Monday, 30 January 2012

Looking at the Democratic Spread

European nation states that are facing financial tensions are those who most recently have had authoritarian regimes. Greece, the country in the worst position, has the weakest of democratic arrangements and was the most recently under the control of a military junta;  then Portugal, still feeling the after-effects of Salazar; Spain is coping better with its Franco hangover.

Italy has a rather different problem of central state weakness: it never has been able to fully assert its control of the criminal alternative governance that has held power in the South for so long and is now deeply entrenched in some northern regions.   Criminal governance is by definition authoritarian and outside the rule of law.  It doesn't have its own rule of law either, despite all the mystical novelettishness about rules of honour and shame and clan allegiances;  it is violence and arbitrary revenge that maintains criminal, authoritarian rule.

Risk, expressed through spreads and yields, is not measured by economic fundamentals alone, but by an inchoate response to democratic fundamentals - democratic representation, rule of law, constitutional arrangements and the institutions of their enforcement,  capacity to assert the will of the sovereign throughout the state.  In part this explains why Italy's yields and spread continue to fall less fast than those of Spain, despite the greater economic strength of Italy. 

Senator Monti has democratic consent to govern and enjoys constitutional propriety, but the rule of law is weak and under determined assault by criminals.  Moreover the consent of the political parties represented in Parliament is fragile.  Neither left nor right have competent or even charismatic leadership, nor sufficiently united objectives among coalitions of parties,  to wish to precipitate early elections.   Spain was fortunate that elections were due when they were, and the electorate was clear in its democratic delivery of a mandate.

The  suggestion that Greece should be commissariata is a crude response to Greece's post-colonels' political underdevelopment.  No-one could risk taking on Greek fiscal governance: apart from  the unlikelihood of being any more successful than the elected Parliament at imposing fiscal restraint measures,  there are no means to assert sovereign control for Greeks, never mind Germans.

It isn't just economic diversity and maturity  that makes the European Union - and specifically that more important part, the 24 nations of the eurozone -   a handful.   Our nation states have their own histories and political inheritances to integrate.     

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