Draghi is often praised for his rare bluntness in assessing Europe’s condition, a quality that has earned him a reputation as one of the continent’s most insightful thinkers. And, certainly, he is right in arguing that the neoliberal architecture of the EU — grounded in “a conscious reduction of the power of states” in favor of rules-based market mechanisms — has left Europe woefully unequipped to navigate a world where military and economic power are increasingly deployed to protect national interests.

The problem is, Draghi’s so-called analyses usually amount to little more than stating the obvious — facts that are evident to anyone not blinded by ideology or vested interests. The acclaim, in short, says less about Draghi’s brilliance than about the poverty of European public debate. But even more importantly, while Draghi may correctly grasp the surface symptoms of Europe’s malaise, he consistently fails — deliberately so — in properly diagnosing their underlying causes.

For if he is right to say that the EU’s neoliberal framework — based upon state retrenchment, fiscal austerity, wage compression and an obsession with boosting exports — has weakened Europe, it’s a policy cocktail that he himself helped blend. He was an architect and enforcer of that model. Already in the early Nineties, when he was director general of the Italian finance ministry, he emerged as a leading advocate of the concept of vincolo esterno (“external constraint”) — the idea that only by “tying the hands” of national governments via a political-economic straitjacket could neoliberal reforms, which lacked popular support, be forced through. That external constraint was, of course, the European Union, and above all the single currency, whose roadmap was laid out in the Maastricht Treaty of 1992. In that position, Draghi was also instrumental in driving forward the large-scale privatization of Italy’s state-owned enterprises.

Over the next three decades, moving between the private sector (notably Goldman Sachs) and senior public posts, Draghi established himself as one of the foremost champions of neoliberal orthodoxy. This role reached its fullest expression during his tenure as president of the ECB from 2011 to 2019, and the act that symbolically marked the beginning of his tenure couldn’t be more paradigmatic.

In August 2011, at the height of the so-called “euro crisis”, Draghi and his outgoing predecessor Jean-Claude Trichet sent a letter to the Italian government. Intended to remain secret, it was subsequently leaked. The letter claimed that Italy’s post-crisis deficit-cutting plan was “not sufficient”, and set out detailed demands, including “the full liberalization of local public services”, “large scale privatizations”, wage reductions and even “constitutional reform tightening fiscal rules”. Giulio Tremonti, Italy’s then-minister of economy and finance, later privately told a group of European finance ministers that his government had received two threatening letters that year: one from a terrorist group, the other from the ECB. “The one from the ECB was worse”, he quipped.

Draghi must have concluded that the conditions set out in the letter had not been met, because a few months later he “forced” (to quote the solidly neoliberal Financial Times) Silvio Berlusconi to leave office in favor of the unelected Mario Monti. Draghi achieved this by discontinuing the central bank’s Italian bond purchases — thus deliberately causing interest rates to rise above safety levels — and by making Berlusconi’s ouster the precondition for further ECB support of Italian bonds. This was belatedly admitted by none other than Monti himself, who claimed in a 2017 interview that, in late 2011, Draghi “decided to stop the purchases of Italian government bonds, which had kept the Berlusconi government afloat in the summer and autumn of 2011”.

It is hard to imagine a more disturbing scenario than a supposedly “independent” and “apolitical” central bank using monetary blackmail to oust an elected government from office and impose its own political agenda. Yet all evidence suggests that this — a monetary coup d’état — is exactly what happened in Italy in 2011. Just a few years later, Draghi deployed the same tools against Greece, effectively shutting down the country’s banking system to force the government to comply with EU-demanded austerity policies, which Yanis Varoufakis, Greece’s then-finance minister, likened to a form of “economic waterboarding”.

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Even in his brief role as Italian premier, between 2021 and 2022, Draghi continued these policies. The few “structural” measures enacted by his government were all aimed at promoting privatization, liberalization, deregulation and fiscal consolidation — while he imposed on his country some of the most draconian Covid policies in the world.

Overall, then, few figures over the past decades have been more unwavering in their commitment to advancing undemocratic neoliberalism than Mario Draghi. But his responsibility for Europe’s downward spiral extends well beyond his role as neoliberal enforcer-in-chief. In his speech last week, he effectively conceded that the EU had been vassalized by the United States. Yet, once again, Draghi omitted any mention of his own role in bringing about this sorry state of affairs: he has always been a staunch Atlanticist, and as such has played a key role in ensuring the EU’s structural subordination to Washington.

The EU’s response to the Russia-Ukraine crisis is a good case in point. In his much-discussed report on European competitiveness, published a year ago this week, Draghi highlighted high energy costs as one of the main reasons for the EU’s loss of competitiveness. The report emphasized that European companies face significantly steeper prices compared to their US counterparts, seriously hindering industrial growth and investment.

Fair enough — yet this was hardly an act of God. Rather, it was a direct consequence of the EU’s decision to decouple from Russian gas, which before the war accounted for almost half of the bloc’s supply, in favor of much more expensive American liquefied natural gas (LNG). More to the point, this policy was vehemently supported by Draghi. Shortly after Russia’s invasion, he defended as prime minister the EU’s decision to impose a gas embargo on Russia, from which Italy imported around 40% of its gas. “Do you want air conditioning or peace?”, he asked, the logic stark in its dubiousness. Draghi was likely suggesting that sanctions would soon cripple the Russian economy and force an end to the war — a scenario that anyone with even a rudimentary grasp of economic and geopolitical realities could have dismissed from the outset.

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A few months later, in a speech at the UN that in retrospect appears almost comically misguided, Draghi doubled down, claiming that the sanctions had imposed “extremely harsh costs on Russia” and had “a disruptive effect on the Russian war machine and on its economy”, making it “harder for Russia to respond to the defeats piling up on the battlefield”. As we know, none of this came to pass — the Russian economy proved resilient, the war machine kept churning, and the defeats mounted not in Moscow but in Draghi’s delusional forecasts. All of this was easily predictable, and indeed was predicted by many of us.

All this raises an obvious question: how is it that Draghi continues to be an enlightened statesman for denouncing the consequences of flawed policies he himself promoted? In a normal world, he would be laughed off the stage — or pelted with rotten eggs. That he so easily evades accountability is the clearest expression of the kakistocratic nature of EU politics, where failure is not punished but rewarded, and where incompetent leaders routinely fail upwards.

But if Draghi’s refusal to acknowledge responsibility for the EU’s problems is bad enough, his proposed solutions are worse still. For Draghi, the cure for the EU’s dysfunction is — to give the EU even more power. “The European Union will have to move towards new forms of integration”, he declared in his latest speech. Translation: yet more political, fiscal, military and technological centralization. In other words, then, Europe’s problems, in Draghi’s view, can only be solved by transferring still more authority to Brussels and further sidelining national governments and parliaments.

But the last thing Europe needs is to give even more power to people like Draghi. On the contrary, if the continent is to have any chance of reversing its decline, it must reject the delusional dogma of “more Europe” and finally hold to account the very technocrats who built the crisis-ridden order they now pretend to diagnose.

This was in striking contrast to her public image during the Greek debt crisis, when cartoonists depicted her in SS uniform resplendent with swastika. But those cartoons were for the masses only. The European political elites, all of them, happily voted with the Merkel government when it came to disciplining the Greek dissidents. They were as eager as the Germans to keep European monetary union alive. Merkel has left Europe to a political class to whom she has not only taught the trickery of two-level politics — national and supranational — but whom she has also, in part, brought to or kept in office. It is a political class that has bet its future on a Europe built around German hegemony.

In many parts of Europe, it is still considered a pleasant surprise to see a German who is soft-spoken with good manners, a wide heart and a big purse, smiling rather than shouting. This proved useful in her rise to becoming informal ruler of the continent. It also helped that she was a woman — someone who could be pictured as a nourishing mother as opposed to a punishing father.

But other things were more instrumental in her rise. When she took office, in 2005, major developments had recently taken place, and major decisions made, which certainly eased her career progression. In the Nineties, centrist political parties, of the Right as well as the Left, had been programmatically emaciated by the advance of neoliberal globalisation. Her party, the Christian Democratic Union (CDU), had been unable to reconcile ever more rapid capitalist modernisation with its traditional commitment to paternalist social protection. This left an ideological vacuum that would give her unprecedented room far for manoeuvre once she became leader.

It also helped that her main rival, the Social Democratic Party (SPD), was breaking apart over the Third Way social policy reforms of her predecessor, Gerhard Schröder — in particular Agenda 2010, which cut unemployment benefits and increased the pressure on people to accept job offers. Not only did the Agenda weaken the SPD for decades, but it spared Merkel, once she had ascended to the chancellorship, from having to implement the neoliberal reforms she had promised as opposition leader. Instead, she could allow the SPD, her partner in three coalition governments, to try to work out reforms to the Schröder reform, thereby reminding its constituents that it was responsible for policies they hated. Merkel, for her part, could claim for herself rising levels of employment and the balancing of the federal budget.

Rising employment and declining fiscal deficits weren’t just a result of the Agenda, though. Merkel’s third and most important long-term advantage was the work of the European heads of government who had created European Monetary Union in the Nineties. It is worth remembering that the common currency was a project not of German but of French and, to a lesser extent, Italian elites, who had hoped that a currency shared with Germany would force neoliberal restructuring in their own countries while protecting them from German financial competition. As it turned out, the former goal was defeated by domestic opposition, while the latter evolved into a Plan B: the southern member states would extract monetary and fiscal policy concessions from Germany in exchange for remaining in the union.

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For Germany, on the other hand, the monetary union was an economic godsend. It made the country the growth pole of Europe, the centre of a liberal economic empire. It also firmly established the preservation of the euro as Germany’s paramount national interest.

Unlike others in Germany, Merkel understood early on that preserving the monetary union would require side payments to its losers. These did not necessarily have to be financial but could be symbolic, for instance by occasionally allowing her colleagues on the European Council to outvote Germany. At home, Merkel had to overcome opposition to what the German public was always prone to see as excessive concessions to profligate southerners. To avoid conflict between domestic and European political needs, most side payments, especially the more expensive ones, had to be made under the counter, through complex operations deep in the bowels of that monster technocracy, the European Central Bank.

This does not mean that there were no tough negotiations on the magnitude of compensations due. Merkel tried to keep the price Germany had to pay as low as possible. But she also understood that the cost had to be sufficient to keep the currency union together. The transfers did not need to solve the continent’s structural imbalances. Their main purpose was political: keeping pro-EU governments in power by helping them fend off challenges from anti-euro parties and movements; providing them with the material and ideological resources to reward their supporters and thereby preserve ‘political stability’.

Very early in her tenure, Merkel realised that the central concern of German policy in Europe had to be defending monetary union against the disappointment of its original proponents. This required keeping alive the impression that the EU was run, if not by all members alike, then at least by a French-German “tandem”, and not Germany alone. Four French Presidents — Chirac, Sarkozy, Hollande and Macron — had to be reassured on this score.

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French aspirations for ‘European sovereignty’ — meaning French sovereignty extended to Europe as a whole — and for a shared ‘strategic culture’  —meaning the EU adopting French military doctrine and ambition — Merkel could satisfy only symbolically. In reality, German national security remained firmly in the hands of the United States and NATO. To keep both the US and France happy, German foreign policy had to rely on rhetorical obfuscation and double-dealing, disciplines in which Merkel excelled. German troops were sent to both Afghanistan and Mali, and would have had to be sent to other places as well had the government not had the excuse that under the postwar German constitution, out-of-area military missions have to be formally approved by the Bundestag.

Domestically, Merkel’s main project was to build a hegemonic neo-bourgeois political centre, with her party in the driver’s seat. Early on, she decided on the Greens as ideal partners who could inject urgently needed new blood and close the generation gap from which older parties suffer in a world of fast cultural change. In the end, however, the alliance with the Greens failed spectacularly. Shutting down nuclear energy after Fukushima and later phasing out coal pleased the Greens but raised the question of how to secure a growing energy supply. The answer was making Germany dependent on Russian gas, to the dismay of the United States. Russian gas also is resented by the Greens, with their “value-driven” idea of foreign policy. While she went along with Western sanctions against Russia over its re-possession of the Crimean Peninsula, Merkel at the same time founded her energy and climate change policy on the Nord Stream 2 pipeline, a project that her Green friends want to abort, as do her French friends, who are eager to sell their nuclear-produced electricity to Germany.

Similar difficulties and domestic-international complexities arose after Merkel’s decision to open the German borders for one million mostly Syrian refugees in 2015. While her refugee policy once more endeared her to the Greens and the new middle class, it divided her party and reinvigorated a then declining Alternative für Deutschland. It also forced her to negotiate an agreement on behalf of the EU with the Turkish dictator, Erdogan, in which Europe paid him considerable sums of money to act as the EU’s gatekeeper, preventing Syrian and other refugees from crossing into Europe. Also to control immigration, Germany insisted on a quota system in Europe for future refugees, knowing full well that it would be unacceptable to most other member states as it would involve a de facto Europeanisation of the German asylum regime. The result was passionate opposition in Eastern Europe and a split in the EU just as in the German electorate.

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Merkel’s migration policy was one reason why the recent Green advance was accompanied by a decline of Merkel’s own party such that in the 2021 election, the CDU/CSU became too small to form a successor government. In the end, the neo-bourgeois centre that Merkel had intended to build was to consist of a three-party coalition under the leadership of the SPD and a chancellor, Olaf Scholz, who as Merkel’s finance minister had done his best to learn from her. As the new government was sworn in, the outgoing chancellor was so alienated from her party that she seemed quite content to see her office turned over to a Social Democrat.

For her successors, Merkel’s will be a hard act to follow. Her manner of leadership by evasion — deferring decisions, delaying moments of truth, papering over conflicts with ambiguous rhetoric, substituting opportunistic improvisation for strategy and suppressing uncertainty by a public display of optimistic equanimity — requires specific personal skills. The same holds for Merkel’s extraordinary ability to get away with abruptly reversing decisions and making conflicting promises to different constituencies. From Merkel, two or three generations of European statesmen and stateswomen learned that leadership in the crises of today means nothing more and nothing less than making yourself appear optimistic enough to satisfy public desires for public displays of optimism.

Now, however, this may no longer be enough. Merkel’s equivocally friendly stoicism is unlikely to serve the next German government, or a German Europe, as well as it served her. During Merkel’s tenure, there was always enough money around to keep most of her partners reasonably happy — enough slack, in cash and time, for making the incompatible appear compatible. That this is no longer true was indicated, among other things, by the recent German coalition agreement, which could come to pass only because the parties deliberately abstained from discussing finance.

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But financial issues will soon assert themselves whether the parties want to discuss them or not, as the monetary union and the pandemic do their work, and German domestic needs make themselves felt. Note that already before Covid struck, there was a crisis of German physical infrastructure. Moreover, the new government, unlike Merkel’s Grand Coalition, will face an opposition in CDU/CSU that it cannot exclude from public debate on principle — as Merkel and all the rest excluded the AfD. This means, among other things, that questions will be asked and have to be answered on Germany’s ability to pay to keep “Europe”, meaning the monetary union, alive by keeping pro-EU governments in control in the south. For this, the ECB will have to invent ever more extravagant methods of direct state finance, including holding interest rates down close to zero in spite of rising inflation and cutting government debt by “fiscal repression”.

The list of unresolved problems Merkel leaves behind is long. It extends from the future fiscal and monetary constitution of the eurozone to Europe’s ever-increasing public debt, the relationship of the EU and its member states to the two hostile global superpowers, the United States and China, the European and especially the German relationship to Russia, the tension between German Atlanticism and French Europeanism, the status of national sovereignty in the EU state system, the future energy supply of Western Europe, and asylum and immigration policies, national and European. More issues could be listed, each urgent, some critical, none easy to resolve.

In a few years’ time, Merkel’s tenure may be remembered as a golden era when pious wishes still helped — a time when hard decisions could still be successfully postponed, dilemmas hidden by optimistic denial and benevolent neglect, and contradictions reconciled by all sorts of pocket money, borrowed or printed. Now, by contrast, things are about to get serious.

For decades, the EU has been providing heroic floods of funding for peculators, perhaps the greatest such flows the world has seen. From 2014 to 2020, the bloc spent €960 billion, and to 2027 has plans for €1,820 billion more. Of these scarcely fathomable sums, around two-thirds goes on various forms of regional and industrial support.

Estimates in the relatively well-policed UK suggest you can expect anything from 2% to 10% of project money to be syphoned off via fraud, collusion, or bribery. But Brussels has long been reluctant to exert central control over its cascades of cash. Only this year has it established a European Public Prosecutor’s Office to pursue malfeasance: despite a tiny budget, in its first few months EPPO has accumulated more than 300 cases. Yet the value encompassed, €4.5 billion, is microscopic compared to the scale of the problem.

This is largely a result of the lack of central oversight, which means you can’t disaggregate skewed spending from theft. You’ll never tally which eye-watering sums have been misallocated, misappropriated, or simply stolen. The best you can do is survey the mechanisms that foment intellectual corruption, and can lead to all the criminal ills.

Take one of its biggest programmes: agriculture, fisheries, and environmental good works, which account for €774 billion of the 2014-27 totals. Leave aside, if you can, the “small scale” rural defraudations over many decades, which by now must total many billions. It’s the essence of the EU’s rural policy that’s obscene, for it’s built on tariffs around food that are passed onto the consumer. Development economists will tell you that, even as latterly reformed, this costs Europe’s consumers over €20 billion a year. This number is a good surrogate for the income denied annually to the poor farmers in the global South who would love to feed the EU’s people.

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Astronomical sums are also spent on space, where the EU works with outfits such as the European Space Agency. The numbers here are deliberately obscured, but in recent years, upwards of €36 billion has been budgeted. The EU’s space policy amounts to a me-first system of outdoor relief for a charmed circle of giant French-controlled firms, with others involved for cosmetic decoration. Step forward Arianespace, run by Airbus (France-Germany-Spain) and Safran (France). Offshoots of Leonardo (Italy’s state-run defence champion) and Thales (France) are also prominent. The Union’s space trajectories reached their apogee with the Galileo scheme to send GPS satellites whizzing above the earth. As far as the numbers tell you, this wheeze has so far absorbed over €10 billion. The bizarre rationale was to rival the perfectly adequate American system, which reserves its tightest accuracy for military use by the US and its allies. Was the EU expecting America to invade? In a further moment of madness, the Chinese were asked to join, though they were later disinvited. After Brexit, Britain was scandalously expelled, though non-EU members Israel, Norway and Switzerland are kept in.

Also among the big boondoggles are central allocations to R&D under programmes dubbed Horizon. From 2014 to 2027 they will total €176 billion. Here, too, the beneficiaries are mainly an established club of “Old EU” companies in France and Germany, plus selected chums in academia. (Britain was a major taker until it left.) The in-built bias was underscored during the latest seven-year spending round, when the newish 11 members in Central and Eastern Europe, despite having a fifth of the EU’s population, were vouchsafed a mere 5% of the largesse available. Meanwhile, famous EU states such as Israel and Switzerland received much more. And has anyone monitored the real-world sales and profits resulting from all that spending? What do you think?

Ensconced in Luxembourg is the European Investment Bank. This is a huge machine for channelling financial subsidies to the Union‘s banks and projects. The EIB does this by borrowing ultra-cheaply on the back of guarantees from the member states. As of the middle of this year the EIB had €179 billion out to financial institutions and €342 billion to other borrowers. The EIB is forever trying to reconcile bankerly professionalism with massive political pressures. It often fails. It’s especially lax in its subsidies to financial institutions, as the modus operandi is to offer overall funding lines that the entities in question use to on-lend at will. Full disclosure: I spent some time as a Head of Division at the EIB, and saw the political machinations first-hand.

Many peculative possibilities come from the plethora of mainstream EU schemes for regional and industrial spending. Even when the goal is a worthy hospital, road, railway or factory, abusive opportunities abound. Start with the local or central governmental satrapies which sponsor many of the projects. They have an inherent tendency to over-specify (the EU’s grants are “free”, after all) and to mismanage the implementation. Greedy advisers and construction firms egg them on. Contractual fiddles can cut links between performance and payment. Central governments (which provide counterpart financing) and EU bureaucrats are complicit, as it’s in everyone’s interest to get the money out of the door. As we’ve seen, when it’s embroiled, the EIB is often swayed by the politicians too.

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Yes, public tenders are stipulated by the EU for most procurement: there are €1,900 billion-worth each year. But it’s easy to fiddle the specifications and the criteria for selection. In particular, Italy, Austria, Spain, Greece, and Portugal have long had poor reputations with their public tenders. In recent years, Hungary, Cyprus, Romania, and Bulgaria have come galloping up the track, and are poised to overtake. Hungary has already won some sort of prize, as PM Viktor Orbán notoriously rewards his chums via hand-steered EU contracts; the country is to receive €22 billion in regional funds to from 2021 to 2027, and more in post-Covid aid.

For decades, the resultant cases of waste and theft have been scattered across Europe. Among the thousands of suspect schemes, notable clumps are in southern Italy, Spain, and in Germany’s once new Länder. A classic of over-investment is Spain’s high-speed rail network. It has absorbed €56 billion over the past 35 years, €14 billion from the Union, but remains chronically underused. One external report put the inappropriate allocation of public funds (to 2016) at €26 billion. The euphemistic plea was voiced for “Transparency in hidden agendas behind public works”. Compared with such herculean Hispanic achievements, the case of Berlin’s new airport seems modest. Supported by the EIB, its cost has exploded from €2.8 billion to €10.3 billion or more. Finally open after 14 years, it’s still not fully functional.

The cases keep coming. Just the other day, the Financial Times revealed to a shocked German railways and to bemused German public prosecutors that the prized scheme for rebuilding the central Stuttgart station, part-funded by Brussels, was allegedly riddled with peculative ills. The original cost, €2.5 billion, has more than tripled to €8.2 billion (and counting). The FT suggested that much of the inflation was due to glaring mismanagement and corruption, one source putting the scale of the peculation so far at €600 million.

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Until EPPO came along the Union’s only policeman was the notoriously feeble control body OLAF, which was supposed to work with another weak entity, the European Court of Auditors. They might as well not have bothered: last year, OLAF itself recommended recoveries of a paltry €293 million. However glaring the case, OLAF was duty-bound to pass it to the given country’s justice system. And all too frequently, local jurisprudence has proved ineffective. This is down to incompetence (Germany) or design (the newish East have underinvested in their legal systems, in many countries prosecutors and courts have been suborned).

From now, EPPO will have criminal law powers while OLAF will concentrate on administrative ills. But don’t expect them to do more than dent the peculation that travels along with the Brussels money juggernaut. They are a mere few hundred-strong. And the vested interests are simply too great, the huge sums of money too tempting. When, in the 19th century, Lord Acton famously said that power corrupts but absolute power corrupts absolutely, peculation was still in common use. In today’s EU, a variant of this still holds true: lack of control over spending corrupts, absolute lack of control can cause absolute corruption.