People's Democracy

  France And Netherlands Vote “No” To EU Constitution

 S M Menon

IN part a peaceful insurrection against globalisation, in part the visceral expression of a fear of the unknown, and in part a relapse into old fashioned chauvinism – in referendums held in France and the Netherlands, the citizens of these two founding members of the European Union, voted overwhelmingly against the next phase of continental integration, which would have seen all countries adopting an agreed European Union constitution. What was expected to be a close-run affair in France turned into a resounding victory for the no camp. And a few days later, what seemed a lost cause in the Netherlands was transformed into ignominious rout on the momentum generated by the French outcome.

Soon afterwards, the UK announced that it would indefinitely postpone its own referendum on the EU Constitution. British prime minister Tony Blair shortly afterwards flew off across the Atlantic for a summit meeting with his patron in chief, US president George Bush. Though the summit had been planned well in advance, the succession of events seemed only to buttress suspicions in mainland Europe that the UK was secretly exulting in the disarray that the European project had sunk into. And Blair, who is regarded with extreme disfavour in most European countries because of his slavish obedience to US dictates, did his image no good either. The suspicion that the UK is the Trojan Horse intent on subverting the European integration project from within, has now acquired the authority of fact.

When the dust had settled though, there was much that remained mysterious about the outcome of the twin referendums. French president Jacques Chirac campaigned for a “yes” vote, promising that the EU constitution was a bulwark against Anglo-American style globalisation and the surest defence that Europe could construct for its unique model of social democracy. The crass competitive ethos of the trans-Atlantic allies, the devil take the hindmost philosophy of social laissez faire, in other words, was no part of the design. Unfortunately though for Chirac and the vast array of propagandists for the European project, it was perceived by most of voters as precisely that.

CURIOUS MIX

Bulky with detail and suffused with seemingly trivial details about different aspects of social life, the EU Constitution was little understood by those who were called upon to determine its future. Among the French “no” voters, a clear majority of 52 per cent – according to opinion polls – voted as they did because they thought that times were bad, jobs were vanishing, and politicians who had promised economic miracles from the European project, had forfeited their trust. Another significant chunk of 40 per cent, partly overlapping with the first category, said that they found the constitution too liberal in its outlook. And still another intersecting group of 35 per cent thought that voting against the constitution was a way of keeping Turkey out of the European Union.

It was this curious mix of well-placed economic woes, distrust of politicians, half-founded suspicions about the business lobbies that were pushing the constitution, and old-fashioned chauvinism that contributed to the resounding no vote in France. The picture in the Netherlands was quite similar.

Arguing the case for the constitution were right-wing politicians like Chirac and the Dutch prime minister Jan Peter Balkenende, environmental groups now organised politically under the Greens banner, and parties of the centre like the French Socialists and the Dutch Social Democrats. Arrayed on the opposing side were the communist left in both countries, and more rigorous thinkers from the socialist camp, like the former French prime minister Laurent Fabius. They kept uncomfortable company in this provisional alliance against the constitution with far-right elements like the Jean-Marie Le Pen crowd in France and remnants of the camp that had coalesced around the late Pim Fortuyn in the Netherlands.

Embittered champions of the EU Constitution have argued that the “no camp” would never have won without the support of the far-right chauvinist element. Though perhaps accurate in a purely numerical sense, there is no way this argument can detract from the significance of the popular mobilisation by the left against the treaty in both France and the Netherlands. The referendums indeed, point to a growing crisis of legitimacy of the process of globalisation driven by finance-capital, which has dominated the policy space for close to two decades. The EU constitution claimed to be various things – a charter of irreducible human rights and freedom for the European people, and the surest guarantee that entitlements won through decades of struggle – a decent wage, regulated working hours, a secure retirement and accessible education and health care – would not be lost in the tidal wave of globalisation. But finally, the reality was that the constitution was seen as a charter of rights for finance capital, which brought the people in only as the supporting cast.

It is in many ways appropriate that the first signals of a potentially fatal crisis of the European integration project should come from France. Nowhere else on the continent is the ambition more highly evolved, to bridle the obscenely bloated geopolitical power that the US exercises. Nowhere else is the organised resistance to government plans to shed the responsibilities of the welfare state and embrace a purely finance driven model, more well developed. Among Chirac’s first priorities on assuming the French presidency in 1995 was to put in place a sweeping set of what were called “reforms” in the country’s social sector. He was halted in his tracks by a wave of strikes by public sector employees, which enjoyed immense popular backing, since for France, the quality of public services has in a historical sense, been the single most important source of identification with the values of republicanism and civic nationalism.

LACK OF IMPROVEMENT  

Chirac then sought to cut through the Gordian knot by calling an early general elections to the French National Assembly in 1997. He only found himself facing an unequivocal mandate for the Socialist Party, which had no time for the reforms he envisaged. His big chance came in 2002, when he capitalised on the sense of public disquiet over an unexpectedly strong showing in presidential elections by the right-wing fanatic Le Pen, and secured a comfortable majority for his party in the National Assembly. He has now had to dismiss the faceless prime minister he appointed then, Jean-Pierre Raffarin, though the outcome of the referendum is more than anything else, a rebuff of his own leadership.

French and German ambitions to forge a Europe that would in its economic depth and width, be a counterweight to the “hyper-power” of the US, have clearly suffered a setback. And the principal reason has been that for all the forward movement that has been achieved over the last decade-and-a-half on the integration project, aggregate measures of economic welfare have not shown much improvement. Unemployment to take the most significant indicator, has remained stubbornly near the 10 per cent mark in the euro-zone for close to a decade. There have been minor fluctuations over the years, but no improvement that would be perceived by the general public as a substantive benefit of European integration.

The economic upturn that the euro-zone experienced in 2003 has since given way to a slump. As the latest World Economic Outlook – the biannual publication of the International Monetary Fund – points out, the global growth scenario has now become more unbalanced, with the US record being “stronger than expected”, and European and Japanese performance being “disappointing”. More significantly, the imbalances that have been a feature of these advanced market economies since the early-1990s, have become considerably aggravated. The US continues its plunge into the red, registering one mammoth deficit on external account after another, sucking in huge volumes of the world’s savings to finance its riotous consumption. And Europe and Japan continue to be in surplus, though more modestly than in years gone by.

There was once a neat match between the US deficit and the counterpart surpluses of Japan and Europe. Not any more. According to the 2003 edition of the World Bank’s Global Economic Prospects, the country-wise pattern of ownership of US equity and debt had begun to shift significantly by then. As the main financial hub in the European region, the UK of course, dominated financial inflows into the US Despite this, the euro-area and Japan, which were the main centres of demand for US securities, had yielded place to East Asia and Latin America. The 25 per cent share of the euro area in net foreign purchases of dollar-denominated assets in 2000 had fallen to 5 per cent in 2002. This was in the World Bank's estimation, a "large decline in relative demand for dollar-based assets", which tended to boost the value of the euro. There has also been a relative decline in the importance of reciprocal trade between the euro-zone and the US.

CRISIS OF ADVANCED ECONOMICS

Evidently, the financial savings generated in the euro-zone are increasingly going into funding the European integration project, rather than the US deficit. The 2005 edition of the World Bank’s annual publication, Global Development Finance, draws attention to an arresting fact. Contrary to the dismal realities of the last two-and-a-half decades, developing countries are now generating large current account surpluses. While the enormous accretion to India’s foreign exchange reserves in recent years has been cause for much celebration, the World Bank draws attention to the broader reality, that “the phenomenon was widespread”. Indeed, of the 132 developing countries that reported changes in foreign exchange reserves during the calendar year 2004, no fewer than 101 registered an accumulation. A “sizeable portion” of this accumulation is, according to the World Bank, invested in US treasury bonds, “indicative of the growing stake of developing countries in the global financial system”.

Why the developing countries should invest scarce savings in propping up a system that has done them little good is of course a question the World Bank would rather evade. There was a time when the developing countries were thought to have a social crisis impending: they had too many people coming into the working age groups and not enough capital to ensure them employment. In their effort to obtain the finance to industrialise and generate employment, they got into a crisis of indebtedness. They borrowed huge volumes of capital from the developed world, but squandered all of it in supporting the lifestyle of their elites. Very little had gone into productive investment that would generate employment, as also the means to repay the debt.

Today, the picture is rather different. In an ironic new twist to the story of the global economic order, developing countries are exporting capital to the US, to ensure that it remains economically stable. And the advanced economies are facing a social crisis of a different order and dimension: their populations are aging and the number of people in the productive age groups is falling in proportion to the total. Supporting the social security and health care costs of this aging population is becoming increasingly difficult. With economic liberalism being the reigning philosophy, politicians are turning their attention towards dismantling social security, rather than augmenting it.

 In the US, president George Bush began his second term in office with the main domestic policy priority of privatising social security. He has chosen a characteristically misleading euphemism to describe the process: the social security taxes in his scheme, would not go into a consolidated fund from which benefits would be paid out, but into “personal accounts” which would give each contributor the privilege of ownership. Inundated with official propaganda and media disinformation, the US working class is yet to fully grasp that this is quite transparently an effort to turn over the massive sums that accrue every year as social security taxes, to the fat cat financiers on Wall Street, to feed their speculative frenzy in the stockmarkets.

Social security obligations in Europe are as a rule, not met out of a trust fund, but out of general government revenues. In this respect, the European integration project is a very palpable threat to the welfare of aging populations, since it stipulates that budget deficits in member governments shall not exceed three per cent of GDP. This basic provision of the European Growth and Stability Pact (or GSP) has now been inscribed into the EU constitution as a fundamental duty of member states. This has been done despite the fact that all the major economies in the continent – France, Germany and Italy – have had repeatedly to seek a waiver of this iron rule of the GSP in recent years. Democratic pressure from the working class to sustain the social model of Europe has prevented the steep cuts in spending necessary to achieve the GSP targets. Small wonder then, that the effort to raise this rather loose norm of fiscal prudence to the status of a constitutional responsibility was decisively voted down by a vast cross-ideological mobilisation in France and the Netherlands.