People's Democracy

European Union In Turmoil - II

Sukomal Sen

THE revolt against the EU Constitution has exposed the depth of the crisis facing the ruling classes of Europe. One analyst, Dominique de Montvallon, correctly concluded: “The country is now in such a state of paralysis, worry and anger that one thinks straightaway of May 1968”. One sociologist, Gérad Mermet, told the French daily paper, ‘Le Parisien’, that the electorate had “zero confidence” in the politicians. He possibly exaggerated a little but went on to warn  that “things will radicalise. There is a real risk of explosion: we are in a pre-revolutionary situation”.

Following the referendum defeat, Jean-Pierre Raffarin was replaced by the aristocratic Dominique de Villepin, whom Bernadette Chirac, (wife of Jasques), once compared to the Roman Emperor, Nero, following his advice to her husband to call for early elections in 1997 which resulted in five years of Jospín's Socialist Party-led government. Villepin’s elevation to prime minister is more akin to rearranging the chairs on the Titanic rather than a serious attempt to deal with the crisis facing French capitalism. Villepin, had an approval rating of a mere 41 per cent after his appointment. This is the lowest of any prime minister for more than 20 years and this only a few days after being in office! Following the referendum Chirac’s own popularity ratings crashed to 26 per cent. Even within his own party, the UMP, his popularity has slumped to 50 per cent.

There has been massive erosion in the credibility of all the bourgeois institutions and all the major political parties. The country is widely seen by the French people to be in the grip of a ‘democratic deficit’. The very appointment of the aristocratic Villepin, who has never been elected to anything, as prime minister, illustrates the presidential Bonapartist nature of the existing Fifth Republic – established by De Gaulle in 1958.

Villepin’s new government has initially attempted to present a ‘softer image’ and has promised that the priority will be defence of the ‘social model’. He has promised 100,000 new jobs as home helps and child minders and 4.5 billion euros for job related policies. Yet these measures will not prevent further attempts at more ‘flexibility’ in the labour market. The government has also pledged that it will continue with its privatisation plans and that public spending will remain frozen. This is a recipe for a massive collision between the classes in France.

Despite his efforts to project an alternative image, 60 per cent of the voters think that Villepin’s government will mean more of the same. The victory of the ‘No’ camp in the referendum has boosted the confidence of the working class which now confronts a fundamentally weakened government. The strikes and protests of the metal workers, within days of the referendum result, indicate that strikes and mass protests are likely to escalate. In one poll, 70 per cent people indicated that they thought social struggles and conflict are likely to increase in the coming months.

All indications point to a deeper crisis of the French capitalist class and consequently also of the ruling class of entire Europe.

The EU ‘project’ for greater economic and political integration was rooted in the pressure felt by European capitalists from US imperialism and, more recently, from China. This drove them towards increased collaboration between themselves and led to illusions that this would result in a politically unified Europe. This trend, along with the process of globalisation of the economy and growth of multi-national and trans-national corporations, illustrated how productive forces have outgrown the limits of the national State and to a certain extent have even outgrown continents. The big companies increasingly look towards the world market rather than simply their national or regional base.

Yet, at the same time, this process has its limits and comes up against the insurmountable barriers of the separate nation States and the national interests of the capitalists. In the aftermath of the referendum, these factors have reasserted themselves, clearly exposing a clash of interests. Some thought that the process of EU integration and European Monetary Union (EMU) represented the point of “take off” for a unified capitalist Europe. But as events show this was not to be. This process of unraveling would only worsen in the event of a serious economic crisis, recession or slump.

EURO IN TROUBLE?

The initial euphoria is now over. Now it seems that the introduction of EMU and the euro was a political and economic gamble by the capitalists, pushed through in the teeth of some opposition even from their own side, during the triumphalism which followed the collapse of the Berlin Wall. Initially the Bundesbank opposed the introduction of the euro but was later compelled to accept it in the light of the political pressure from capitalist politicians who supported its introduction. The stability pact was introduced as a ‘safety net’, intended to prevent governments resorting to “profligate spending”.

Moreover, the whole idea of the euro was tailored to a situation of continued growth of the European economies, with no real account taken of what would happen in the event of a slow down, stagnation or recession. The mood expressed in the referendums and recent workers’ struggles on the other hand reflects dissatisfaction that the economic growth, jobs or higher living standards promised with the introduction of the euro have now proved illusory.

The ruling classes attempted to impose an economic union in the absence of an existing political union. An economic union or currency cannot just survive indefinitely under capitalist dispensation.

When the “project” was on track the capitalists ignored the lessons of history. Now faced with today’s crisis, newspapers like the British Financial Times belatedly warn that such contradictions cannot be reconciled indefinitely.

In an article which seriously questions the sustainability of the euro, Wolfgang Munchau pointed out: “All large-country monetary unions that did not turn into political unions eventually collapsed. The Latin Monetary Union of 1861-1920 collapsed partly because of a lack of fiscal discipline among its members – Italy, France, Belgium, Switzerland and Greece. A monetary union set up in 1873 between Sweden – which included Norway at the time – and Denmark failed as political circumstances changed. By contrast, Germany’s Zollverein, the 19th century customs union that developed into a monetary union, succeeded precisely because of the country’s political unification in 1871.” (FT, August 06, 2005).

There is a vast difference between a federal state, such as the US, which can distribute funds to local state governments in a relatively easy fashion on the basis of an agreement, and the situation of the EU. The distribution of resources or funds cannot be done in the same way in a Europe comprising different nation states, as the current struggle over the EU budget shows.

The current EU crisis has revealed that the monetary union, rather than leading to a political union, has resulted in a political fracture between the national states. Partly, this is what lies behind the current spat over the EU budget, which was triggered by Chirac’s challenge to Britain’s rebate. This is a dangerous ploy, from the point of view of the French ruling class, because it has allowed Blair to raise the issue of the Common Agricultural Policy (CAP) in retaliation. France currently receives over 20 in one poll of farm subsidies from the CAP, which is a purely political decision to maintain support for the French bourgeoisie and for Chirac amongst French farmers.

A recession or slump would have major repercussions within the euro zone. Germany would be particularly badly hit by a slow down or recession in the world economy because of its increasing reliance on exports for economic growth and contraction of the domestic market. The onset of a serious recession will pose the likelihood of a breakdown of the euro. There could be a simultaneous collapse of both the euro and the dollar if the crisis reaches beyond control. Such a development will shatter the dream of the European capitalist analysts who hoped the euro could eventually rival the dollar as the leading world currency.

However, it is not necessarily Italy, or one of the weaker euro zone economies, that could torpedo a collapse of the euro. Commentators like Wolfgang Munchau, writing in The Financial Times, recently pointed out that France or Germany, in the event of a watered down stability pact and increased inflationary pressures, may eventually conclude they would be better off outside the euro zone, with their preference for price stability. In the event of these countries emerging with appreciating national currencies, their debt repayments would fall. One analyst from Deutschebank warned: “The pressure to leave the euro zone will not come from its weak members but from its strong members.”

Indeed, it is from the strongest of the euro zone economies, Germany, that the pressure to leave could become greatest because of the dramatic social, economic and political crisis which has developed in that country.

SOCIALIST PATH –THE ONLY ALTERNATIVE

The unprecedented crisis in the EU has caused the continental bourgeoisie to move away from a common approach to one driven by nationalism and defense of its own separate national interests.

However, the crisis of the EU, and its institutions, has nothing to do with the narrow nationalism of the ruling class and far right. The working class of Europe has common interests and we stand for the defense of a united socialist Europe on a free, voluntary democratic basis with a socialist perspective.

The working class through its struggles in some countries has been able to slow down the neo-liberal offensive launched by the capitalists. In 1995 the French workers were able to stop the Juppé plan. In Italy, Berlusconi was unable to implement his proposed pension ‘reform’. In countries like France and Germany it has not yet been possible to carry through the neo-liberal policies to the extent that the ruling class would like to. They have not been able to proceed as Thatcher did in Britain.

Yet, the failure of the trade union leaders to politically educate the mass of the working class, equip them with a socialist consciousness, organise massive resistance and offer a socialist alternative, has enabled the capitalists to continue their offensive. It is urgent that a socialist alternative to neo-liberalism is fought for throughout Europe and the entire capitalist world. The working class must unite across national borders to combat the threat of neo-liberalism, capitalism and imperialism and unleash massive struggles for a socialist alternative. Whether it is the turmoil in EU or a general turmoil in the capitalist world, this is the only political solution.