by David Gow
Originally posted on,
Thursday 19 March 2009 13.53 GMT

“The recession is turning into a depression in an unprecedented manner and at an unprecedented pace … The degree of fiscal expansion may not be enough but the possibilities for [it] will diminish … The situation in Europe is grim and ­getting grimmer …”

“This is the paradox of the paradigm. When a system is in crisis it relies on the same old failed institutions to explain and deal with a phenomenon that no longer fits the paradigm … This is a crisis caused by global over-production and over-consumption and the solution ­requires the transformation of capitalist economic systems.”

The run-up to the EU spring summit this week and the G20 summit in London on 2 April has seen a deluge of reports, interviews, statements and lobbying declarations flood inboxes, submerging any clarity of thought and purpose.

So it was a pleasure and delight for this correspondent to chair, for the Trans­national Institute of Amsterdam, a two-hour debate on EU responses to the crisis – beyond the G20 – between Gert-Jan Koopman, director of structural reforms at the European commission’s directorate general for economic and financial affairs, and Walden Bello, a Filipino sociology professor, head of the Freedom from Debt Coalition and author of the concept of “de-globalisation“.

Koopman, who uttered the first quote above, and Bello, who voiced the second, jousted intellectually at a level of intensity that made the often mediocre and bland utterances of well-intended politicians – with a few notable exceptions such as Jacques Delors (see below) – regulators, central bankers and business lobbies seem beside the point.

They did so with sober passion and, not least, humour and mutual respect, commodities sadly lacking in most of the contributions so far. And for older commentators such as this one, alarmed that a reprise of the depression 80 years later could trigger worldwide violent political extremism of the kind that wrecked European civilisation in the 1930s, they went at least close to the heart of the problem. What kind of capitalism or post-capitalism will or should emerge from the crisis? What social and economic order are we willing to embrace or able to agree on? If the economic crisis is over-arched by the planetary one of global warming can we really envisage and implement a “green new deal” or a sustainable society that breaks with the past and deals resolutely with poverty, exclusion and injustice?

Of course, the panel of two delivered no definitive answers. But in a city where policy wonks debate issues from breakfast to post-dinner and the audience emerges little or none the wiser, it was refreshingly provocative and radical. And there was even, surprisingly, a degree of consensus between a proponent of (amended/reformed/regulated) globalisation and one of its fiercest critics.

Koopman, thrown into a lions’ den of largely anti-capitalist NGO campaigners, stoutly defended the EU’s responses to the crisis against Bello’s repeated criticism that it depended heavily on “failed multilateral institutions” or FMIs (a play on the French version of IMF: Fonds Monétaire International) that required radical reform.

Bello – drawing on the experience of 1944 when, in the middle of war, more than twice as many countries as in the G20 turned up at Bretton Woods for the (now discredited) new world order – wants the UN to play the key role in deciding BW2; Koopman thinks that body too unwieldy given the urgency of the crisis.

The pair argued extensively over issues such as the likelihood or not of an implosion of euroland under the weight of credit default spreads, budget deficits, mega-unemployment et al. It’s a prospect viewed as increasingly imminent by Delors. In a melancholy and angry interview with the German magazine Capital he assails Germany for failing to offer prior consultation on its own responses or adequate solidarity. “I could well imagine that the pressure of the strong on the weak to carry out better policy or leave the monetary union is growing … I’m pessimistic about the future of the euro.”

Delors, co-architect of the EU’s crowning glory, the single market, says Europe is in full protectionist retreat and reacting “slowly and ploddingly in areas such as new rules in financial supervision or on cleaning up banks”. It was a view endorsed by Bello, who wants a ban on derivatives, hedge funds and short-selling and “the extension of criminalisation to certain economic and financial activities”.

Koopman, of course, countered that the EU is already leading the way in proposing tougher, more extensive regulation such as outlined in the recent Lamfalussy and De Larosière reports (reprised by Adair Turner in his 122-page FSA paper this week).

But this was, above all, not a meeting of closed minds between the north and the south. We emerged into a sunlit European Quarter with agreed notions that a 80% cut in CO2 emissions on 1990 levels by 2050 will be inadequate; on the need for an inter-generational pact to tackle the demographic challenge in mature economies; on the urgency of genuine solidarity with the fathomless pool of the discarded unemployed in the north and of the excluded, innocent poor of the south; and of a permanent brake on consumption and greed.

Europe may be peering over the edge of an abyss but at least there are some thinkers and policy-makers searching for ways to drag us back.