Speech at the PES Council
‘The Future And The Challenges Of Contemporary Social Democracy’
“Thank you, Poul. Dear friends, dear comrades, I am glad to be here with our social democratic family, in this crucial Council in Warsaw, a Council that finds Europe at a critical crossroads, a moment of truth, a moment of truth for Europe, a moment of truth for our movement.
A deep and ongoing recession for many parts of Europe, biting austerity measures that are hitting the most vulnerable, high unemployment, deepening social inequalities, uncertainty, insecurity for Europeans. A financial system which is risk-averse, jittery, fearful, speculative, and is undermining European unity and stability.
So our decisions must address this historical moment.
But I am also very happy to be here in Warsaw, as Poland is the country of my great grandfather, Zygmunt Mineyko. Revolutions and wars sent him to prison and to exile, and he finally settled in northwestern Greece and married.
Zygmunt fought in the Balkan Wars. He uncovered an ancient city of Dodoni, and he was the only Polish correspondent reporting on the first modern Olympic Games from Athens in 1896.
So I always feel as if I am coming back to past roots of mine, when I come to Poland.
His story is a story of so many Europeans, one of strife, a fight for liberation from authoritarian regimes, wars, ethnic hatreds, but also hope for democracy.
A past we share, although we were then divided, and a present we are together creating now, united.
And this small story should serve as a reminder of the crucial decisions we must take to ensure further strengthening of our European institutions for the benefit of our peoples.
So as a compatriot, I would like to wish the best to Grzegorz, the leader of the Polish party. Good luck for your movement and your success. And we need you, as our movement needs to live up to the historical moment, charting a safe course out of these troubled waters, with as much clarity as possible in a very complex world, clarity and unity of purpose, shared values, shared responsibility and clear goals.
One that creates a capacity, enables, empowers our societies, our citizens, our youth, our women, our peoples to deal with the challenges of our times.
And we know what the challenges are. We have already either experienced them, and they could be simply a taste of what is in store for us ahead: climate change, catastrophes, financial crises, food crises, energy crises, nuclear proliferation, poverty, illiteracy and inequality, all feeding apathy or absenteeism, and a deep frustration with our democratic institutions.
Even worse, these problems feed into extremism, intolerance, xenophobia and religious fundamentalisms that threaten to tear the fabric of our societies apart.
We know these are false solutions to our problems. We know these are no solutions to our problems. We also know these sentiments have become fodder and fuel for the ultra-right, but recently even the more moderate right in Europe.
The fact is that most of these problems have been caused, and certainly they have been exacerbated, by the neoliberal or neoconservative policies that have dominated our global and European politics in recent years. Lax financial regulation, tax policies that favour the wealthy and powerful, media concentration in the hands of the few, disproportionate salaries and bonuses for financial sector professionals, heavy burdens for the poor. These have all been responsible in different ways for the economic crisis we now face all across Europe.
As social democrats and progressives, we must face up to our own responsibilities. Yes, we did not fight hard enough to rein in the excesses of the financial markets, whether in government or in opposition, despite ample warning from progressive economists.
Now we know, even though we are a minority in government in the European Union that not enough has been done to ensure that such a global meltdown doesn’t happen again.
And even though the right, the conservative, was deeply responsible for this mess, we are today being challenged by them.
Now is the time for austerity, they say. But what do they mean by austerity? It is the pensions, it is the welfare, it is the unemployment benefits, it is education: these are the culprits.
So according to their story, we are to blame, because we represent the bloated welfare states.
So while much of the world, and certainly the developed world, has still not exited the global financial crisis, suddenly the prevailing solution among elites in both Europe and America is that we must cut, not spending in general, but cut social services, cut public sector workers, cut wages and pensions. More unemployment, more poverty, more costs to our families for education or welfare or health, more inequality, and no growth.
And now they say, “Look at Greece. You see, this is proof of what we say. A bloated welfare system, too many benefits, too high pensions, too much on health.”
Let me tell you the real story. Of course, of course we must cut waste and cut government spending wherever it is necessary. Wherever there is bad allocation of public funds. Wherever and whenever these public funds are not put to use for the common good.
These are monies of our people, of our taxpayers. We must respect this money.
But who has done so, the right or the left? In Greece’s case, as in so many other conservative governments – take for example George Bush II – it was they, the right, not the left, where public money was not respected, where money was allocated to serve the few, not the many, to serve big interests, not our citizens, serve those that are already powerful or wealthy, to the detriment of the weaker strata of our societies.
This is exactly what happened in Greece. We were not overspending for the poor. We were overindulgent to special interests, where there were tax breaks for the rich or clientelistic policies for friends or lack of oversight in our hospitals, that allowed the pharmaceutical companies to charge our pension funds twice and three times the costs of medicine. Money was spent for the few, and lost for the many, for the public good.
This was Greece 2009. This is what we are changing, and we inherited a deficit of 15.5%.
But this is why Greece is also different from Portugal or Spain. Socialist Portugal and socialist Spain in no way could be accused of irresponsible governance or bad fiscal policies. And they don’t warrant such suspicion, rumour and maltreatment.
While Greece was also a victim of very jittery markets, we were also responsible for some very bad practices.
I have called it clientelistic capitalism. I could also call it clientelistic state policies and practices, because I believe we often, as socialists, make a mistake. This is not the state versus the market. This is a state that serves the people versus a state that is captured and serves a strong established elite. This is a market that serves the profits of the powerful versus a market that serves the needs for sustainable growth, jobs for our citizens, while it protects consumers.
That is why this is not an issue of pure economics. It is an issue of politics, or, even better, it is deeply an issue of democracy.
Who do our institutions serve, whether they are national or European, whether they are states or financial institutions or markets or parliaments or media? Do they serve our people, or are they captured by special interests?
How are our resources allocated, whether they are public monies, wealth of our natural surroundings, human capacity and resources, our communication and energy networks? Are they distributed, managed in the interests of our polity, our demos, our common good? Or are they allocated for special interests?
This is the question, and this is our challenge as social democrats: to restore good and democratic governance, but to further extend it to our regional, European and global institutions.
Good and democratic governance. I believe that this is why our economies are in deep trouble. If we had been courageous enough – or let me use the word responsible enough – to make the necessary reforms when the financial crisis first erupted, the global economy would not be in such dire straits today.
Since 2008 we have been talking about the urgent need to create a more democratic, transparent and accountable system of global governance, not just in our movement. The world’s media and multilateral organisations have all been debating this issue.
And yet two years down the line very little has actually changed. The first depression of the twenty-first century is far from over. And here in Europe, the financial crisis in the private sector has become the fiscal crisis of the public sector.
Two years ago, when global financial markets froze, government rushed trillions of dollars to aid – trillions – to prevent a full-scale collapse.
Now, two years later, with no economic growth, starving the tax revenues of states, these same financial markets are saying governments are to blame.
What has changed? The only real thing that has changed is the narrative of the right. It then wanted the taxpayer to pay for the banks. Now it wants the taxpayer to pay for the public debt, through cuts in benefits.
So we are challenged by the right. They say the solution is austerity. I would say that we social democrats could say no, the solution is responsibility. You say economic austerity. We say democratic responsibility.
What does democratic responsibility entail? Yes, we need to rein in excessive deficits and control soaring public debts. But we cannot build stronger, safer and healthier economies for our citizens simply by massive cuts in government spending and social services.
Keynes 70 years ago buried the reactionary dogma behind cutting public spending when the private sector fails. Indeed, he proved conclusively that the economy could remain locked in stagnation for years, without major public spending.
And it was Keynes even conservative governments applied, that weakened the negative effects of the recent global recession.
Responsibility means yes, putting order in your fiscal house, but also making sure the economy grows.
This is not an issue of one versus the other. It is much more an issue, as the ancient Greeks would say, of measure. All things in measure.
For example, only a year ago the markets were crying out for us to cut our deficit in Greece. We did, 6%, more than our initial target.
Now they are saying, “Where is the growth?” The answer, I believe, is Europe. Of course, a progressive, socialist and democratic Europe.
And we socialists have answers, but I will get to that.
A second responsibility is to make sure that policies to ensure our future economy, our future viability, do not do injustice and damage to the weak and needy of today.
This is our socialist tradition, equality. And we know now from studies that inequality not only creates unhappy people and societies, but also it is a reason in itself for bad governance, corruption, the capture of democratic institutions, the lack of creativity and security.
A fair tax system, as well as the welfare state, is needed more rather than less, in times of crises.
Certainly of course an efficient welfare state, one that does not put people into passivity but creates incentives and builds capacity for full participation of all in social and economic life of our countries.
In this we, as progressives, cannot embrace the false dichotomy of equality versus efficiency, accepting the economic “recovery” mandates, which are massive unemployment, stagnant, even falling, wages, the abandonment of our fundamental covenant with citizens, as their democratically chosen leaders.
A third responsibility is to our environment. It is to transform our economies into green and clean economies, an economy in tune with our nature, more humane, more quality, more participative, more innovative, more creative. More competitive globally, yet also more local, using our culture, our regions, our continuing education, our special identities, as our comparative advantages.
How do we combine these three elements of democratic responsibility, responsibility to welfare, equality and to our environment and economy? I believe we have a European solution. Europe today is facing a crisis. With some exceptions, lower competitiveness, high debt, low growth and the lack of direction.
Our policies should be designed to tackle the twin challenges of recession and climate change at the same time.
On the one hand, yes, we need more fiscal responsibility at the national level, but at the European level we need a European New Deal, with a green component that will deliver sustainable, low-carbon development.
The Green Growth paper to be adopted here spells out exactly what needs to be done. It marks the inauguration for all of us of a new wave of sustainable economic policies.
People always ask: Where will the money come from? Who will pay for social services? Who will fund the transition to a low-carbon development model?
Again, here we have made responsible proposals. We have put forward the idea of a European financial transaction tax. And I am very pleased that the European Parliament adopted this proposal by a large majority in October.
This victory was largely down to the strong advocacy work of Poul Rasmussen and the PES. Congratulations, Poul, to all in the PES, for your efforts, because they have paid off.
Now we must all work even harder, to ensure that levying a financial transaction tax becomes standard EU practice.
We could further combine this idea with the idea of Eurobonds, green bonds, and of course a tax on CO2 or greenhouse gas emissions.
We also need to quickly build a serious European and international set of regulatory agencies and rules, to ensure the accuracy of credit ratings, to ban short selling and toxic debt instruments, to protect small investors and large pension funds alike from what we have seen are the two common abuses of those who trade on insider information, spread slanders to damage companies and countries alike, all in the name of billion-dollar market killings at the expense of the rest of us.
This should include regulation of the financial sector that wants countries like Greece to pay their debts, yet help tax evaders take their money out of countries like Greece through their banks, robbing us of revenues necessary for our survival. And this with the help, very often, of the financial sector.
So if we want to have the private sector really involved in helping, let us stop banks in the financial sector helping and abating tax evasion throughout Europe. Because tax evasion, by some estimates, costs the European Union a trillion euros a year.
In Greece we have started an unprecedented crackdown on evaders, as you know. But to be truly effective, we must all act in closely coordinated fashion.
Eventually, I hope the rest of the world will follow Europe’s lead on these issues.
This could also lead to a global New Deal, because we can – and we have shown it very often – we can have a positive influence beyond not only our national but also our continental borders.
I have always felt that Europe can do more, that we underestimate our powers. And we cannot afford any more delays. We are underestimating our powers even today, when we are letting the financial markets run circles around us.
Let me give you an example from my experience. Eurosceptics are always complaining that the EU bureaucracy is slow and sclerotic. It’s true. The European Union could have reacted faster when the sovereign debt crisis first erupted.
But now we have a stabilisation mechanism in place. It took four months for Europe to work out a rescue package for Greece. But it took just six days for us to agree on a deal for Ireland.
Is this enough? We socialists have said certainly not. We need the regulation and the tools to be able to intervene when necessary, and do so effectively. We need a true European fund, to be able to intervene more effectively in the markets.
Both here and in the PES and in the broader social democratic family of the Socialist International, we have been very proactive in putting forward responsible proposals on new regulatory mechanisms, financial tools and governance structures that would prevent another financial crisis. Now we must push harder for these reforms to be implemented.
As markets are either too risk-averse or are speculative, we could create an EU fund to finance our common needs through the process, for example, of the Eurobonds. I believe this idea is gaining traction, as it is powerful, it is simple, it can be equitable, equitable for all, with both sanctions for the misbehaved and benefits for those who govern prudently.
But it also could be a source of revenue for growth, green growth and jobs, infrastructure projects from IT to transportation, renewable energy connecting Western Europe with Central and Eastern and Southern Europe, funds for innovation and education, funds for stronger competitiveness.
Eurobonds could easily be tied to major reforms. In Greece we are not simply using the mechanisms alone to service our debts. We are using the crisis as an opportunity to make very deep structural reforms that will prevent such a crisis from recurring, but also making our society more transparent and more just.
Exactly the same principle should be applied when we are dealing with the global economy. Simply bailing out banks to the tune of trillions of dollars, without addressing the underlying causes of the financial crisis, doesn’t make any economic sense. And it certainly doesn’t make any sense in terms of social justice. Ordinary citizens are still paying a very high price for bankers’ profligacy. It makes no sense in terms of democracy.
We in Greece know we had a mess to clean up. We took loans that give us time to make the deep changes, because we are accountable, because we are democratic governments responsible to the common good.
Yes, we are taking the pain to change, so that we won’t wind up in the same situation later on. But did we do the same for the banks? We gave them trillions, not billions. But did we ask them to do anything to change? Did we reorganise our financial governance around the world?
The answer is no. No democratic accountability, no real regulation. Only window dressing and a lot of words.
Who is to blame? Not the banks, but the conservative politics. And that is what we have to change.
Before I conclude, one more point on conservative politics. Conservative politics risk tearing the European Union apart. Just now, when the European Union is most needed as a strong defence, but also a democratic player around the world.
Now that we need to promote a just global economy, democratic global governance, rule of law and protection of human and social rights, where we do not lose competitiveness and jeopardise our welfare systems because of the low labour costs, lack of collective bargaining, non-existent welfare systems and often blatant exploitation of our fellow human beings in developing and emerging economies.
They, the conservatives, talk the politics of austerity, we the politics of responsibility.
But they also talk the politics of fear and scapegoating. Conservatives fear change; they fear reforms that might threaten existing power structures.
But they espouse the politics of fear. The politics of fear has created fertile ground for racism and right-wing extremism in Europe.
I am not talking about the obvious, the Roma or the Muslims or the Africans or the Arabs. Once you start scapegoating, once you play the politics of fear, it becomes contagious, and it undermines our democracy, it undermines our cohesion, it undermines our social cohesion, it undermines our sense of union in Europe, and it moves us back into our nationalistic corners.
And if we fear, if we develop the fear, the fear of anything and everything different, we are all in peril. We will lose the trust amongst us.
If we do not stand together, how will we deal with the voracious appetite of the markets? They will pick us off, one by one, one at a time.
Let me give you an example. I recently ran part of the Marathon. Historians say that that epic battle was won, not because of courage or military prowess, although they were also present, but because the ancient Greeks, the ancient Athenians were able to fight one for all and all for one. And this was translated to their hoplite formation, as it was called.
But why did they have that spirit and the opponents did not? Simple: because of democracy. The sense that all were equal, respected, trusted, as if one.
This is the democratic spirit we must not lose today in Europe. I say that because I see nationalism and scapegoating creeping into our public discourse. I say that, for example, because I belong to a group called the PIGS. Yes, I don’t know if I look it, but I am also one of the PIGS. And I am proud to be one of the PIGS, which stands for Portugal, Italy or Ireland, Greece and Spain.
Well, you know I am proud to be Greek. No matter what we may say or what we may be going through, I deeply believe in Greece, in my country, in the Greek people.
But as a European and as a social democrat, let me also say whether in trouble or not, I am proud to be Portuguese, I am proud to be Italian, I am proud to be Irish, I am proud to be Spanish.
But if Hungary or Slovakia were to be threatened, I would be proud, and I am proud, to be a Slovak. I am proud to be Polish.
If Germany was threatened, I am proud to be German. If France was threatened, I am proud to be French. Because I am proud to be European, and I am proud to be a socialist and a social democrat.
In good times or in bad times, we stick together, whether snow or sun. Our beautiful diversity, our cultures, our languages, our different languages, our histories: our project is strong, is strong and will be strong, as long as we are united in our values. Yes, our DNA is our values, our common values.
So we, we progressives, represent a very different vision of Europe. Let us replace the politics of scapegoating with the politics of sincerity. Let us replace the politics of austerity with the politics of responsibility. Let us replace the politics of fear with the politics of trust, the politics of hope, the hope and the certainty that we can change Europe, we can change the world that we can do what we say.
Thank you very much. Thank you, Poul. Thank you, Martin. Thank you all.”