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the ECB’s “input legitimacy” has steadily evaporated.
In a nod to democracy, it was decided that the Maastricht Treaty needed to be ratified by all twelve EU members. But only three of the signatories trusted their citizens sufficiently to hold a referendum. Perhaps the politicians anticipated the results. Denmark narrowly rejected the treaty in 1992, with 50.7 percent voting no. France stunned the federalists when just 51 percent of the population voted in favor. Only Ireland was enthusiastic, with a 68.7 percent vote. The remaining nine members delegated the vote to their parliaments, all of which approved the treaty. Denmark voted again the following year. Copenhagen negotiated four opt-outs from the treaty, including the right not to join the European Union. This time the yes vote won, with 56.7 percent.
The ongoing experience of European union seemed only to dampen its citizens’ enthusiasm. In 2005 France and the Netherlands both voted no in referenda on the new European constitution, which would have replaced previous treaties and further accelerated the federalization process. European officials then stepped around this by renaming the constitution as the Lisbon Treaty and arguing that it merely amended previous treaties—thus there was no need for referenda. Only Ireland held a referendum on Lisbon, in June 2008, when 53.4 percent voted no. After sufficient political and pressure was applied, a second referendum was held in October 2009. This time Irish voters voted yes.
The more the European politicians and officials talked of democracy, it seemed, the less the citizens of the continent were able to exercise it. But the course of events in postwar Europe had been decided decades before the ECB opened for business.
Back in October 1941, Thomas McKittrick had received an inquiry from a friend of his living in Louisville, Kentucky, asking about the plans for the postwar financial system. The BIS president replied, “People everywhere are talking about federalisation accompanied by partial abrogation of national sovereignty. . . . The extent to which national sovereignty in this direction is limited must fix the boundaries of international financial authority.” 7
For Europe at least, those bounds were now fixed, permanently, at the ECB’s headquarters in the Eurotower at Willy-Brandt-Platz, in downtown Frankfurt. But despite the technocrats’ best efforts, real life was proving more complicated than the bank’s monetary framework for the new Europe. Germans saved; Greeks spent. Italians did not pay their taxes. The French refused to give up their sixweek holidays. Germany and France both broke the Stability and Growth Pact’s rules governing public debt. But some things were immutable. The ECB’s price obsession, engraved in its statutes, to keep inflation below 2 percent, forced Eurozone governments to slash public services and cut public spending. That in turn reduced consumer demand, stalled economic growth, increased unemployment and triggered a slide into recession that has resulted in Europe’s gravest political and economic crisis since 1945.
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