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A Fat Bureaucracy Ensures EU’s Survival

By: Rick Ackerman, Rick's Picks


-- Posted Thursday, 6 September 2012 | | Disqus

[In addition to being a Grammy nominated record producer, jazz buff and popular L.A. radio host, our friend Alan Geik, whose thought have been featured here before, holds a masters degree from the London School of Economics and has taught economics in London colleges. In the essay below, he explains why the European Union and its central bank will survive the current crisis even if some members are forced to withdraw. The ship will not be allowed to sink, says Alan, simply because there are too many bureaucrats dependent on the EU for cushy jobs and fat pensions. They will do whatever it takes to hold onto their sinecures, our guest columnist assertsm ensuring that the EU itself will endure. RA]

The countless extra-territorial entities created since the introduction of the euro are now totally reliant on the common currency’s continued existence. Whenever huge budgets are put on the table and there is little regulation or oversight, there is the inevitable rise of aggressive bureaucracies whose aim is to insure a long stay at the funding trough. So it is in Euroland. This may bring to mind another international agency, the United Nations. However the United Nations, surely one more maze of national and self-interest, pales in relation to the euro-stoked organizations. This is quite remarkable given that the UN has had more than a fifty-year head start perfecting bureaucracy-building; but more about that later.

The public face of the Euro Crisis is the entrenched technocrats and foreign ministers hurriedly convening meetings, summits, press conferences and private discussions throughout European capitals. They often imply a high-minded reason for the survival of the euro: a movement toward a unified Europe, a Europe free of boundaries and discord that marked the past several hundred years. However, their more immediate need is to insure a constant inflow of the currency in order to accommodate their ever-increasing budgets. These Euro Players can, at any moment, quickly reverse course in response to each political crisis or pushbacks by one national parliament or the other. However their unified goal has always been to “keep the euro alive…at all costs,” an expression used more emphatically recently after still more midnight meetings end with no far reaching plan.

Who are these spokespeople? Where did they come from? Who gave them so much authority? Why are they so determined to keep alive a currency barely twelve years old –“at all costs?” Nigel Farage, a British member of the European Parliament, takes great joy directing these questions to two of the more colorless dolts in this enduring Euro Drama: Jose Manuel Barroso, the president of the European Commission; and Herman Van Rompuy, president of the European Council. For those of you who, like myself, delight in someone asking a highly paid bureaucrat “Who exactly are you? Can you tell us what is it that you do?” here is a brief video clip of Mr. Farage addressing these two men. It is an amusingly (to me, anyway) theatrical performance, even if in front of an empty European Parliament. Barroso and Rumpoy’s silence varies from surly contempt to amused smugness. Regardless, they seem to be thinking, “I hustled my way into this job and I’m not going anywhere soon — and what I do is to make sure that I can keep doing whatever it is I do.” Farage has been censured for his personal attacks by the President of the European Parliament, Jerzy Buzek — a toothless action, but these Sleepy Hollow agencies never intend to call attention to themselves.

They Love Titles

As you can see there are European Parliaments, European Councils, European Commissions, European Unions and many, many more players. A common thread amongst them is the intermittent uncovering of corruption, cronyism, and empire building at the highest levels. This is similar to the U.S. Congress, except that in Europe it unfolds on a landscape of, at last count, twenty-seven countries. In 2004, Mr. Farage revealed that Jacques Barrot, then French commissioner delegate to the European Parliament (they love titles), had previously been banned for two years from elected office in France as a result of a conviction for embezzlement of government funds. Nonetheless, he became European Commission vice president, appointed by Mr. Barroso.

In 2005, Barroso himself was a guest for a week on the yacht of a Greek shipping billionaire only a month before the commission approved (by a different president) 10.3 million in Greek state aid for his host’s shipping company. The image of the current sovereign basket case, Greece, carving out chunks of its budget as “state aid” for the European Union [EU] cronies gives some indication of the great power quietly wielded by these bureaucrats — a power that exists far removed from any nation itself. Many of these organizations existed before the adoption of the euro, but in comparison to their current roles as international dealmakers and power grabbers, they were previously more similar to outback Rotarian Clubs. It was of course the Maastricht Treaty in 1992 that created the single currency and gave the steroid injection for the rebundling, renaming, recombining and ultimately creation of dozens of new entities under the European Union umbrella.

Overseeing…Everything

The EU is a poster child for unchecked power-base building. Every year they churn out reports, studies, inquiries, statistical analysis, investigations, and form ad hoc committees to oversee seemingly every aspect of human life: terrorism, postal services, organized crime, trafficking in human beings, drug addiction, forestation (and, presumably, deforestation), border management, animal welfare (!), consumer protection, maritime security, transport safety, radioactive waste, disaster preparation, numerous individual country studies, food safety and, well, the list is endless. And mostly everything is written, archived, and translated into as many as 22 languages. Possibly, there is even a committee that decides what should be translated into which languages. Could it be that the most secure job to have in Europe these days would be a translator of Dutch to Slovakian?

A sampling of the current entities under the EU umbrella includes:

European Investment Bank
European Ombudsman
European Administrative School
Community Fisheries Control Agency
European Agency for Fundamental Rights
European Institute For Gender Equality
(EMU) Economic & Monetary Union
Joint Research Center
European Group on Ethics in Science & New Technologies
Court of Justice
European Court of Human Rights
Registrar of the Court of First Instance (Don’t ask!)
European Civil Service Tribunal
Court of Auditors
European Anti Fraud Office
European Development fund
European Economic & Social Committee
Committee of the Regions (Your guess is as good as mine.)
The European Parliament
European Council

…and there are dozens more.

Spending Tallies

Revealed in the EU 2005 annual report is that the European Parliament’s Secretariat (is this one included above?) had 4,696 permanent posts. The European Commission had 17,571 permanent administrative posts, 366 temporary posts and 3,705 permanent research posts. The 2005 budget for the 25 member states was 116.6 billion, including administrative costs of 6.293 billion and 900 million for pensions. The 2010 EU budget for its increased membership to 27 members was 21.5% higher at 141.5 billion and a total administrative cost listed at 6% of that amount, or 8.4 billion. We can estimate the 2010 pension liabilities of at least 1.1 billion. And to keep up with the changing times, new agencies were added to the more recent budget: European Globalization Adjustment Fund, and others dealing with cybercrime, information systems, telecommunications, and tourism.

The other 900-pound gorilla at this Eurofest, the European Central Bank (ECB), has similarly burgeoning budgets and pension liabilities. In 2005 the ECB had 1,331 employees and a pension liability of 223.5 million. In 2010 the ECB staff increased to 1,607 and the pension obligations increased doubled to 555.5 million. For detailed information, click here to access the EU’s general report for 2010; here for the European Central Bank’s annual report for 2010; and here for the EU’s 2005 report on general activities. EU and ECB pensions amounted to approximately 1.6 billion in 2010 alone. No wonder the euro must be “kept alive — at all costs.” Who will make good on the generous pension plans of these organizations if the Euro tent collapses? With the inevitable return of the Greek drachma, and perhaps the Italian lira and Spanish peseta, will those countries assume the obligations for Belgian economists and German statisticians, let alone for political VIPs who have secured for themselves extremely generous pensions and other perks? Not likely.

A Gift for Self-Preservation

By comparison, the United Nations “core” budget for the two years 2010-2011 was a trifling US $5.01 billion, plus $8 billion for peacekeeping and other “special” expenditures. In 2004-2005, the comparable figures were, respectively, $3.16 billion and $5 billion. The numbers are stated here with an understanding that the enduring expertise of these agencies is to move items around the budget at will, burying, juggling, or putting on a happy face wherever deemed necessary. This is not to suggest there may not be valid reasons for the euro’s survival any more than criticism of the U.S. Congress for its flagrant opportunism would necessarily support its abolition. Nor is this meant to negate the usefulness of some of these programs nor the input of the many talented people dedicated to their success. Nonetheless, perhaps this New Age corps of European bureaucrats and technocrats have a remarkable gift for self -preservation, but no strategy to prevent the inevitable financial destruction that they themselves helped engineer.

***

Trading stocks, options and commodities in these treacherous times calls for great patience and skill. Click here if you’d like to see how Rick’s Picks approaches the challenge.


-- Posted Thursday, 6 September 2012 | Digg This Article | Source: GoldSeek.com

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