Year LXI, 2019, Single Issue, Page 84

 

 

DEMOCRACY AND POLITICS
IN THE BIG-TECH AND CYBERWARFARE AGE.
EUROPE UNDER ATTACK

 

 

Introduction.

A combination of many factors underlies the current political struggle that is leading the electorate in many countries to embrace forms of populism and nationalism, which offer emotive and seemingly easy answers to the complex problems of today’s society. And this is happening in spite of the fact that nationalist remedies cannot offer genuine solutions, as the migratory crisis, a significant example, clearly shows.

One of the aspects now emerging is the extent to which information technology has determined the success of certain political campaigns, which have often been found to be orchestrated by external powers through the use of voters’ data and profiles, as well as the activity of trolls and bot twitters, in both cases with the aim of influencing culturally weaker and more socially-economically disadvantaged sections of the population. This is a form of interference that seriously jeopardises the exercise of democratic rights, to the point that some commentators are now engaged in a fierce debate, asking whether there now even exists a liberal democracy and whether its values are still fundamental in the life of the Western democratic world, or whether that world is actually on the brink of a rapid decline.

These questions apart, there can be no denying that, for some time now, we have been witnessing the effects of a veritable war, waged with the aim of politically destabilising a number of EU member states, given that the European Union is considered the adversary of the world’s superpowers; and this war has been possible, in part, because of the political weakness of the European institutions and the room for manoeuvre that this has allowed.

Numerous authors have dealt with these issues. In this article, reference is made to several particularly significant texts and articles written by experts from a range of disciplines, specifically historian and sociologist Timothy Snyder (The Road to Unfreedom), university lecturer in information technology Giovanni Ziccardi (Tecnologie per il potere), economic sociologist William Davies (Nervous States), philosopher Remo Bodei (Vivere on line), and politician Carlo Calenda (Orizzonti selvaggi).
 

Technology and Power: the Influence of the Big-Tech Companies.

The technological age in which we find ourselves immersed has benefited us in many ways and allowed mankind to make giant leaps forward in, for example, the industrial, commercial and medical-scientific fields, in transport, and in daily life. At the same time, however, within our increasingly complex world, it has become clear that the giants of technology known as “Big Tech” companies have become central players in:

• the conditioning of individuals,
• disintermediation,
• the destabilisation of society and institutions
• collusion with politics

The economic weight of the Big Tech companies is tremendous. “Amazon captures more than one-third of all US online retail spending. Google represents 88 per cent of the US search engine market, and 95 per cent of all mobile searches. Two-thirds of all Americans are on Facebook, which having bought Instagram and Whatsapp now owns four of the top eight social media apps” writes Rana Foroohar in the Financial Times.[1]

According to William Davies, “In particular, Google, Apple, Facebook, Amazon […] are acquiring unprecedented insights into our thoughts, feelings, movements, relationships, and tastes, of a sort that was never available to traditional social scientists, statisticians, or market researchers.”[2]

In June 2015, Mark Zuckerberg, the inventor and owner of Facebook, which now has over two billion users, unveiled bold new development programmes: “One day, I believe we’ll be able to send rich thoughts to each other directly using technology. You’ll just be able to think of something and your friends will be able to experience it too, if you’d like. This would be the ultimate communication technology.”[3]

Analysing and further exploring this perspective, Davies remarks that “the fantasy of brain-to-brain communication is becoming a reality, without requiring paranormal leaps” and that it “will depend on a form of language, just not one that most people are able to understand when they see it. The means of communication will have become privatised”[4]. “Mental processes are tasks, which can be split into a series of separate chunks: this is what it means to process something digitally. These tasks can be pieced together in the form of code, which a machine can then execute one by one. Mark Zuckerberg’s belief in telepathy ultimately rests on the idea that ‘thoughts’ are nothing but a series of physical motions, whose patterns can potentially be read like the smile on a face or an encrypted message to be cracked.” [5]

“The broader philosophical fear is of a society in which people become readable pieces of data, without any recognised interiority.”[6]

A development that further underlines the influence of Facebook came on June 18^th, 2019, when Mark Zuckerberg presented the company’s digital currency, the Libra, initially to be used between twenty or so very large commercial or financial enterprises, such as Uber, Spotify, Visa, Mastercard, Paypal and Free. This power to issue and control a currency, hitherto a prerogative of states, can be expected to reduce the monetary sovereignty of central banks, and the power of state institutions, and it has the potential to undermine the functioning of democracy.

These profound technological changes, and particularly the speed at which they have occurred, have had an unsettling and bewildering effect especially among the older section of the population, many of whose members may be economically, socially and politically marginalised.
 

The End of the Bipolar Equilibrium and the Effects of Globalisation.

It would be wrong, however, to attribute people’s fears solely to distorted use of technology. The end of the bipolar equilibrium and the strengthening of the process of globalisation, both producing various negative phenomena, have also played a part in stoking people’s fears, and have thus contributed to the tendency of today’s electorate to adopt irrational stances. By negative phenomena, we mean:

— the US-triggered economic and financial crisis that began in 2008,

— uncontrollable wars,

— the severe effects, in some parts of the world, of global heating,

— the migration phenomenon,

— the wealth imbalances that have become particularly marked, especially within countries.

One of the topics dealt with by Timothy Snyder in his book The Road to Unfreedom,[7] which focuses mainly on the destabilising influence of Putin’s Russia on the Western liberal democracies, is indeed the large disparity in socio-economic and political conditions present within different countries, and how this, among other factors, has left people feeling detached from traditional politics. Britain’s situation is emblematic in this regard. As pointed out by William Davies “Britain has a similar story to tell with the most extreme polarisation of rich and poor regions of any nation in Western Europe contributing directly to the outcome of the Brexit referendum. Output per head in West London is eight times higher than it is in the Welsh Valleys, which was one of the most pro-Brexit regions.” Similarly, “in 2010-15, median household wealth in London rose by 14 per cent, while it fell by 8 per cent in Yorkshire and on the Humber, areas that also featured strongly pro-Brexit votes. Britain’s economy is the fifth largest in the world, and yet the majority of regions experience GDP per capita below the European average, something that is concealed by the disproportionate wealth and productivity of London.”[8]

 
A New Way of Doing Politics.

All this has led to an increasingly confrontational world and the development of a tendency to react to events emotionally rather than rationally. Accordingly, hitherto indisputable truths have been called into question, such as the truth and reliability of statistics and official data, scientific methods, and expert opinion, the latter considered biased; in addition, for some time now there has been a growing mistrust of parties and ideologies.

For Bodei, “The most striking thing today is […] the waste of intelligence, the contrast between, on the one hand, the possibilities offered by modern technology and by modern schooling and, on the other, the widespread decline in or blunting of common sense, which sometimes leads to incredible levels of credulity”[9].

Most people react to the complexity of the situation by seeking simple solutions, or by losing interest in politics and ceasing to engage with it.

Some politicians have been quicker than others to intercept and play on people’s fears and feelings of disquiet. Leveraging the general discontent, they have implemented a new way of doing politics, based on the use of social media and the spreading of violent messages, and in so doing they have offered people a vent for their anger.

Exploiting new communication technologies, they have constructed political campaigns that target, and seek to harness the votes of, the fearful and dissatisfied sections of the population, giving them the chance to interface directly with the political decision-makers, encouraging them to demand ‘everything now’ and to play a key role in the fight against perceived elites and the complete rejection of mediation.

As Davies has pointed out, populists are terrible decision makers but they have excellent slogans, effective gatherings and few scruples about lying. The hidden promise of nationalism is that of giving meaning to ordinary people’s lives.[10]

 
Big-Tech Companies and Cyberwarfare.

In his book, Tecnologia per il potere, Giovanni Ziccardi reveals that “today, in almost all countries, most people spend up to eight hours a day on social networks”[11] and that these have thus become instruments of a ferocious war waged not with weapons but with technology. We are facing a cyberwar in politics, in which, according to the philosopher Remo Bodei, “interactive media, especially the Internet and social networks, now represent the incubator, or new hothouse, of politics: ‘sites’ where consensus is not manifested and distributed through traditional means (government, parties, newspapers, street demonstrations), but is forced, drugged”[12].

Part of this cyberwarfare is orchestrated by Russia. In fact, “Vladimir Putin has expressed the view [...] that the country that leads the world in artificial intelligence will dominate the twenty-first century.”[13]

According to Dmitry Kiselev, coordinator of Russia’s state international news agency, “information war is now the main type of war”[14].

“The notion of ‘weaponising’ everyday tools has become a familiar part of the political lexicon. The Kremlin has been accused of seeking to weaponise social media so as to disrupt democratic elections and spread confusion in the media [...] Facebook and Twitter can be treated as tools of disruption or even violence, as they have the capacity to destabilise and spread fear.”[15]

This policy of disinformation, pursued principally by Russian agencies, dates back at least to the time of the 2014 war in Ukraine; to date, Brexit and the election of Trump are the most significant fruits it has borne, a fact also underlined in an interesting article by Scandinavian journalist Karin Pettersson, who wrote: “Since the 2016 ‘Brexit’ referendum and the election of Donald Trump as US president, the following year, discussion about the negative impact of social networks on democracy has intensified. ‘Fake news’, disinformation, Russian interference and propaganda have become the new normal. In a recent TED-talk, the Guardian journalist Carole Cadwalladr described how Facebook became a platform for lies and illegal behaviour in the Brexit campaign.”[16] Pettersson, remarking on the content of Mark Zuckerberg’s address to the company’s annual developers’ conference held on May 1^st in San José, California, points out that “Facebook is now more powerful than most nation states” and asks whether there exist democratic solutions that may be implemented to address this situation or whether, as argued by the economist Dani Rodrik, the real problem is the trilemma whereby “hyperglobalisation, democratic policies and national sovereignty are mutually incompatible” and can never all three exist “simultaneously and in full.”[17]

What underlies cyberwarfare? And how does it play out? Giovanni Ziccardi, in his book, explains it all very clearly, stating that: “the fact that misuse of technology has the capacity to upset electoral and democratic balances is well known and has long been under the lens of states, candidates and specialists in communications and politics”[18], and also that “the technique of data falsification and the use of violent language are typical of this strategy. A broad look at the current framework of online politics reveals a scenario that is far from reassuring. The era of falsification of information and online dissemination of mutual accusations seems to be in full swing, with the use of pre- and post-election messages amounting to the creation and spreading of false assumptions and personal attacks.”[19]

Ziccardi highlights, in particular, how control of user data is one of the ongoing battles, citing the data scandal that blew up around Cambridge Analytica, the political consulting firm that “after gaining access to Facebook profiles was able to harvest the data of 87 million users”[20], data that were subsequently used to influence the choices of the electorate in the Brexit referendum and the 2016 US presidential elections. He also invites readers to “consider […] the suspected Russian interference in the conducting of elections held in other countries (primarily in North America, the UK and France), the frequent allegations of deliberate and organised dissemination of false information or hatred via Facebook, Twitter and in WhatsApp groups — as in the recent election in Brazil won by Jair Bolsonaro —, as well as similar allegations concerning the activation, also in Italy, of veritable digital mud-slinging machines that, set up in a matter of seconds, serve to mercilessly attack and denigrate opponents or critics of a particular political force.”[21]

“For the first time in the history of politics, the entire world was shown how, through a team, a structure, a strategy and a huge database — all specifically created to manage technologies, profile potential voters and collect their contributions, and exploit big data and the creation of social media data archives and social networks —, information technology and technological platforms could be an essential and decisive factor behind unexpected electoral outcomes. In short, they showed that the world’s most important elections could be won by placing technology, as the driving force, at the heart of the electoral strategy.”[22]

Snyder, too, asserts that the “Russian campaign to fill the international public sphere with fiction began in Ukraine in 2014, and then spread to the United States in 2015, where it helped to elect a president in 2016.”[23] In a comment alluding to the fact that Russian money has previously saved Trump from bankruptcy, he adds that it is more than speculation that the US elections were piloted by Moscow: “Russians raised ‘a creature of their own’ to the presidency of the United States.”[24]

In an interview given to Public Radio International, Lyudmilla Savchuk, a journalist who worked under cover for two and a half months in a “troll factory”, explained how the Internet Research Agency works. Here, she found hundreds of mainly younger people working in rotating shifts around the clock. Some, known as “demotivators” were dedicated to producing visual memes. There was also the “news division,” and a department staffed by “social media seeders” [...]

“Despite the division of labour, the content was remarkably uniform. The US, the EU, Ukraine’s pro-European government, and Russia’s opposition were regular targets for scorn. And then there was Russian President Vladimir Putin —seemingly no Russian triumph under his rule was too small to warrant a celebratory tweet, meme or post.”

The operation was run by Evgeny Prigozhin, a restaurateur from Saint Petersburg. “Often called ‘Putin’s Chef’ for his close ties to the Russian President, Prigozhin was placed under US sanctions in 2018 for what American officials say was a coordinated attempt to interfere with the US elections”; “he was indicted by Special Counsel Robert Mueller’s investigative team last year.”[25]

 
Attacking the EU.

Carlo Calenda, too, highlights the existence of “a clear strategy of destabilisation of the West and liberal democracies pursued by Russia’s leaders.”

“Russia [...] has lost all its links with Europe and the West and has gone back to conducting aggressive and ruthless power politics. [...] Orbàn, Salvini and Le Pen are all inspired by Putin, from whom they have obtained support that is probably not only ideological.”[26]

According to Davies, “the anger, intimidation, and lies that have crept into the media and civil society, destabilising institutions without constructing alternatives, can generate a downward spiral of fear and mutual suspicion. Politicians of the far right, often loosely allied to online and offline crowds using intimidation, are successfully mobilising people who are and feel disempowered. Across Europe, the European Union provides a target for nationalists seeking to explain why their society isn’t safer and richer.”[27]

Snyder, referring to the situation in the UK, writes: “All of the major Russian television channels, including RT, supported a vote to leave the EU in the weeks before the June 23, 2016, poll. [...] Russian internet trolls, live people who participated in exchanges with British voters, and Russian Twitter bots, computer programs that sent out millions of targeted messages, engaged massively on behalf of the Leave campaign. Four hundred and nineteen Twitter accounts that posted on Brexit were localised to Russia’s Internet Research Agency—later, every single one of them would also post on behalf of Donald Trump’s presidential campaign. About a third of the discussion of Brexit on Twitter was generated by bots—and more than 90 per cent of the bots tweeting political material were not located in the United Kingdom.”[28]

“In the 2017 French presidential campaign, Marine Le Pen praised her patron Putin. She finished second in the first round of elections that April, defeating every candidate from France’s traditional parties. [...] In the second round, Le Pen received 34 per cent of the ballots. Though she lost to Macron, she did better than any other far Right candidate in the history of postwar France. To support the Front National was to attack the European Union.”[29]

Disruptive interference has always been present in politics, but now, as a result of the use of new technologies and social platforms, its power is unprecedented and overwhelming.
 

Efforts to Stop the Interference.

Ziccardi points out that “with big data and the use of digital technology now at the centre of political activity, security has become the key issue, given the increasingly widespread use of information technology in election campaigns.”[30]

On June 14^th, 2019, a European Commission progress report on the fight against disinformation referred to evidence of sustained disinformation activity carried out by unnamed Russian sources in the run-up to the European election, with the aim of reducing turnout and influencing voter preferences.

Macron, in his open letter to the citizens of Europe on March 4^th, 2019,[31] highlighted the EU’s need to create a European democratic protection agency: “Our first freedom is democratic freedom: the freedom to choose our leaders as foreign powers seek to influence our vote at each election. I propose creating a European Agency for the Protection of Democracies, which will provide each member state with European experts to protect their election process against cyberattacks and manipulation. In this same spirit of independence, we should also ban the funding of European political parties by foreign powers. We should have European rules banish all incitements to hate and violence from the Internet, since respect for the individual is the bedrock of our civilisation of dignity”.

On June 2^nd, 2020, the French National Assembly began discussing how to stem the growing intrusiveness of Google, Facebook and Amazon in political debate, and how to tax these entities.
 

Democracy and the Political Crisis of the West.

This war of information is undermining the democratic rules of dialogue-based consensus building that, until now, have applied in the Western world. It is a global war, yet it is being fought in our very homes through social media (Facebook, Google, YouTube), which are greatly influencing the way people think, particularly those without the cultural tools necessary to defend themselves.

Bodei remarks that “many have the feeling that, within democracies, politics has been emptied, from within, both of its rational motivations and of its civil passions, leaving just a hollow shell of spectacle that has been filled with emotivity that offers little in the way of content”; and, further, that “nowadays, the truth is threatened by what those in Trump’s entourage call ‘alternative facts’, because we now live — this is an expression that is taking hold — in the post-truth era.”[32] Bodei even wonders “whether democracy still exists, or whether we have not, instead, already entered the post-democracy age, which is taking the form of populism, demobilisation and infantilisation of the masses, elective autocracy, conformism, relegation of truth to mere opinion, and loss of the ability to judge, an ability often paralysed by artfully spread fears. All these factors are making individuals, given their levels of insecurity and complementary need for reassurance and protection, less rational, and generating a sense of alarm mixed with resignation. In the mechanisms designed to ensure the citizens’ protections and guarantees, something has broken down: it is though a lowering of immune defences has given the powers of seduction more room for manoeuvre, and allowed analysis, reasoning and projects become to be turned into mere storytelling.”[33]

As Nunziante Mastrolia explains, “democracy is at risk when it abandons ‘the people’ and panders to ‘the crowd’”, where crowd, a holacratic concept developed by Plato, refers to a lawless, degenerate entity. “The crowd is a mass that fears the future. A fear that can be accentuated by the lack of a livelihood (or by the perception of a relative impoverishment) or by the absence of the intellectual tools necessary to rationalise the problems that afflict it. […] The mass that fears the future feels poor and sees itself as a victim of dark forces that are ruining its existence (any scapegoat will do); […] letting the crowd enter the liberal citadel means opening the door to tyranny. It is no coincidence that the great despots of the twentieth century, from Mussolini to Hitler, did not seize power overnight with a coup. Instead, they did so to the applause of cheering crowds! The crowd is reactionary and irrational [; instead,] there has to be a people for there to be democracy.” The people is a political construct resulting from great achievements such as the welfare state and the constitutionalisation of institutions, which brought freedom from fear, poverty and ignorance: “the political crisis of the West derives from having produced such an extraordinary scientific, technological and economic change that the political and social structures, designed for the Fordist era, are unable to treat and prevent the harmful side effects that such progress has had on large swathes of citizens of Western open societies: citizens who are now afraid. The political crisis of the West comes down only to this! The fact of having allowed the people to become the crowd, without intervening to prevent this transformation. It was the crowd that voted for Brexit, the crowd that voted for Trump, and the crowd that voted in populists in Italy.”[34]

Davies, too, remarks that a “sense that we have entered a new age of crowds is heightened by the growth and rising influence of social media” and he also points out that “crowds have been a feature of politics since ancient times, but they never possessed real-time coordination tools until the twenty-first century.”[35]

Calenda, on the other hand, says that a main reason for the crisis of liberal politics and democracy in the West is “the separation of politics and power resulting from the weakening of the nation-state. As the international markets have come to prevail over the national markets, the state has gradually lost its powers. But this process has not been accompanied by the birth of an international democratic political power. The only experiment of this kind has been the European one, but [...] economic integration has advanced much further than political integration [...]. The internationalisation of the economy has thus ended up weakening liberal democracy [...;] when the pace of change impacting on society exceeds society’s capacity to adapt to it, the citizens, justifiably, continue to demand that the state provide them with protections and guarantees.”[36]

Vladimir Putin, in a recent interview with the Financial Times said, among other things, that: “the liberal idea has become obsolete. It has come into conflict with the interests of the overwhelming majority of the population” and that “our Western partners have admitted that some elements of the liberal idea, such as multiculturalism, are no longer tenable.”[37]

The most recent election results, which have seen many countries rejecting traditional liberal-democratic forces in favour of populists and nationalists, seem to support Putin’s view. In fact, it was excessive and unfettered liberalism that created the conditions for the financial crisis and the emergence of huge disparity in wealth, well highlighted in Thomas Piketty’s Capital in the Twenty-First Century,[38] that have resulted in today’s deeply fractured society.

Liberal democracy must be combined with social justice and liberal excesses must be controlled. Furthermore, in the words of Martin Wolf, responding to Putin’s claims, “Liberal societies do need shared values and identity. That is perfectly compatible with immigration and enduring cultural differences. But both need to be managed: otherwise, popular discontent will bring to power leaders who despise the norms of liberal democracy. The fragile balance might then collapse.”[39]

While the illiberal oligarchy present in Russia, a country where income gaps are among the highest in the world, is clearly not the answer, the fact remains that democracy in our countries finds itself plunged into a deep crisis. As Calenda remarks, “only 47 per cent of Europeans and 31 per cent of Americans consider it essential to live in a democracy”[40] and in Italy “over 73 per cent of under-20s are politically uninformed, and 30 per cent never talk about politics.”[41]

Is our increasingly cybernetic society therefore destined to be a society without values and without respect for life and human dignity? A society that fails to grasp the consequences of what it does, and that, in the grip of negative and destructive emotions, loses individual references and becomes part of a mechanism or robot, a society that forgets history, or an indifferent society in Gramsci’s sense of the term?

Is there still time to mount a European resistance on behalf of mankind?

 
What to Do and the Illusion of Continuity.

The globalised world really is a new world that, politically speaking, demands new attitudes from Europe, which must, in particular, avoid adopting a simple wait-and-see strategy.

It is important to recognise that there is nothing Europe’s nation-states can do, singly, to address the huge power imbalances present in the world.

Even though, in this schizophrenic framework, Europe, should it choose to settle for the status quo, runs the risk of spiralling in on itself and collapsing, it nevertheless remains, for now, the world’s only real bulwark of democracy and civilisation. But, we have to recognise that the Europe we have is one that has been self-referential for far too long, and whose supporters, even those hailing from parties that profess to be progressive, have always been too lukewarm in their support of European unity, and not always thrown themselves wholeheartedly behind the cause.

The enemies of European unity, starting with Trump, Putin and, to an extent, China, are both numerous and strong, and they act by fomenting discontent, by financing anti-European parties, by managing cyberwarfare, and by implementing the divide and rule strategy; or, alternatively, they wait on the sidelines ready to grab the pieces of the crumbling Union.

The strength of these enemies is such that there can be no continuing with the policy of small steps, under the illusion that continuity will win out.

This is a misconception that Snyder explains very clearly: “Americans and Europeans were guided through the new century by a tale about “the end of history,” by what I will call the politics of inevitability, a sense that the future is just more of the present, that the laws of progress are known, that there are no alternatives, and therefore nothing really to be done. In the American capitalist version of this story, nature brought the market, which brought democracy, which brought happiness. In the European version, history brought the nation, which learned from war that peace was good, and hence chose integration and prosperity.”[42]

The most important and urgent thing is to build a new European institutional framework that, within the Union, can implement a federation project involving the countries that are most in favour of this endeavour.

It has become necessary to work out a new model of social development based on reduction of economic imbalances, to make institutions influential and authoritative once again; and where these are inadequate, as in Europe, we need to find effective political responses to the serious global problems that today’s “new politics” is unable to address.

As reported across all the leading media channels, the Federal Trade Commission, the independent US consumer protection authority, recently fined Facebook 5 billion dollars for furnishing Cambridge Analytica with the data of around 87 million users for political purposes.

What is needed, in place of today’s nation-states that lack the necessary size and resources, is a European federation capable of controlling, with appropriate laws, the excessive power of the Big Tech companies.

The right wing and populist parties were quicker than the progressive ones to really appreciate the hardships faced by the sections of society most in difficulty, and exploited these as a means of manipulating them. The disorientation felt by much of the electorate is, indeed, the fabric and basis of nationalist and populist action. If the nationalist agenda wins and, in the ensuing chaos, Europe falls, this will lead to the war the superpowers are perhaps hoping for.

But who should be doing what in a European Union in which 27 countries want the single market but are, in many cases, opposed to the ideas of deeper integration and a political Europe? What might be the starting point?

As Calenda has pointed out “the European integration process can be furthered only by (and among) a group of states that might be considered an enlarged founder members group (Germany, France, Italy and Spain). […] The rift with the Visegrad countries is definitive […] To counter the Visegrad group, it has become necessary to establish a ‘Rome Group’ (named in honour of Europe’s birthplace) that can constitute the hard core of the future federal Europe.”[43] “This may prove to be a difficult path to follow, or even impossible, but there are no alternatives. Unless the climate of mistrust can be eliminated, at least among a smaller and more homogeneous group of countries, then there will be little that the EU institutions can do to move Europe forward […]. And we have to act soon, because the next financial or geopolitical crisis (be it over migration or war) risks being Europe’s last.”[44]

The federal structure characterised by autonomous power at different levels, ranging from neighborhood to European and, ultimately, global level, is the ideal structure for meeting the challenges of globalisation, combatting divisions and hatred, and restoring confidence in the future.

Let us “turn the crowd back into a people and look to the future with the confidence of an open society.”[45] Or, as Snyder urges, let us “halt our thoughtless journey from inevitability to eternity, and exit the road to unfreedom. [The time has come to] begin a politics of responsibility.”[46]

This is, in fact, the crux of the matter, and it goes beyond the question of external interference (influential as this undoubtedly is): it is up to Europe to believe in itself and abandon the status quo. Through an initially small group of countries, it must start creating a genuine European political decision-making power, in the new ways that politics demands, and it is up to the progressive and liberal parties to quickly shoulder their responsibility for promoting this.

Anna Costa

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[1] Rana Foroohar, Big Tech is America’s new railroad problem, Financial Times, 16 June 2019, https://www.ft.com/content/ec3cbe78-8dc7-11e9-a1c1-51bf8f989972.

[2] William Davies, Nervous States, How Feeling Took Over the World, New York, Random House, 2018.

[3] Ibidem.

[4] Ibidem.

[5] Ibidem.

[6] Ibidem.

^[7] Timothy Snyder, The Road to Unfreedom, http://cd.bos.rs/online-citanka-novi-lideri--nove-mogucnosti-10/uploaded/Timothy%20Snyder%20-%20The%20Road%20to%20Unfreedom(2018).pdf.

[8] William Davies, op. cit..

[9] Remo Bodei, Vivere on line, Il Mulino, 490 (2017), pp. 207-208.

[10] William Davies, op. cit..

[11] Giovanni Ziccardi, Tecnologia per il potere, Milan, Raffaello Cortina Editore, 2019, p. 116.

[12] Remo Bodei, op. cit., p. 207.

[13] William Davies, op. cit..

[14] Timothy Snyder, Russia is winning the information war, Literary Hub, April 3, 2018, https://lithub.com/russia-is-winning-the-information-war.

[15] William Davies, op. cit..

[16] Karin Pettersson, The trilemma of Big Tech, https://www.socialeurope.eu/the-trilemma-of-big-tech.

[17] Ibidem.

[18] Giovanni Ziccardi, op. cit., p. 11.

[19] Ibidem, p. 51.

[20] Ibidem, p. 111.

[21] Ibidem, pp. 9-10.

[22] Ibidem, p. 18.

[23] Timothy Snyder, op. cit., p. 14.

[24] Ibidem, p. 177.

[25] Charles Maynes, PRI’s The World, The trolls are winning says Russian troll hunter, https://www.pri.org/stories/2019-03-13/trolls-are-winning-says-russian-troll-hunter.

[26] Carlo Calenda, Orizzonti selvaggi, Milan, Feltrinelli, 2018, p. 153.

[27] William Davies, op. cit..

[28] Timothy Snyder, op. cit., p. 89.

[29] Ibidem. p. 87.

[30] Giovanni Ziccardi, op. cit., p. 224.

[31] Emanuel Macron, For European renewal, https://www.elysee.fr/emmanuel-macron/2019/03/04/for-european-renewal.en.

 

[32] Remo Bodei, op. cit., p. 208.

[33] Ibidem, p. 209.

[34] Nunziante Mastrolia, La democrazia è a rischio quando abbandona “il popolo” e coccola “la folla”, https://open.luiss.it/2018/04/20/la-democrazia-e-a-rischio-quando-abbandona-il-popolo-e-coccola-la-folla/. Readers are also referred to the article by Mastrolia published in this issue of the journal.

[35] William Davies, op. cit..

[36] Carlo Calenda, op. cit., p. 143.

[37] Martin Wolf, Liberalism will endure but must be renewed, Financial Times, 2 July 2019. https://www.ft.com/content/52dc93d2-9c1f-11e9-9c06-a4640c9feebb.

[38] Thomas Piketty, Capital in the Twenty-First Century, Cambridge, Mass., Harvard University Press, 2014.

[39] Martin Wolf, op. cit..

[40] Carlo Calenda, op. cit., p. 27.

[41] Ibidem, p. 50.

[42] Timothy Snyder, op. cit., pp. 10-11.

[43] Carlo Calenda, op. cit., p. 159.

[44] Ibidem, p. 160.

[45] Nunziante Mastrolia, op. cit..

[46] Timothy Snyder, op. cit., p. 225.

 

Year LXI, 2019, Single Issue, Page 99

 

 

HOW SHOULD EUROPE AND THE WORLD BE GOVERNED IN THE ERA OF GLOBAL INTEREDEPENDENCE?

 

 

By 2050, around 70 per cent of the world’s population, almost 7 billion people, will be living in urban areas. This figure, unprecedented in the history of mankind, reflects a trend that is destined to impact increasingly on the dynamics of international relations and the development of entire countries and cities, especially those that have been drawn most deeply into the process of globalisation. In short, cities are becoming more and more interconnected and equipped to use technologies and infrastructures that, worldwide, are changing the way in which individuals consume space and time. However, at both continental and global level, the world still lacks institutions equipped to rise to the challenge of governing the phenomenon of growing global interdependence. Furthermore, those responsible for tackling the global challenges we face, while well aware of this phenomenon,[1] find themselves helpless in the face of it. For this reason, it has become crucial to understand how cities are changing, and also to identify and analyse the nature of the relations between them, the institutional frameworks within which they interact, and the power relations that govern their interactions. It has been estimated that by 2040, the world will be faced with the need to invest 15 trillion dollars in infrastructure in order to boost and and manage trade flows and global connectivity between the world’s major urban areas, between more and less developed countries, and between urban and rural areas.[2]

For geographical, historical, political and economic reasons, Europe lies at the heart of these challenges.[3] However, although continental Europe should, by now, have the experience necessary to affirm a new model of state — specifically, one in which coordination between different, independent levels of government can and must coexist with democratic control of, and participation of the citizens in, decision-making processes split among these levels — , this new institutional model is struggling to take shape and become established. Instead, we are witnessing resurgences of localism and a tendency to retreat into old ideological, national and/or micro-national positions that, in addition to being narrow and anachronistic, hinder any progress towards a more integrated, structured and coordinated institutional system on a supranational scale.

There is no shortage of analyses and studies on the high level of interdependence now reached in practically all sectors of development, or of evidence confirming the need to create institutions more appropriate to the level of scientific and technological growth achieved by humanity.

On the other hand, we still lack political-institutional reference models that can be used to govern the growing interdependence at both continental and global levels.

* * *

One study, among others, to have clearly highlighted and analysed the growth of global interdependence, is by Parag Khanna,[4] who showed that “connectivity is the most revolutionary force of the twenty-first century.” In his analysis, Khanna illustrates, through data and examples, the reality faced by different political leaders during their time in government.[5] In so doing, he provides evidence substantiating what the historic urban planner Lewis Mumford had already intuited decades ago in his studies on the city, namely, that whereas single cities were once worlds unto themselves, over time the world itself is destined to evolve into a single global city.[6]

However, as journalist Carlo Bastasin has explained, the challenge we face concerns, precisely, the difficulty institutions and individuals are having in adapting to the rapid transformation of economic structures and processes of interaction in the era of new technologies, global trade and the shift from industry to services. With respect to this transformation, societies are reacting in two different ways. In regions that, for geographical and historical reasons, are well integrated into global production chains (Catalonia, Veneto, Lombardy, Greater London, Holland, Bavaria and so on), it has resulted in greater mobility and growing autonomy, and this has made these regions impatient with the inertia and inadequacy of states and individuals that want to remain sheltered from the realities of competition, or wish to benefit from the status quo. On the other hand, on the edges of this global change (in the central states of the USA, large areas of Russia, the North of England, Greece, Southern Italy and Spain, Eastern Germany), there has emerged a fear of backwardness and, in some cases, a sense of impotence. In these regions, the industrial transformation has been exacerbated by a reduction in investment in, and support for, nationalised industries (compared with the levels recorded in the 1950s-1970s) and a decline of the basins of labour-intensive raw materials. At the same time, in almost all these regions, individual mobility, in both a cultural and a geographical sense, has become an increasingly pressing need. All this has had the effect of fostering feelings of rootlessness, victimisation and longing for a perceived bygone golden age.[7]

In this context there have emerged, worldwide, two conflicting phenomena at the various levels of government: fragmentation versus integration of commercial, economic and industrial policies. And the smaller European states are, at once, victims of and leading players in the tussle between them.[8]

* * *

The growth of connectivity and of direct interaction between large cities has created the illusion that we can do without state institutions, which are deemed limited on account of their purely national dimensions and capacity for action, and also ill-prepared to promote and govern growth, development and progress at supranational level, given the still embryonic of forms of government existing at this level.

Nearly three decades ago, Jane Jacobs likened urban planning and development to a pseudoscience,[9] saying that it still consisted of bloodletting rather than effective therapies. Now, as then, we have clear diagnoses, but as yet only rough prognoses, and still no effective method of treating the problem. This state of affairs plays into the hands of populist and demagogic forces, as it enables them to exploit popular discontent with the existing powers and institutions. By targeting and leveraging the malaise of specific sections of the population — those that consider themselves victims, not protagonists, of globalisation and the technological revolution, and fear that massive immigration will leave them economically and socially marginalised —, they are able to promote the rise of personalities and political formations that merely adopt an anti-system stance, but have no real capacity to tackle and solve the problems we face.

Thus, the phenomena of fragmentation and integration of political and economic policymaking have become increasingly intertwined. But none of the fiscal or monetary stimuli introduced over time by different governments can resolve the conflict between them, and this fact has resulted in the creation of a vicious cycle in which, at all levels, the disintegration of political cadres feeds social crises, and vice versa. Meanwhile, the era of global connectivity is advancing, to the point that more infrastructures are expected to be built worldwide in the next forty years than in the last four thousand, and people are moving into cities at a rate of around 150,000 per day.[10] At the same time, the world order founded on relations of force and power between states is finding itself increasingly influenced and undermined by private actors seeking to act outside the framework of democratic institutions and rules.[11] Meanwhile, the new principles shaping the governance and evolution of the world order seem to be based, more and more, not on power relations between states, but on the direct connectivity that exists between urban centres, and on the new multinational giants’ control of the supply chain of the raw materials needed to feed the new mode of production. In this setting, the world region in which the conflict between fragmentation and integration processes is most clearly visible is Europe, i.e. the heart of global production and commercial processes, the focus of nationalist and sovereignist siren calls, and the site of the world’s most advanced supranational power building process. China, on the other hand, is the continent in which other contradictions inherent in the new global mode of production are becoming increasingly acute, with the risk of generating new tensions and conflicts.[12]

* * *

Environmental issues, i.e. the impact of human activities on ecological balances and the livability of our environment, are now key considerations in all countries’ economic policy management processes. Precisely because urbanisation is now a global phenomenon, any economic activity, meaning any production and consumption of goods, rapidly translates into a potential threat to the environment. We saw this with the CFC refrigerants used for preserving food. Initially considered harmless and indispensable resources, it was subsequently discovered that they posed a threat to the atmospheric balance and contributed to the deterioration of the ozone layer. Another example is the widespread use of plastic materials for packaging, marketing and preserving food and consumer goods, with the disposal of these materials now widely acknowledged to be a serious environmental problem. Evidently, the solution does not lie in regional and/or national level regulation of the production, marketing and use of these and other materials that have been and will be invented; rather, the management of these environmental emergencies depends on the promotion and application of binding, continent-wide and global agreements and rules on the consumption of products.[13] As indicated above, in an increasingly interconnected, interdependent, densely populated and urbanised world, every good produced and consumed is bound to have, over time, a global environmental impact. Hence the crucial need to establish a new institutional order that connects and coordinates all levels of government.Over time, Europe has seen the development and establishment of various models of urban and territorial planning, linked to ever more complex and structured institutions. As a result, the continent’s institutional urban landscape now includes expressions of the centralised, exclusivist model (e.g. London, Paris, Vienna and Berlin), of the highly environmentally oriented polycentric model (found in the Netherlands and in the Rhine region of Germany for example), and of the market growth-oriented model, characterised by a number of hierarchical stratifications (as seen in Bavaria and Lombardy). The centralised model became established in the wake of historical and political situations that favoured the consolidation of national institutional systems. The polycentric model, typical of the Netherlands, is still based on a few large centres, such as Rotterdam, Amsterdam, Utrecht and The Hague, linked to each other by efficient transport networks; this model minimises labour mobility but allows great mobility of goods, and the maintenance of sizeable green areas between the different urban centres. Conversely, the market-oriented model favours the centralisation and concentration of economic and production activities in a small number of cities. It is exemplified by Northern Italy’s industrial triangle of Turin, Milan and Genoa.[14] Europe is the world region in which the questions of quality of life and how to govern the growing interdependence between large urban areas have assumed particular relevance, highlighting the need for detailed, democratic planning at supranational level. This planning clearly cannot be carried out within the framework of the existing nation-states, but requires a federal-type institutional structure consistent with the expression and exercise of the general will at multiple levels of government. Despite what some still seem to be suggesting, this structure cannot be one that replicates old models, such as those based on the coexistence of a multitude of nation states, or on interaction between cities or regions; the model to follow is that of a multilevel federal state created on a continental and, eventually, global scale.[15] In fact, such a state envisages not just two levels of government, but multiple levels, whose territorial limits must coincide with the natural spheres of influence of central goods and services (of different orders of complexity and specialisation), and of the “institutions” that supply them.[16]

* * *

To understand more about the causes of territorial imbalances, it is useful to recall several elements of the theory published by Walter Christaller, and the method he used to shed light on the spatial arrangement of settlements. His starting point was the observation that every economic and production process has a spatial dimension that derives from the distribution of the centrality of the goods and services offered.[17]

After an initial study that focused on a region of Germany, Christaller attempted to apply his theory at European level, but the results of this research were poor due to the lack of data available. His aim, in conducting these studies, was to provide a practical demonstration that a city’s main purpose, or even fundamental characteristic, is to be at the centre of a territory. Hence his use of the term central places (Zentralen Orte). However, in order to determine the importance of a place in terms of its centrality, we need a method able to translate this quality of centrality into quantitative data.[18] This method, to be credible, and as objective as possible, must be based on the measurement of data and information flows between cities. Whereas the economic success of trade in central goods can be considered to be reflected in the income index of those who offer and use these goods, the success of entities providing services such as education and security cannot be evaluated in the same way. Christaller’s solution, to get round this problem, was to use what has become known as his telephone index: this method entailed counting the number of telephone connections, which, he explained, coincided rather exactly with the importance of a place.[19] In this way, Christaller, using rigorous formulas that analysed the number of inhabitants in relation to the number of telephones connected, obtained a map of southern Germany that differed considerably from that based simply on the number of inhabitants. Marked differences emerged in the places that, on the basis of their centrality, could be deemed important.[20] Christaller was well aware of the limits of his analysis, admitting that neither the use of telephones as a surrogate for importance, nor the calculation of centrality could be said to be precise methods in a mathematical sense; however, he argued, the values he obtained showed the central importance of a place far more accurately than the number of inhabitants, or of individuals working in trade, transport and key professions, can do.[21] In any case, through this study, Christaller managed to show that the centrality of a place corresponds to its importance surplus, and also its importance relative to the surrounding area. The importance surplus of a central place in a given region counterbalances an equivalent importance deficit of the more peripheral places. According to Christaller, historically three principles have been used to correct this importance surplus: the marketing principle (Marktprinzip) or supply principle (Versonungprinzip); the transportation principle (Verkehrsprinzip); and the administrative principle (Verwaltungsprinzip) or separation principle (Absonderungsprinzip). With regard to this third principle, Christaller was acutely aware of the huge impact that administrative and political boundary changes can have on the fate of urban centres. He had lived through the upheaval triggered by the collapse of the Austro-Hungarian Empire in the aftermath of the First World War, particularly in the border areas of Germany and in Vienna, Budapest and Bratislava, three cities that, until 1918, had been well integrated, both administratively-economically and in transport terms.[22] This topic was subsequently taken up and examined in depth from a federalist perspective by Francesco Rossolillo.[23]

* * *

Increasingly, large cities are connected directly with each other economically, commercially and through flows of data, information and people, and this is a powerful driving force for the production and consumption of goods, services and energy on a global scale.[24] To consider only the economic aspect, in 2017 the world’s ten largest cities together generated a “GDP higher than Japan’s, as well as France, Germany and Italy combined”,[25] and some studies suggest that within the next 20 years, cities will be producing 80 per cent of the world’s wealth. Meanwhile, on the pollution control front, it is worth remembering that, by definition, substances that are harmless to the environment and humanity in small quantities can become harmful and dangerous when they spread on a global scale.[26] All this, in addition to generating a widespread awareness of the great benefits and advantages to be derived from good governance of the phenomenon of interdependence, is also fueling, at all levels, a widespread sense of disorientation in citizens, as well as a crisis of political representation. This is giving rise to the dangerous illusion, skillfully fed and exploited by some, that it has become possible to establish a sort of global direct democracy through the use of new social media channels.[27] For this reason, it has become crucial to show, starting with the political-institutional consolidation of an initial group of eurozone countries, which have already renounced monetary sovereignty, that it is possible to establish a new, supranational model of state — one based on multiple independent and coordinated levels of government within a federal framework.

Franco Spoltore

---

[1] In this regard, see Chancellor Merkel’s intervention on February 16, 2019, at the Munich Security Conference, where she alluded to Humboldt's remark that everything is interdependent ”Alles ist Wechselwirkung” https://www.bundeskanzlerin.de/bkin-de/aktuelles/rede-von-bundeskanzlerin-merkel-zur-55-muenchner-sicherheitskonferenz-am-16-februar-2019-in-muenchen-1580936. Similarly, former US president Obama recently pointed out that “the world is more interconnected than ever before, and it’s becoming more connected every day. Building walls won’t change that…”, https://time.com/4340310/barack-obama-commencement-address-transcript-rutgers/.

A speech on given on 18 March 2019 by the current mayor of Milan, Giuseppe Sala, is also interesting in this regard: https://www.ispionline.it/it/eventi/evento/dialoghi-sul-futuro-le-citta.

[2] Stefano Riela and Alessandro Gili, The Future of Infrastructure: Which Options for Public Private Cooperation?ISPI Dossier, 17 June 2019, https://www.ispionline.it/en/pubblicazione/future-infrastructure-which-options-public-private-cooperation-23309.

[3] According to a Eurostat report, in 2012, around 40 per cent of the population of the 28 EU member states was already living in medium-sized or large cities. https://www.casaeclima.com/ar_9855__ITALIA-Ultime-notizie-eurostat--ue--popolazione--citt-Il-40-degli-europei-vive-nelle-citt.html.

[4] Parag Khanna, Connectography, Mapping the Future of Global Civilization, New York, Random House, 2016.

[5] Former US president Barak Obama, for example, made the following observation: “Let me be as clear as I can be: In politics and in life, ignorance is not a virtue. It’s not cool to not know what you’re talking about. That’s not keeping it real or telling it like it is. It’s not challenging political correctness (…) that’s just not knowing what you’re talking about. (…) The world is more interconnected than ever before, and it’s becoming more connected every day. Building walls won’t change that.”, https://www.nj.com/news/2016/05/full_text_of_president_obamas_speech_at_rutgers_co.html.

[6] Lewis Mumford, The City in History, New York, Harcourt Brace and World, 1961.

[7] Carlo Bastasin, E’ l’antagonismo centro periferia a nutrire i populismi, Il Sole 24ore, 13 October 2017.

[8] Milena Gabanelli and Fabio Savelli, Le città connesse saranno sabotabili: chi non protegge i nostri dati e perché, Corriere della sera, 16 June 2019, https://www.corriere.it/dataroom-milena-gabanelli/smart-city-sicurezza-dati-5g-italia-rischi-furti-cyberattacchi/366c6500-8ec4-11e9-aefd-b9bfecbb01f9-va.shtml.

[9] Jane Jacobs, The Death and Life of Great American Cities, New York, Random House USA Inc., 1993.

[10] Parag Khanna, Connectography, op. cit..

[11] This is shown, for example, by the proposal to introduce a new virtual global currency, the Libra, controlled by Facebook.

[12] In 2015, China was already importing 34 per cent of all the electronic components produced in the world, and was the largest exporter of information technology, Connectography, op. cit.

[13] As explained by Lewis Mumford, at the dawn of the industrial era, wood, and not metal, was still the material most widely used to produce handicrafts and industrial goods, including boilers and dishes/plates, in which only the part exposed to the flame was coated and protected with metal. See Lewis Mumford, Technics and Civilization, New York, Harcourt Brace Company, 1934, p. 120.

[14] Gianfranco Testa, in a series of unpublished lectures given at the University of Pavia in the 1970s and 1980s, analysed these models and their development in some depth. The cartographic material, also unpublished, prepared by Testa for these lectures can be found in his essay La difesa della natura a livello di problema urbano, in Convegno nazionale sulla difesa della natura. Aspetti economici, urbanistici, giuridici, Pavia, 1970.

[15] With his book Technocracy in America: Rise of the Info-State, 2017, Parag Khanna, who has also carried out an in-depth analysis of the growth of interdependence on a global scale, seems to indulge in the idea that city states might be restored in the modern era. In the preface to this book, he claims that “Direct technocracy is the superior model for 21st century governance. It combines Switzerland’s collective presidency executive and multi-party parliament with Singapore’s data-driven and utilitarian-minded civil service...”. In this way Khanna makes same mistake previously made by an illustrious scholar of urban phenomena, Jane Jacobs, who, after effectively highlighting the importance of the evolution of urban structures in promoting an effective and positive social life and economic and production development, in her book Cities and the Wealth of Nations (New York, Vintage, 1985), hypothesised the creation, based on a multiplication of currencies” of a system of sovereign cities tha would compete freely with each other. In this regard, see my note Jane Jacobs’ Home Remedies, The Federalist, 29 n. 1 (1987), https://www.thefederalist.eu/site/index.php/en/notes/2129-jane-jacobs-home-remedies.

[16] This point is drawn from the analysis of the structure of territories conducted by Walter Christaller in Central Places in Southern Germany (translator: Carlisle W. Baskin), Englewood Cliffs, N.J., Prentice-Hall.

[17] Walter Christaller, op. cit.: Christaller’s study dates back to the early 1930s. It was not until the end of that decade that his work began to be appreciated in the USA, and much later in Europe too.

[18] Walter Christaller, op. cit.

[19] Walter Christaller, op. cit.

[20] Walter Christaller, op. cit.

[21] Walter Christaller, op. cit.

[22] An in-depth study on the influence of state borders on the distribution of central places was done in 1939 by another German geographer, August Lösch, in The Economics of Location, New Haven, Yale University Press, 1954 (translated by William H. Woglom). The following passage is particularly relevant: “Larger market areas are always transformed along political frontiers, and all areas are changed where the borders represent merely man-made obstacles to trade. We can classify these changes into: first, destruction of locations or their removal away from a boundary, which in the absence of disturbing influences together create the border wasteland; and second, removal of locations across the border”.

[23] “All this creates an opportunity to adapt the constitutional arrangement of the federation to the structure that the distribution of central places, and the relative territories, spontaneously tends to assume in the absence of disturbing factors. This means that the territories of those levels of self-government that are located on the edges of the territories of immediately higher levels must not be delimited in a way that leaves them entirely contained within one of these, but in such a way as to ensure that they intersect with two or more of them. In this way, these territories will cease to be peripheral and instead assume hinge status: in other words, they will assume an active and evolutionary role as junctions and exchange areas between two or more territorial areas of a higher order. Let us imagine the regions of Sicily and Calabria set in a European or world federal framework; in this context, the territories of Messina and Reggio should ideally constitute a single district, whose function is immediately obvious in view of the opportunity this would give them to manage in a coherent way the problems associated with the existence of the Strait of Messina. Similar reflections would apply to a hypothetical macro-region including all the coastal areas of the Rhine, and so on.” Francesco Rossolillo, Città, territorio e istituzioni, Naples, Guida editori, 1983, http://www.fondazionealbertini.org/sito/rossolillo/vol_i/RI-5-5-Il%20modello%20istituzionale.pdf.

[24] According to a study conducted by Cisco (Cisco Visual Networking Index: Forecast and Trends, 2017–2022 White Paper, https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white-paper-c11-741490.html), Internet data traffic between urban centres is expected to triple in the next three years.

[25] Tobia Zevi, Global Cities as a Challenge for the 21st Century, Milan, Istituto per gli Studi di Politica Internazionale (ISPI), 2018, https://www.ispionline.it/it/pubblicazione/global-cities-challenge-21st-century-21551.

[26] This is what we saw in the case of CFC refrigerants, which were considered harmless until it became clear that their large-scale release into the atmosphere was depleting the ozone layer.

[27] This situation has also been explicitly denounced by, among others, Ulrich Beck in his book Power in the Global Age: A New Global Political Economy, Rome and Bari, Laterza, 2010. Beck points out that Europe in its current form is a hybrid between market and bureaucracy. It is not a political entity. Furthermore, it lacks visionary force, both as regards the form that the world of European states should take, and as regards Europe’s position in relation to the other regions of the world.

 

Year LX, 2018, Single Issue

 

 

EUROPEAN INSTRUMENTS FOR
ENVIRONMENTAL POLICIES AND
RESOURCES FOR SUPRANATIONAL DEMOCRACY*

 

 

1. Introduction

Study of measures aimed at fighting pollution must necessarily start with the definitions of the terms public goods, market failure, negative externality and public intervention. Goods can be classified as private (if they are rival and excludable in consumption), club (not rival but excludable), common resources (rival but not excludable), or public (neither rival nor excludable). Clean air, given that it is shared by everyone and its consumption cannot be regulated, falls into the category of public goods. In a public goods economy, individuals have no interest in revealing their preferences, in particular their marginal evaluations. Underestimating or concealing these evaluations is thus the dominant strategy of consumers, who act as free-riders and effectively prevent economic actors from producing public goods, which will therefore neither be demanded nor supplied. This is a textbook case of market failure, given that these goods cannot be produced efficiently in a free decentralised economy. With regard to air pollution, it is also necessary to consider the question of negative externalities. An externality occurs when one actor’s production or consumption choice directly influences another one’s pay-off, without being compensated for. In environmental economics this is a key concept, because pollution is classified as a negative externality mainly caused by producers and affecting both producers and consumers. This constitutes another example of market failure, which therefore demands some kind of public intervention.[1] In the following sections we will discuss the main strategies public authorities may adopt in order to tackle the problem of pollution.
 

2. Public Action to Protect the Environment

Bosi[2] identifies six main strategies that states, through incentives, disincentives and regulation mechanisms, can use in order to protect the environment. The first two, namely public production and mergers of companies, aim to internalise externalities. Public production serves to bring the polluting economic activity under the control of a political authority, meaning that the relative emissions are controlled by political rules. Pollution thus ceases to be an externality, since its level, being determined by voters, becomes a political choice that is made taking into account an economic pay-off. The limit of this strategy is that it is a radical solution that considerably limits the freedom of economic players in a decentralised economy. Company mergers, on the other hand, internalise externalities by unifying the production cost functions of the firms involved. The weakness of this strategy, therefore, is that it impacts only on negative pure production (i.e. producer-to-producer) externalities. However, this is offset by its very low cost of implementation, compared with that of the public production strategy. I will analyse the other strategies in more detail.
 

2.1. Regulation.

Through regulation, political authorities can oblige companies to keep emissions below given limits, and individual consumers to avoid certain behaviours. In the short term, companies may react to a legal restriction by decreasing production. They may also invest in research and development, so as to equip themselves with less-polluting installations in the future. However, recourse to industrial regulation has two considerable drawbacks. First, it necessitates the recruitment of inspectors, who constitute a significant cost for the public authority; moreover, individual cases may differ considerably from each other, with the result that a single regulation may not affect all polluters equally. Second, at international level, since regulation is seen by companies as an onerous obligation, they may choose to relocate their factories to countries with less stringent rules.

Regulation of emissions from consumer goods is less problematic, particularly in the field of standardised mass consumption. After all, standardised goods are easier to monitor, and citizens cannot relocate their activity in the way companies can. The European regulation on passenger car emissions is one of the best-known cases. A report commissioned by the European Commission to monitor the effects of regulation on prices[3] shows that in a free market economy prices are determined more by competition than by the costs to companies deriving from the regulations themselves, including fines for transgressions. In the light of this brief consideration, we can say that a regulatory policy on consumption is suitable both for national states and for regional organisations, because consumers are bound to their territory. States would only be induced to leave this kind of legislation to a supranational body for two reasons: it would allow them to share the costs of policy implementation, and would also boost cross-border business. On the other hand, regulating companies’ emissions at national level is a less efficient solution because states embrace a more restricted territory and, theoretically, in a global scenario, the activities of a limited number of organisations would be easier to coordinate. Nevertheless, regulation policies alone are not enough to fund democratic supranational bodies that lack fiscal capacity, given that the only income would derive from fines for transgressions, which are by definition intermittent and unpredictable.
 

2.2. Allocation of Property Rights: the Coase Theorem.

The Coase theorem was enunciated in 1960, and thus coincided with the birth of environmental economics.[4] Even though it was widely criticised, it gave rise to a debate that considerably enriched this topic. Robert Coase criticised the very concept of externalities as a cause of market failures, since the reactions of damaged individuals are themselves externalities against the player that inflicted the damage. This situation can be overcome only if property rights are fully allocated, so that only the market has the right to interfere with the goods of others. Therefore, the destination of property rights is not important, given that individuals are able to trade them efficiently; what matters is the state’s ability to allocate them and guarantee a free-trading environment.[5] The first prominent critic of this approach was Allen Kneese,[6] who highlighted two main problems. First, there arises a problem of equity, in the sense that it is fairer to compensate a victim of pollution rather than expect him to pay for his health. Second, in the real world, establishing a market without transaction costs is difficult, and in the case of a large number of individuals affected by externalities, it is too expensive to aggregate their preferences and thus create a market.[7] A case study shows that “the Coase theorem is not robust in the presence of imperfect information, non-maximising behaviour and transaction costs. (...) The use of standard schemes or government intervention may, under some conditions, be a more effective and cost-efficient approach.”[8] This report confirms Kneese’s points, showing that application of the theorem is more complicated in practice than in theory.
 

2.3. Pigouvian Taxes.

The theorisation of so-called Pigouvian taxes stems from the work of Arthur C. Pigou.[9] A public intervention is justified by the difference between the value of the marginal private net product and the value of the marginal social net product. This difference impacts on private and public marginal costs, leading to a situation in which producers have no interest in reducing the losses incurred by society, which are negative externalities. Therefore, public intervention is required in the form of a targeted fiscal policy. The value of the tax should be equal to the external marginal cost, calculated from an ex-post efficiency perspective, leading the producer to reach a maximised level of production net of the taxation. As in the case of the Coase theorem, the transition from theory to policy is very complicated. In fact, it is difficult for a public authority to gather information about every producer’s marginal costs and optimal levels of production in order to calculate the right amount of the tax. Furthermore, assuming that this amount is determined, it would remain valid only in the short term, i.e. for as long as industrial activities remain the same. Any increase or decrease in the number of firms would make it necessary to recalculate the tax.[10] Italian legislation adopted as a result of the Kyoto Conference provides a current example of the Pigouvian tax.
 

2.4. Transferable Pollution Rights: the Basis of Cap-and-Trade Policies.

The proposal of transferable pollution rights seeks to decrease negative externalities by combining the role of public institutions with the market economy. In this scenario the state provides pollution rights in the form of vouchers which limit companies’ emissions to a given level. The total amount of permitted pollution is thus politically decided, and the assignment of the rights should be based on efficiency and equity criteria. After this phase, producers will start bargaining the value of these vouchers and redistributing them, according to their own individual cost-benefit evaluations. The placing of a limit on the total number of allowances in circulation ensures that they have a value, and this whole process should result in their optimal distribution.[11] According to the International Monetary Fund,[12] choosing between a carbon tax and the above-described Emissions Trading System (ETS) is less important than getting the design basics of the chosen option right. The important thing is to cover emissions comprehensively, establish stable prices in line with environmental objectives, and exploit fiscal opportunities. The ETS actually presents some weaknesses: the permits concern only certain polluting activities and therefore do not achieve full coverage; they require accompanying price stability provisions, and furthermore, the allowances have to be put to auction in order to obtain revenue to finance broader fiscal policies. This theoretical design has been adopted in different areas of the world, in particular by the European Union.
 

3. Taxing Pollution and Supranational Institutions

3.1. The Game Theory Approach.

Game theory is a discipline that lends itself very well to studies on the management of environmental problems as it can accurately describe certain situations that typically arise during the process of negotiating international agreements on climate. Intergovernmental conferences in this field commonly adopt the “pledge-and-review” scheme, which basically means that states are required to fulfil certain tasks and present reports on their efforts. The “pledge and-review” scheme creates a competitive environment whose outcome is similar to the “tragedy of the commons” situation.[13] Accordingly, the dominant strategy of the actors, assuming that they are self-interested and fully informed on the relative benefits and costs, is to avoid cooperation because they cannot influence another player’s behaviour. The Nash equilibrium[14] is a non-cooperative solution, and it arises because acting virtuously alone is relatively less advantageous than refusing to act. The following table schematises simply the situation described, showing the players’ outcome in the short term; the solution corresponding to a Nash equilibrium is shown in bold.
 

	B cooperates	B does not cooperate
A cooperates	( + ; + )	( - - ; ++ )
A does not cooperate	( ++ ; - - )	( - ; - )

 

The traditional response to this dilemma, which condemns the international arena to impotence, is to create a supranational power that can force states to cooperate: this new political actor should be capable of enforcing laws that will decrease the pay-off for non-cooperative behaviours. But, since this political development is not in sight, many scholars from the “Carbon Price Project” have proposed a new approach for promoting international cooperation.[15] The idea is to evaluate each state’s contribution and redistribute, in equal parts, the sum raised at international level. Assuming that the players each start off with two units, and that the redistributed resources double in value, with the excess being assigned to a third player, each actor’s final pay-off would be equal to the non-redistributed resources plus the value of the states’ minimum contribution multiplied by two. For example, if one of the states does not contribute, nothing is redistributed to it, and therefore its pay-off is equal to the starting resources. Therefore, it is in the states’ interest to all redistribute the same amount of resources. This new approach, known as the “common commitment game”, can be summarised in the following table.
 

	B gives 0	B gives 1	B gives 2
A gives 0	( 2 ; 2 )	( 2 ; 1 )	( 2 ; 0 )
A gives 1	( 1 ; 2 )	( 3 ; 3 )	( 3 ; 2 )
A gives 2	( 0 ; 2 )	( 2 ; 3 )	( 4 ; 4 )

 

This situation provides multiple Nash equilibria, since, unlike what we saw in the first case, there is no single dominant strategy. Therefore, actors will coordinate their action in order to achieve the maximum outcome, i.e. the desirable solution given the environmental needs.

The main critical issue with the game theory approach is the fact that it considers states as individual and homogeneous players. It is thus difficult to imagine that political choices, like putting a price on carbon emissions, can be determined only by the national interest and the decisions of other states. For massive cooperation to be achieved, each state involved in the process has to choose to massively cooperate. If only one state refuses, the whole game ceases to be a useful tool. Another concern is that the role of the game regulator is not well identified, and were this regulator to be an international organisation, such as the World Bank or the UN, it would also lack democratic accountability. Furthermore, if no enforcement is envisaged, the international arena would remain the same, with the issue of carbon pricing continuing to be left to intergovernmental negotiations. Even though this outcome might amount to a practical success in relation to a specific issue, it would not contribute to the creation of a supranational democratic institution. In conclusion, game theory is useful for understanding why international agreements fail, but, since it is based on self-interested actors, it cannot serve as a roadmap for achieving a supranational democracy.
 

3.2. International Conferences on Climate.

Game theory is a useful means of analysing why numerous international climate change conferences based on the “pledge-and-review” method have failed. The Kyoto Conference,[16] for example, must be considered a failure because, after declaring an overall common commitment to decreasing emissions by a given percentage, the states decided to act individually. Moreover, on July 25, 1997, the US Senate passed the Byrd-Hagel Resolution, which blocked any attempt to adopt the measures envisaged in Kyoto. American senators were concerned about the relative advantage developing countries would obtain if developed ones were forced to cut their emissions. In particular, the text of the resolution states: “The United States should not be a signatory to any protocol (...) which would mandate new commitments to limit or reduce greenhouse gas emissions (...) unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or would result in serious harm to the economy of the United States”.

The Paris Agreement[17] is based on a different concept, in fact the treaty will become binding only if a minimum number of countries sign it. Its text states that the “agreement shall enter into force on the thirtieth day after the date on which at least 55 Parties to the Convention accounting in total for at least an estimated 55 percent of the total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession”. These numbers suggest that only a common action on the part of the world’s biggest polluters, which are always reluctant to ratify agreements of this kind, would really have the power to breathe life into the treaty. Moreover, the Paris Agreement requires all Parties to put forward their best efforts through nationally determined contributions and to strengthen these efforts in the years ahead, and to report regularly on their emissions and on their implementation efforts. This mechanism is actually very reminiscent of the “pledge-and-review” scheme that has failed to bring success to the Kyoto Conference.
 

4. National and European Environmental Policies

Having briefly outlined the two most famous international conferences on climate change, and their weaknesses, let us now look at the situation on the European stage, both at national and EU level.
 

4.1. National Level: Carbon Taxes.

Since the EU lacks the features of a fiscal union, only its member states have the power to implement fiscal policies. In Italy, the first law regulating taxation on emissions is law no. 448/1998 Public finance measures for stabilisation and development, where article 8, paragraph 1 states: “In order to pursue the objective of reducing carbon emissions, in accordance with the conclusions of the Kyoto Conference of December 1-11, 1997, excise duty rates on mineral oils must be recalculated (...)” The second paragraph states that the change in these rates must not increase the overall tax burden on citizens. Therefore, paragraph 10 provides that the increased revenue generated should be offset by a reduction of fiscal pressure on certain other budget lines. Therefore, Italy transposed into law the principles of the Kyoto Conference, but the result was limited to a reallocation of fiscal burden, without introducing any funding of political instruments to further cut carbon emissions.[18] Currently the country taxes oil products when these are used to produce energy. This case constitutes an exception to the EU’s “Energy Tax Directive”, which envisages a fiscal drag on electricity output.[19] Among the various national policies, an interesting case study is the British Climate Change Levy. As McEldowney and Salter [2015] show,[20] the CCL falls short of being a carbon tax and is, in effect, an energy tax, but, as indicated, the tax rate does not vary directly in relation to the carbon content of fuels. In its own terms, it has nevertheless made a contribution to achieving the UK climate change targets. Estimates vary, but savings of 12.8 million tonnes of carbon dioxide are calculated to have been made between 2001 from 2010, which corresponds to a 20 per cent reduction in carbon emissions.[21] The example provided indicates that a national policy could achieve important results, even if coordination with other counties is not ensured.
 

4.2. EU Level: Emissions Trading System.

The European Union’s Emissions Trading System (EU ETS) was established in 2005 and it concerns the countries of the European Economic Area, i.e. the EU member states plus Iceland, Liechtenstein and Norway. It covers around 45 per cent of greenhouse gas emissions in this area. The whole operation was divided into three phases. Phase 1 (2005-2007) covered only CO₂ emissions from power generators and energy-intensive industries, and free allowances were distributed. In phase 2 (2008-2012), a lower cap on allowances was set: the proportion of free allocations fell slightly to around 90 per cent, several countries held auctions, and the penalty for noncompliance was increased. In phase 1, trading volumes rose from 321 million allowances in 2005 to 1.1 billion in 2006 and 2.1 billion in 2007. Currently, the programme is in phase 3, whose main feature is the application of a single, EU-wide cap on emissions in place of the previous system of national caps. Auctioning is the default method for allocating allowances (replacing free allocation), and more sectors and gases have been included. Phase 4 will start in 2021 and end in 2030, the official term envisaged by the Paris Agreement. To achieve the EU’s target of an at least 40 per cent reduction, the sectors covered by the ETS must reduce their emissions by 43 per cent compared with 2005.

The EU ETS has two main limits: it covers only part of the total emissions, and the revenue from auctions is available only to the member states, not to the EU. Moreover, most of the credits gained have been used to finance domestic activities. The main revenue use categories are renewable energy (2.89 billion euros, or 40.6 per cent of total revenue use), energy efficiency-related spending (1.95 billion euros, or 27.4 per cent), and sustainable transport (774 million euros, or 10.9 per cent).[22]
 

5. Conclusions

As we have seen, the current projects can be divided into two categories: carbon pricing and cap-and-trade policies. The first solution does not require the creation of supranational democratic actors, since it is based on cooperation between individual states. An “internationally-harmonised domestically-collected carbon price” is sustainable.[23] The second one, on the other hand, needs supranational actors able to coordinate states and create a common scheme: democratic accountability is thus not mandatory. The purpose of this paper was to analyse the specific issue of carbon emissions, and the fiscal instruments set up by governments to limit them. But every report indicates that a successful environmental action can only derive from a combined recipe of proposals, which includes both state-led and market-led initiatives and embraces interventions of different kinds. In order to efficiently implement a combination of these policies, citizens and governments will likely require supranational institutions, as French president, Emmanuel Macron, recently declared. In a speech on green finance delivered in Brussels on March 28, 2018, he stated that European citizens need a true European system of own resources in order to sustain a green and durable economy. Consequently, an autonomous budget would ensure the capability to make important investments in infrastructures and projects in the field of ecological transition. This budget must not be incompatible with environmental purposes or other policies, and indeed must offer new instruments that may contribute to the pursuit of the ecological vision. Macron then proposed the implementation of a border tariff as an instrument to finance a European budget line for environmental policies.[24] This sort of green dumping seems interesting but also rather unrealistic, especially given that Germany, which has important commercial interests with carbon-dependent countries, would likely oppose it. Nevertheless, the whole proposal fits in with Macron’s idea of a sovereign Europe, whose realisation requires a democratically controlled eurozone budget funded with European own resources. This is currently the only position held by a European head of government that calls for the creation of new supranational institutions, and therefore its success is important to all those who wish to see the creation of democratic institutions above the level of the national states.

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* This lecture was delivered at the Supranational Democracy Dialogue meeting, held in April 2018 at the University of Salento.

[1] Paolo Bosi, Corso di Scienza delle Finanze, Bologna, Il Mulino, 7^th ed., 2015.

[2] Ibidem.

[3] Adarsh Varma, Dan Newman, Duncan Kay, Gena Gibson, Jamie Beevor, Ian Skinner, and Peter Wells, Effect of regulations and standards on vehicle prices. Technical report, Didcot, AEA Technology plc., 2011; https://www.google.com/search?q=E%EF%AC%80ect+of+regulations+and+standards+on+vehicle+prices.+Technical+report&ie=utf-8&oe=utf-8&client=firefox-b.

[4] Steven G. Medema, Of Coase and Carbon: The Coase theorem in Environmental Economics, 1960-1979, Denver, University of Colorado 2011.

[5] Paolo Bosi, Corso di Scienza delle Finanze, op. cit..

[6] Allen V. Kneese, The Economics of Regional Water Quality Management, Baltimore, The Johns Hopkins Press and Resources for the Future, 1964.

[7] Ibidem.

[8] Jens Abildtrupa, Frank Jensenb, and Alex Dubgaardb, Does the Coase theorem hold in real markets? An application to the negotiations between waterworks and farmers in Denmark, Journal of Environmental Management, 93 (2012), p. 169.

[9] Arthur C. Pigou, The Economics of Welfare, London, Macmillan and Co., 1920.

[10] Dennis W. Carlton and Glenn C. Loury, The Limitations of Pigouvian Taxes as a Long-Run Remedy for Externalities, The Quarterly Journal of Economics, 95, n. 3, (1980), p. 559. Richard N. Cooper, Peter Cramton, Ottmar Edenhofer, Christian Gollier, Eloi Laurent, David JC MacKay, William Nordhaus, Axel Ockenfels, Joseph Stiglitz, Steven Stoft, Jean Tirole, and Martin L. Weitzman, Global Carbon Pricing. The Path to Climate Cooperation, Cambridge, Mass, The MIT Press, 2017.

[11] Paolo Bosi, Corso di Scienza delle Finanze, op. cit..

[12] Mai Farid, Michael Keen, Michael Papaioannou, Ian Parry, Catherine Pattillo, Anna Ter-Martirosyan, et al. After Paris: Fiscal, Macroeconomic, and Financial Implications of Climate Change, Staff Discussion Notes No. 16/01, International Monetary Fund, 2016.

[13] This phrase was first used by G. Hardin in 1968 (G. Hardin, The Tragedy of the Commons, Science, 162 (1968), p. 1243; http://science.sciencemag.org/content/162/3859/1243.full) to describe situations where freely accessible goods, whose ownership is not clearly defined and whose exploitation is not regulated, are inevitably bound to run out because of the exploitation by individuals pursuing only their own interests (free-riders). The tragedy can only be avoided if the ownership of such goods is clearly defined and their exploitation is regulated by the owners.

[14] J.F. Nash, Jr demonstrated that in a game in which each player chooses his strategy in order to obtain the highest profit, none of the players is interested in changing his strategy unless another player changes his own (strategic rationality). If each actor adopts a dominant strategy, i.e. adopts the choice giving him the highest pay-off taking into account opponents’ expected moves, a Nash equilibrium is reached. In the case of the tragedy of commons, a Nash equilibrium, given the interaction of actors’ dominant strategies, leads to a non-cooperative and therefore sub-optimal solution.

[15] Richard N. Cooper et al., Global Carbon Pricing. The Path to Climate Cooperation, op. cit.

[16] https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=XXVII-7-a&chapter=27&clang=_en.

[17] https://unfccc.int/sites/default/files/english_paris_agreement.pdf.

[18] Italian Law no. 448 of 23 December 1998, Misure di finanza pubblica per la stabilizzazione e lo sviluppo, Gazzetta Ufficiale, n. 302, 29 December 1998, supplemento ordinario n. 210/L.

[19] OECD. Taxing Energy Use 2018. Paris, OECD Publishing, 2018.

[20] John McEldowney and David Salter, Environmental taxation in the UK: The Climate Change Levy and policy making, Denning Law Journal, 27 (2015), p. 37.

[21] Ibidem.

[22] Xavier Le Den, Edmund Beavor, Samy Porteron, and Adriana Ilisescu, Analysis of the use of Auction Revenues by the Member States, European Commission, 2017.

[23] Martin L. Weitzman, Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality? Harvard Project on Climate Agreements, Journal of the Association of Environmental and Resource Economists, 1 (2014), p. 29.

[24] Emmanuel Macron, Discours du Président de la République à la conférence sur la finance verte, Brussels, March 2018.

 

Year LX, 2018, Single Issue

 

 

A NATION’S AGONY

 

 

Venezuela’s ongoing political and economic decline, which started five years ago, is dragging the country towards catastrophe. Despite being among the ten countries with the biggest oil reserves in the world, Venezuela has been brought to its knees by senseless policies, and its starving population forced to start fleeing to neighbouring states. It is estimated that in the course of 2017 and the first part of 2018 over two million Venezuelans left their homeland, often illegally, thereby extending to this part of South America the sad phenomenon of emigration that is already known elsewhere in Latin America.[1] Considering that Venezuela has a population of 31 million people, the scale of the exodus is clearly huge. We are talking about numbers that make the migratory flows we are seeing in Europe pale into insignificance,[2] also because, in Venezuela’s case, the phenomenon has been concentrated in a period of little more than a year. Venezuela is emptying of people; what is more, those that have left the country, mainly for Ecuador or Peru, are becoming virtually ghettoised and obliged to do the most humble jobs despite, in many cases, having a high level of education. Ironically, the Ecuadorian and Peruvian populations are tending to subject the Venezuelan newcomers to the same humiliations inflicted on their own compatriots living in Europe or the USA.

Although the election of Chávez as president of Venezuela was greeted with optimism across Latin America, and also welcomed by many Western political forces, which saw him as the prototypical friend-of-the-people, anti-capitalist, anti-American president, Venezuela’s crisis can actually be traced back to the early years of his mandate. Chávez’s rise to government, together with that of Morales in Bolivia, seemed to offer a new road to socialism in a subcontinent that had previously seen socialism evolve into dictatorship, first in Cuba and then in Nicaragua. After embarking on a policy of nationalisation and introducing a strongly anti-US foreign policy, Venezuela under Chávez lost little time in entering into trade agreements with Cuba, Nicaragua, Russia, China and Iran, leading the country to be classed as a “rogue state” by American president George W. Bush. The most important aspect to note is that Venezuela’s economic and trade policy was linked to crude oil extraction and oil prices on the international markets. In the early years of Chávez’s rule, the price of oil per barrel was high, making it easy for the president to dispense largesse to the population as a whole, by applying merely “political” prices to many primary goods. The cost of a litre of petrol in Venezuela during Chávez’s time in office was 0.01 euro and even today, with the crisis in full swing, it still costs only a few cents, although the problem nowadays is finding fuel stations that have any available to sell. Indeed, having seen many wells forced to close due to a lack of spare parts, Venezuela is now in the paradoxical position of having to import oil. The entire Venezuelan economy has been based on oil for many years, but the rich revenues generated, instead of being at least partly reinvested in infrastructure or new economic activities, have been used to pay for the purchase of goods and services from abroad, particularly from countries hostile to the USA. Cuba, for example, provided doctors and drugs, which Venezuela paid for in barrels of oil in a sort of barter arrangement that did not involve the movement of capital, while arms were purchased from Russia and Iran. Chávez’s charisma and popularity, his carefully crafted man-of-the-people persona, and his obsessive use of propaganda to exalt his “achievements” all helped to conceal the country’s authoritarian drift, which quickly led to the birth of a regime. However, the true nature of the situation did not become clear until the time of Chávez’s death in March 2013, and the sharp drop in oil prices a few months later.[3] After fourteen years with Chávez at the helm, the presidency was taken over by his anointed successor Maduro, another so-called man of the people,[4] who, however, lacks the charisma that had allowed his mentor to rule unchallenged.

Maduro’s assumption of the presidency and the simultaneous collapse of oil prices exposed the flaws of a policy that was leading the nation towards social chaos and economic default. Maduro responded to the first signs of the crisis by tightening police powers, closing down newspapers that challenged him, and imprisoning opponents. The lack of primary goods, the country’s astonishing need to import refined oil, and the central bank’s lack of foreign exchange reserves were not allowed to be seen as signs that his policy was failing; instead the crisis was attributed to various other alleged causes: the middle and upper classes’ exportation of their wealth abroad; a US-led conspiracy to starve the people of Venezuela and oppose the government’s socialist policies; and attempts, by opponents, to slander the government. Maduro’s populist approach, like that of Chávez before him, simply rejected the very clear evidence of what amounted to a demagogic economic policy. Ultimately, Maduro’s desire to conceal the true causes of the crisis prompted him to hold a constitutional referendum that effectively marked the definitive transformation of his government into a formal dictatorship, sanctioned by a popular vote. Maduro won his referendum amidst accusations of fraud and protests from the entire international community, with the sole exception of Russia and China (the latter refraining from comment). The first consequence of the referendum result was Venezuela’s indefinite suspension from Mercosur, under the terms of the organisation’s commitment to the democracy rule set out in its Protocolo sobre compromiso democrático:[5] the other full members of Mercosur — Argentina, Brazil, Uruguay and Paraguay — voted unanimously to suspend Venezuela, accusing Maduro of violating fundamental democratic rights.[6] This political act by Mercosur sent out a hugely significant message: those that do not respect the fundamental rules of democracy cannot be part of a community and deserve to be isolated. It is a message that we in Europe would do well to heed, given the attacks on the foundations of democracy seen, for example, in Hungary and Poland.

With Venezuela now lacking the support of this continental brotherhood, the regime has stepped up its insistence that the country’s national sovereignty is under threat from treacherous neighbours and foreign powers that, it argues, are determined to subdue a people’s government — the very same government that, notwithstanding the financial aid received from Moscow in early 2018, has been forced to relinquish its national currency (the bolivar) because the country’s economy is in default. Since the end of 2017, the rate of inflation in Venezuela has remained at absurd levels (four-digit percentage rates and even higher), with the result that the price of goods, of any kind, can change completely within the space of a single day. This lack of currency has resulted in a freeze both on domestic purchases and on foreign imports. Many commentators have likened Venezuela’s financial situation to that of the Weimar Republic in the last century. But unlike Weimar Germany, which had just come through a disastrous war and was burdened with exorbitant claims for compensation from the powers that had emerged victorious from World War I, Venezuela has brought its social instability and chaos on itself, in the name of an ultra-sovereignist agenda. In 2017 the rate of inflation in the country was estimated to stand at 1,000 per cent, before rising to 1,000,000 per cent in July 2018, while its GDP was 50 per cent down on the value for 2013.[7] These are figures that are clearly spinning out of control. What is more, the crisis has also had dramatic repercussions beyond the country’s own borders. Venezuela is indeed one of the world’s main oil-producing countries, it is a member of the Mercosur regional agreement (albeit currently suspended from this), and it enjoys financial support from China and Russia, a fact that clearly sets the country in opposition to the USA. Russia is the only nation in the world to have accepted the petro, i.e. the cryptocurrency imposed by Maduro in place of the bolivar. The value of the petro is determined by the price per barrel of oil. Maduro calls it a cryptocurrency, but this is a misnomer: what Venezuela is actually doing is selling Russia its oil production for the coming years in exchange for immediate financial aid. But the point is, not even Russia can indefinitely sustain a nation of 30 million people that is in economic agony.

The most serious aspect of all this, however, is Venezuela’s isolation from the rest of its continent, which, among other things, is opening up a deep divide within Mercosur. On September 4^th 2018, the foreign ministers of 13 Latin American countries met in Quito, the capital of Ecuador, to discuss the Venezuelan migration crisis. One city particularly hard hit by the daily flight of thousands of people from Venezuela is Cucuta in Colombia, which, in just over a year, has been transited by more than 600,000 refugees. Meanwhile, in the northern Brazilian province of Roraima, which lies on the border with Venezuela, the army has been deployed in an attempt to contain the migratory flow. Peru, Ecuador and Chile are now demanding that all Venezuelans entering their territory, both refugees and those simply passing through, have an entry visa and passport; until July 2018, under the terms of a South American Schengen-type agreement (now suspended), all they had needed was an ID card. The news agency Pressenza has dismissed the Quito summit as pointless, claiming that it was intended to damage Venezuela’s image.[8] Meanwhile, the Venezuelan government is suffering from the “siege syndrome” that typically afflicts populist governments (whether in the American continent or Europe) that, finding themselves to be incapable of governing effectively, see everyone around them as the enemy: international institutions, banks and neighbouring countries, as well as the forces that they loosely call “the elite”, being unable to define them any more precisely than that. Because the point is, they feel they have to indicate an enemy in the name of the sovereign people for whom they claim to speak.

Maduro has rejected as fake news reports of Venezuela as a nation in disarray with a fleeing population, while at the same time he has asked the UN to contribute half a million dollars to the Venezuelan government’s efforts to help departed citizens return home (under its “Return to the Homeland Plan”), claiming that they fled “…because they had been cheated and misled… only to find themselves robbed of their belongings”.[9] These claims show a complete loss of contact with reality. However, with the opposition to Maduro incapable of acting in unison, and with some of its leaders in prison, there is a risk that the army will ultimately become the arbiter of this situation. This would certainly be a sad outcome for a country that has already experienced military dictatorship in the past, and a sad return to the past for the whole of Latin America, which, from the 1980s onwards, has seen the collapse of all its military regimes and the advent of democracy. The wind of Venezuelan populism, with its pursuit of easy consensus, is also being felt beyond the country’s borders. The recently elected president of Brazil, the largest Latin American country and a founder member of Mercosur, is a populist with an army background who, on more than one occasion, has eulogised the years of military dictatorship and harshly criticised Mercosur’s trade policy.[10] The whole Venezuelan situation and the wind of populism that is now also blowing from Brazil threaten to undermine not only the role of Mercosur, but also the democratic advances that began with the fall of Latin America’s military regimes in the 1980s.

Stefano Spoltore

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[1] Agencia Brasil, 24 August 2018.

[2] Avvenire, 15^th September 2018. Between January 2018 and the time of writing (October 2018), around 74,000 refugees landed on EU shores after crossing the Mediterranean.

[3] At the time of Chávez’s death in March 2013, a barrel of oil cost an average of 109,18 dollars. In August 2018 the price was 72.69 dollars (and the previous March it had dropped to 66,27 dollars). https://www.clal.it/mini_index.php?section=petrolio.

[4] Maduro, before becoming Chávez’s devoted supporter and right hand man, was a bus driver and trade union leader.

[5] The Protocolo de Usuhuaia sobre compromiso democrático en el Mercosur was signed in July 1998 and amended in December 2011. Venezuela’s suspension is the third time it has been used against a member state; on two previous occasions it was implemented against Paraguay.

[6] See: Venezuela e Mercosur: la difficile via verso la democrazia, Il Federalista, 59 (2017), n. 2, p. 169.

[7] See: Business Insider, 26 July 2017 and InvestireOggi, 24 July 2018.

[8] Rosi Baró, Making up a migration crisis to create a “casus belli” against Venezuela?, Pressenza International Press Agency.

[9] Avvenire, 22^nd September 2018.

[10] See: El Observador, 21^st October 2018; La Nación, 29^th October 2018.