Wrecking the Welfare State in Secret


A golden staircase greets guests to De Warande, an exclusive club in central Brussels.  Built in the late eighteenth century, this mansion was acquired in 1907 by François Empain, a banker who helped his royal chum Leopold II loot the Congo.  With its historical association to imperial conquest, it is surely an apt venue for furtive talks on how to reorder Europe.

On 8 March 2010, Herman Van Rompuy, the EU’s “president”, dined here with 10 business leaders.  The select grouping mulled over how they could exploit the ongoing economic crisis to the benefit of the ultra-rich.  Among those invited were board members of Volvo, Nokia, Nestlé and Philips.  Fittingly, Umicore – a firm set up to exploit Congo’s mines (which it still does) – was represented, too.

I have obtained Van Rompuy’s speaking notes for the occasion.  He began by likening his role to that of a chairman of a holding company, who doesn’t have shares in the individual firms belonging to it. After that apparent witticism, he claimed that all EU governments agree on a “familiar” list of priorities for raising productivity: “innovation, higher quality of human capital through education, pension reform”.

To achieve these objectives, Van Rompuy briefly presented a vision for greater economic coordination. It would consist of reducing the number of targets set for EU governments and turning “peer pressure into genuine pressure”.

The dinner was hosted by the European Roundtable of Industrialists (ERT), which brings together about 50 powerful entrepreneurs.  It was one of several  such confabs between Van Rompuy and the ERT in his current role.  Though he is supposed to be a public servant – not the chairman of a holding company – Van Rompuy and his team have not published any details of these meetings.

Fancying himself as a philosopher and a poet, Van Rompuy was not crude enough to say that he wanted the pursuit of profit to trump all other goals. But that is the effect of his argument – particularly on pension “reform”.

Van Rompuy conceded in his comments that politicians who propose raising the retirement age from 65 to 67 will have a tough job being re-elected. So he and others in the Brussels bureaucracy are discussing how this can be done without voters obstructing their plans.

And this isn’t purely a matter of addressing what policy wonks call the demographic “time-bomb” (surely an ageist phrase) caused by rising life expectancy.  Pensions are one of many advances won through workers’ relentless struggle that the ERT – one of the most influential lobby groups in Europe – wants to reverse.   The ERT’s push for pension reform didn’t begin with the current crisis: it first described the pension entitlements that are integral to the entire concept of the welfare state as an “economic threat” in 2000.

One month before the 2010 soirée in De Warande, Van Rompuy received a letter from the ERT stating that “urgent transformation is necessary”.  It was signed by Leif Johansson, then of Volvo, and Gerard Kleisterlee, then of Philips.

The kind of “transformation” desired has been elaborated on in a series of ERT briefing papers.  One key recommendation was that all legislation viewed as incompatible with the bosses’ agenda should be “reviewed” – a coded way of saying “gutted”.  The impact of new laws on business would have to be “screened”.  An impact assessment procedure “must send back” laws that hamper profit maximisation, the ERT argued.

The ERT’s repeated calls for greater investment in education should be treated sceptically.  In 2011, Johansson – now representing Ericsson – sent a detailed list of demands to Van Rompuy.  Johansson insisted that the EU “mainstream competitiveness” into all its policies.  “Competiveness” is a synonym for corporate dominance.

Special emphasis was placed on opening up services to the private sector.  Reading between the lines, it was clear that Johansson wished such services to include health, education, water and public transport.  All of these are essential to social justice; Johansson is pushing for them to be handed over to corporations.

In a reply to Johansson, one of Van Rompuy’s advisers stated the president “agrees to a great extent with your recommendations”.  Bolstered by that response, the ERT went even further last year by urging an “immediate halt” to new regulation “which has no proven immediate effect on economic growth”.

The call is not being made in a vacuum.  Under the watchful eye of Edmund Stoiber, a bigwig in Bavarian politics, an EU group of “experts” is already preparing a bonfire of laws that the captains of industry don’t like.  Everything from commitments on climate change to the rights of people with disabilities is being attacked by these “experts”.

The “competiveness” that the ERT espouses habitually should not be confused with competition.  In its discussions with Van Rompuy and other “important” figures, the ERT has been urging that the EU become more relaxed about controlling mergers between large companies.   It is clear what the result of this hands-off approach would be:  power would be concentrated in fewer corporate hands  than is now the case.  This is a recipe for oligopoly, not for dynamism.

What is going on here?  Democracy is being eroded by a dozen or so individuals who meet in private clubs.  They are all rich, white and male.  They have nothing in common with 99% of the world’s population.  They are our enemies: so let’s start fighting them.

David Cronin’s book Corporate Europe: How Big Business Sets Policies on Food, Climate and War will be published in August.  It can be pre-ordered from Pluto Press (www.plutobooks.com).

A version of this article was originally published by New Europe (www.neurope.eu).









A version of this article  was first published by EUobserver.

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