No capitalist solutions to the eurozone crisis

The capitalist classes of Europe are all adopting the same policy of attempting to make the working class pay for the capitalist economic crisis. As the capitalist politicians arrived in Brussels for the 30 January EU summit they were met with a clear and determined message from the Belgian working class – a magnificent 24 hour general strike (see photo) – the first in the country for nearly 20 years – in defiance of the summit’s austerity agenda.

German chancellor Angela Merkel wrote the cuts agenda of the summit in letters a mile high, when she arrogantly declared that “the debt brakes will be binding and valid forever” as she agreed the fiscal pact that is supposed to solve the Euro crisis. This is not a fiscal pact, but an austerity-max pact; an agreement to inflict untold misery on the working classes of Europe, in order to try and satisfy the vultures of the finance markets.

The capitalist classes of Europe are all adopting the same policy of attempting to make the working class pay for the capitalist economic crisis. In Britain, Cameron stood aside from the pact in order to pacify the right of the Tory party, but is implementing virtually identical policies.

The pact’s ’debt brakes’ are supposed to be written into the constitution of every participating country – making it illegal to run a deficit, with countries facing fines of up to 0.25% of GDP if they do so. This could never be fully implemented, Estonia is currently the only country in the EU that has a budget surplus; all others, even Germany, have a deficit. What is more the drive for austerity will do nothing to solve the Euro crisis, but will only fan its flames.
The eurozone as a whole is back in recession with unemployment reaching 10%, the highest level since the Euro was created. In Spain one quarter of the population is now unemployed. Young people are being written off as a ’lost generation’ across the continent. In Italy youth unemployment is 28%, in Greece 43%, in Spain an appalling 51%.

In a continent of growing misery, the population of Greece face the most acute hell. Over the last two years 91% of the population have suffered a fall in income, of an average of one third. The nightmare the Greek population is suffering is summed up by the human tragedy of hundreds of families giving up their children because they can no longer afford to feed them.

Yet the conditions for the Greek bailout currently under negotiation are to inflict yet more cuts on the living standards of the Greek population, inevitably accelerating the deflationary spiral in which the country is trapped. The Euro summit largely avoided discussing Greece, the ’elephant in the room’.

However, in the days before the summit a leaked memo from the German government declared that Greece’s “disappointing compliance so far” meant that the Greek government should be forced to hand over control of all tax and spending decisions to a eurozone ’commissioner’. This would have literally meant colonial rule of Greece, no different to the ’governors’ who ruled the colonies of the British Empire. The memo has been retreated from, but the reality remains little different, with the German capitalist class, as the strongest economic power in Europe, using the EU institutions to dictate terms to the countries of the periphery.

This offers no solution for the eurozone. On the contrary, as the Socialist has long argued, the eurozone’s attempt to unify Europe on a capitalist basis will inevitably turn into its opposite. As the crisis has intensified so has the attempt to tighten the bonds of the eurozone.

As anger at ’austerity Europe’ increases there will be growing demands for referenda to allow the people to vote on whether to accept the austerity pact. In Ireland our sister section is leading a campaign for a referendum to take place and for a ’no’ vote. It is possible, as a result of a massive campaign to frighten the Irish working class about the consequences of being ’out in the cold’, the ’yes’ vote will be able to win a majority in a referendum. Incredibly it is being suggested that even if Ireland and other countries reject the treaty, it will only take nine of the 17 for it to go ahead.

The attempt to tighten the bonds of Europe will inevitably result in an increase in the centrifugal forces – of nationalism and splits – which will pull the eurozone apart. Greece will be forced out of the eurozone, possibly very quickly.

The bond yields of Portugal have now reached 16%, as the financial vultures circle on their next prey, which they calculate will be forced to follow Greece. Spain and Italy, far bigger economies, also remain in clear danger. Meanwhile funds available to rescue countries remain highly inadequate, nowhere near what is needed to bail out Spain or Italy.

The capitalist classes of Europe will continue to scramble to save the eurozone, recognising the catastrophic economic consequences of it fracturing, or even worse a disorderly collapse.

The European Central Bank (ECB) has provided almost €500 billion to the banks at the end of December, in an attempt to counter the credit crunch. However, it is expected that banks will demand two or three times as much when the next auction takes place at the end of February. The possibility is still posed of one or more banks collapsing, triggering a dramatic acceleration of the crisis.

The working classes of Europe have already shown their determination to resist austerity. General strikes and mass demonstrations have swept the continent. This movement needs to grow in the coming months. Determined resistance needs to be linked to a vision for a better future.

A socialist alternative needs to be put forward in every country of Europe – beginning with demands like: cancel the debt and nationalise the banks under democratic, popular control, and going on to explain the possibility of building a democratic socialist society capable of meeting the needs of all.

Without this there is the danger that right-wing, populist nationalists will seek to take advantage of the crisis by blaming foreign ’enemies’ and migrants. It is high time for the workers’ movement in Europe to plan concerted action to rally opposition and go onto the offensive against capitalism.