly created by neo-liberal capitalism, to further imbed the policies. That is what happening. My slides show two quotes by the two largest business lobbying organisations in Europe, the European Round Table of Industrialists and BUSINESSEUROPE. In 2002 the European Round Table of Industrialists stated, "[A]t the drafting state, the implications of national budgets and of major national fiscal policy measures [should be] reviewed at the level of the Union". That is what has been agreed over the past two years. This agenda has been pushed by big business in Europe over an extended period. Given the opportunity of the crisis they have been able to go ahead, push it and have their agenda successfully implemented. I shall quote BUSINESSEUROPE from spring 2010 which states: "[Eurogroup] will ... have to assume greater responsibility in improving economic governance in the euro area, and put greater emphasis on domestic and competitiveness imbalances, which have proved in most recent developments to be a major source of fiscal instability". That is precisely what has been done through the "six pack", "the two pack" and the fiscal treaty. They are the changes that are being implemented and they were wished for in advance of the crisis.

With regard to what has happened so far, one can refer to non-legislative measures. That is a nice term for what has been happening. On the other hand, there are legislative measures.

In terms of non-legislative measures, we have seen, largely without a peep from the established media, the removal of elected governments in Greece and Italy. We have also had the replacement of governments by bankers for bankers whose mandate does not come from the people of those countries but the markets. European Central Bank ransom notes have been sent. For example, Sylvio Berlusconi received one on 5 August 2011 that sought a series of measures that had to be implemented and finished with the ominous line, "We trust that the government will take all the appropriate actions". The Italians needed the ECB to buy the bonds on the Monday morning. If they did not it would result in a collapse and bond prices going through the roof. The ECB, an unelected and unaccountable institution, held a sword over the Italian Government. Obviously I completely disagree with the policies of that Italian Government. We know, even though we do not know the details because we have not seen the letters, that letters were sent to the Irish Government at the end of 2010. There is also the experience of the troika's supervision. The troika primarily dictates, even though there is a certain amount of discussion, economic policies to the governments of Greece, Portugal and Ireland. I have listed the non-legislative measures so far.

There has been a series of three legislative measures. First, the six-pack, which we only heard about in Ireland during the course of the fiscal treaty debate even though it had already happened at that stage. Second, the fiscal treaty. Third, the two-pack that will come before the European Parliament next week. I shall oppose the latter but unfortunately it is likely to be passed overwhelmingly. The legislative measures have made the Stability and Growth Pact targets binding. Therefore, the 3% deficit ratio and the 60% debt-to-GDP ratio have been made binding and subject to fines if countries do not meet or head towards those targets. They have imposed rules in national law of binding force and permanent character about a structural deficit which is new and was not contained in the Stability and Growth Pact of 0.5%, as well as the Stability and Growth Pact targets. It has introduced a procedure called the excessive deficit procedure, in which 20 countries in the EU are currently involved, which subjects them to a large degree of supervision by the European Commission in particular. There has been an introduction of a system which has not been discussed at all called the scoreboard system. This is new and goes beyond the Stability and Growth Pact. It contains ten other indicators that the Commission now uses to monitor the economies of EU countries. If countries exceed their scoreboard targets they can be put in what is called an "excessive unbalanced procedure". Again, the EU countries can be subject to fines if they do not implement the correct corrective measures which are always Thatcherite and neo-liberal.

The voting rules in the Council have been changed with breathtaking cynicism whereby qualified majority voting has been turned on its head.

Now, when voting on sanctions such as fines for countries where, in the view of the Commission, sufficiently rigorous austerity has not been implemented, it is almost impossible to stop those fines being passed. The fine is presumed to pass unless one can get a qualified majority against it. Also, countries that are subject to fines, miscreant countries, lose their vote on subsequent votes that will take place about fining other countries. It is an attack on democracy at the level of the European Council. There is also the introduction of the European Semester.

I will outline some of the details of the two-pack, because we only hear that the budget will be announced in October and we tend to think that is the only difference it will make. It is as if there is something completely innocuous about the two-pack. A common budgetary timeline is introduced, and it is not just about every member state doing it at the same time. It is there for a purpose. The purpose is that the Commission can apply political pressure on governments to ensure that budgets are changed if necessary so that enough austerity, in its view, is implemented. The Commission now has the power to request a revised draft budgetary plan in accordance with the provisions of this regulation. There is also the introduction of economic partnership programmes, which detail the policy measures and structural reforms needed to ensure an effectively durable correction of the excessive deficit. It is really an agreement between the member state and the European Commission. The enhanced surveillance element will put a number of countries, not just countries in so-called bailout programmes but also others, in the same position whereby they are subject to extensive surveillance. I believe there is a great deal more to come.

Emer Costello, MEP, referred to the "Towards a Genuine Economic and Monetary Union" paper. Everybody should read it. There are different drafts of it; it has different iterations as the discussions proceed. People should read them all because even where material has been taken out of the latest drafts it does not mean it is still not there in terms of a plan that the elites within Europe, including José Manuel Barroso, have in mind. Some quotes will give the committee an indication of this. The first is: "The reforms introduced ... through the creation of the European Semester ... are a step in the right direction. But there is a need to go further...". This is the start, not the end, of the process. For them it ends in a political and fiscal union with an absence of real democracy and real control by people over economic affairs and with austerity being institutionalised.

The next quote is: "A fully-fledged integrated budgetary framework would require the establishment of a Treasury function with clearly defined fiscal responsibilities". What they are talking about is a European Minister for Finance or a European finance ministry. That is the direction they want to go with this process. Again, it is not necessarily subject to democratic check or accountability. The next quote shows where they are at present. What we will see is a real emphasis on "arrangements of a contractual nature between Member States and EU institutions...". They want to have contracts for austerity between the member states and the European Commission. It is a way of subverting democracy, because the contracts will not bind the governments but the states. If a government is kicked out because people do not like austerity and vote against it, in law the contract will bind the incoming government.

In conclusion, what is so bad about all of this? Does it not make sense and is it not the only way to save the euro and our economies? First, it is a fundamentally undemocratic process. It is taking power to decide on economic policy away from people. It is taking economic policy out of the sphere of political debate. Second, institutionalised austerity, which is what this means, will result in deeper crisis. It will not solve the economic crisis. Austerity is being implemented across Europe and has resulted in a 0.6% contraction in GDP in the last quarter of last year. The eurozone has gone back into recession. It has caused disaster for many people. There are 26 million people unemployed and there is social devastation in Greece in particular. One can see the consequences for people.

Why is this policy being pursued? Austerity is working for those for whom it is meant to work. Austerity was never envisaged as a plan to save the economy and improve people's lives. It is a plan by which the very rich in our society, the 1%, can strengthen their position at the expense of the rest. The bondholders have been protected and profits are up across the European Union. Privatisation is being promoted and wages have generally been pushed down. There is €750 billion in excess cash holdings in listed EU companies. Profits are increasing but investment by the private sector continues to decline. The result is large amounts of cash sitting on the balance sheets of big business. In my opinion, the way out of this crisis is through public investment and socialist policies, but they are precisely the policies that there is an attempt to outlaw through this process of authoritarian neo-liberalism.

What is to be done? We need massive protests across Europe. Most people here probably will not agree with me-----