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Analysis: Brussels takes heavy hand in euro crisis

By Don Melvin
Associated Press / November 12, 2011

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BRUSSELS—The European Union, never known for its light touch, is pushing through the euro crisis with an unusually heavy hand. Surprisingly, few people seem to be complaining.

Brussels -- and the leaders of the EU's two most powerful countries -- have come close to ordering that a government of national unity be formed in Greece, that a national referendum there be scrapped, and that Italy accept humiliating international financial inspection of its books.

But voters in those beleaguered member states seem weary for now of politics and the fine mess their elected leaders have gotten them into. They've looked over the precipice and seem to have decided just for the moment to forego politics, ballot-going and little quibbles over sovereignty.

The normally fiercely independent-minded people of Greece and Italy -- both countries in dire trouble over their sovereign debts -- seem willing to accept as their new prime ministers technocrats who are veterans of pan-European institutions with reputations for meddling in national affairs.

The new prime minister of Greece is Lucas Papademos, a 64-year-old former vice president of the European Central Bank. The expected new leader of Italy, once the flamboyant and often embarrassing Silvio Berlusconi resigns, is 68-year-old Mario Monti -- a former competition commissioner for none other than the EU.

It's beyond doubt that France and Germany play a huge role in making decisions on behalf of all 27 EU nations. French President Nicolas Sarkozy and Germany Chancellor Angela Merkel often meet in advance of EU summits to hash out a common position on the issues of the day, which they then present to the other 25 heads of government, almost as a fait accompli.

These pre-summit meetings have evolved now into an informal committee called the Frankfurt Group, which also includes officials from the EU and the IMF.

And though the European Union casts itself as a global supporter of democracy, some recent actions by Sarkozy, Merkel and EU officials based in Brussels could be viewed pretty much as diktats that were not particularly deferential to the rights of national voters to shape national policies.

EU leaders erupted in rage at the call by George Papandreou, then Greece's prime minister, for putting the terms of Greece's bailout to a referendum. After Merkel and Sarkozy summoned him to the G-20 summit in Cannes to explain himself, the referendum was duly scrapped.

Wielding the power to withhold a desperately needed euro8 billion ($11 billion) batch of bailout money, EU leaders strongly urged that Greece's two main parties join in a government of national unity -- which they did. And EU honchos made no secret of their preference for Papademos to lead that government of national unity.

So, after four days of wrangling, the Socialists and Conservatives tapped Papademos.

In Italy, EU officials imposed International Monetary Fund financial monitoring on Italy -- essentially an expression of mistrust of the elected government there.

But people in Greece and Italy, feeling badly let down by the governments they elected, do not seem to be taking offense at the outside help.

In Greece, where democracy was invented, recession-weary citizens seem less than keen to hurry back to the ballot box. According to a recent poll, 79 percent of them opposed Papandreou's plan to hold the referendum on a bailout. The Alco telephone poll of 1,000 adults conducted Nov. 2-4 also found that more than half of Greek voters -- 52 percent -- preferred the formation of a coalition government to early general elections. No margin of error was given.

Italians are angry, but their wrath is directed more toward Berlusconi and Italian politicians in general for the mess they are in, rather than at EU headquarters in Brussels.

"We're angry with our government for its lack of action," said Amadeo Lefevre, as he arranged the shelves in his bookshop a few blocks from Berlusconi's residence and the Chamber of Deputies. "They have no policy, no strategy."

Adriaan Schout, an expert on European politics at the Clingendael international affairs institute in the Netherlands, said voters have reason to feel let down by what their democracies have achieved.

"Politics have done great damage to the economic and monetary union," Schout said.

Furthermore, he said, it is not the business of democracy to hold referendums on every issue that comes along, and the lack of them does not make the EU undemocratic. Democracy sets goals and parameters, and then it is up to technocrats to implement those policies, he said.

But if the EU is in fact democratic -- it has its rules, it is governed by elected heads of government and an elected parliament -- another unelected force is at play in the current crisis: the markets.

Market reaction played perhaps as big a role in forcing the cancellation of Greece's proposed referendum as did the EU or Sarkozy or Merkel. And those faceless markets also put huge pressure on Berlusconi to go.

The reason the markets are now able to wield such power is because the political class has fumbled and simply handed it over to them.

"It is not the markets who have a 120 percent public debt," said Roberto D'Alimonte, a political analyst at Rome's LUISS University. "It is the politicians who created the 120 percent public debt. These debts are now offering the markets the chance to dictate their conditions."


Don Melvin is Brussels news editor for The Associated Press. Frances D'Emilio in Rome, Colleen Barry in Milan and Derek Gatopoulos in Athens contributed. Don Melvin can be reached at top stories on Twitter

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