Utopian realism: The Green New Deal in Europe

By Charlie Lawrie

October 14, 2019

BOLOGNA, Italy — At the beginning of the year, the announcement of a Green New Deal briefly dominated U.S. headlines. Led by recently-elected Democratic Representative Alexandria Ocasio-Cortez and Boston stalwart Ed Markey, the Green New Deal was trumpeted as a legislative package aimed at decarbonising the US economy and creating a major public works program. It proposed to address the twin challenges of climate change and yawning economic inequality with a series of transformative policy measures, including the creation of 20 million jobs by 2030 through green infrastructure investment, salaries for fossil fuel industry workers during the transition, and the rejuvenation of the democratic process through an emphasis on local decision-making.

The history of the Green New Deal can be traced to a flat on Baker Street in central London. In the midst of the 2008 Financial Crisis, a group of British environmentalists and economists gathered at the house of economist Ann Pettifor to discuss solutions. Their discussions formed the backbone of a report entitled “A Green New Deal: Joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices.” The report envisioned a way out of the crisis with a series of policies aimed at decarbonizing the economy, creating a broad swathe of “green collar” jobs and imposing regulations on international capital.

That report, however, was largely ignored by politicians at home and abroad. Unable to conceptualize a financial system beyond the failed contemporary model — a state of being once described as “capitalist realism” — European financial institutions embarked on a program of quantitative easing to ensure the survival of the private banking system.

The program succeeded in saving Europe’s banks, but the opportunity to address the broader structural issues posed by the dominant economic model was lost. 10 years later, the same countries face environmental crises, secular stagnation and the spectre of recession. What is more, the inability or unwillingness of governments to provide decent economic and environmental conditions has led to an erosion of faith in democratic institutions.

In these circumstances, the Green New Deal has reemerged as a potential deus ex machina. In Europe, the campaign is being led by the Democracy in Europe Movement (DiEM25), which founded the Green New Deal in Europe campaign in April 2019. In the words of David Adler, campaign coordinator at the Green New Deal in Europe, the objective of the Green New Deal in Europe is clear: “To use the financial muscle [of the European Investment Bank] to drive a massive investment plan that would overhaul the European economy, delivering decent jobs to millions of people who are now under or unemployed, as well as delivering necessary investments in infrastructure and industry to avert total environmental collapse.” The campaign seeks to champion a vision for a new European economic settlement and hold the EU to account. Adler is clear that the campaign aims to “hold up a mirror to the EU revealing the deficiencies of their green agenda”.

Europe’s Green New Deal defies norms

In its April 2019 Blueprint, the Green New Deal in Europe outlines three broad strands of action. First, it calls for the creation of a Green Public Works (GPW) to conduct infrastructure investment; second, an Environmental Union to provide a legislative framework for the Green New Deal; lastly, an Environmental Justice Commission, to ensure that the Green New Deal is implemented fairly.

The GPW presents a radical departure from conventional European economic policy. The capital needed for the GPW — a proposed 5% of Europe’s GDP — would be raised through issuing green bonds, sold by public investment banks such as the European Investment Bank and bought by private investors on secondary markets. Crucially, the European Central Bank (ECB) would undertake to purchase all green bonds should their yields rise beyond a defined level to ensure the bonds retain their value. In effect, the ECB would eliminate the risk of default, making these bonds attractive to low-risk investors such as pension funds. This unprecedented funding mechanism would allow significant levels of public financing to be raised; no new taxation would be necessary.

European Commission: (Green) business as usual?

The appointment of Frans Timmermans as the European Commission’s Executive Vice-President for the European Green Deal indicates that European policymakers are taking these concerns seriously. Ursula von der Leyen, the president-elect of the European Commission, has already instructed Timmermans to present a report on the European Green Deal and propose the first European Climate Law within the first 100 days of the new Parliament.

Adler, however, is skeptical. “[The EU] have shifted from the Green New Deal with its roots in FDR’s radical sense of economic transformation to a much more familiar, Brussels-style, green deals, boardroom handshakes, lacquered social change that amounts to greenwashing an existing agenda that maintains the fundamental economic architecture of the European Union.” For him, the devil is in the details. “We noticed a very clever sleight-of-hand: [The EU] have moved from talking about a ‘Green New Deal’ to talking about a ‘Green Deal.’ They’ve neatly excised the word ‘new’ from their discussions about the climate agenda,” he said.

Could Europe’s Green New Deal make European politics more democratic?

Alongside its economic ambitions, the Green New Deal in Europe has a second goal: the democratization of European politics. This has been the Democracy in Europe Movement 2025’s (DiEM25) primary objective since its inception in 2016: to avert the potential disintegration of the bloc by decentralizing the decision-making process. Greater transparency in the EU’s political institutions, the establishment of “constitutional assemblies” and the resolution of Europe’s economic crisis all feature on DiEM25’s manifesto. 

It is important to bear in mind, however, that DiEM25 has had limited success at the ballot box. In the most recent EU parliamentary elections, DiEM25-affiliated parties won a total of 16 seats in the lower chamber and one in the upper chamber; former Greek Minister of Finance Yanis Varoufakis, who stood in Germany, failed to win his seat.

The Green New Deal in Europe campaign may represent DiEM25’s attempt to reframe its argument: that climate change is a more effective mobilization strategy than democratization. But the recent successes of Extinction Rebellion suggest that the two issues are more persuasive when articulated in combination. Beyond its calls for governments to declare a state of climate emergency, the environmental group is demanding the establishment of citizens’ assemblies to present climate proposals to their respective legislatures. Indeed, Adler acknowledged a debt of gratitude to Extinction Rebellion for developing a democratizing approach that goes beyond traditional electoral engagement.

Like its sister project in the United States, the European Green New Deal presents a radical break from the economic and political status quo. Its success will ultimately depend on its ability to persuade not only European political elites, but millions of European citizens whose faith in supranational projects appears to be dwindling. But the recent successes of groups such as Extinction Rebellion and Fridays for Future — groups driven by young people — suggest a growing caucus of youth united in their support for radical interventionist policies. As Adler is keen to highlight, “Everyone is looking to young people as the only source of real inspiration and hope for the future. That is seriously rattling certain sections of the political class for whom watching their children marching in the street puts them in an uncomfortable bind.”