Marxilainen Työväenliitto,
25.11.2007, 2.21


Wither Europe?

By Savas Michael-Matsas

Paper presented to the European University, St-Petersburg, Russia, November 3, 2007

1. In the beginning of the new century, in 2000, the European Union Summit in Lisbon elaborated an ambitious project, named "The Lisbon Agenda", with the strategic goal "to make Europe, by 2010, the most competitive and the most dynamic knowledge- based economy in the world". Since then, not much has happened, in spite of the process being restarted in 2005: the European Union, while expanded into 27 members, still lags behind in international comparisons, with an aging industry, protectionist and over-regulated barriers, and unresolved internal antagonisms between the bigger European Nation -States.

On October 18-19, 2007, only three years from the landmark of 2010, an E. U. Summit, in Lisbon again, had not solely to face the persisting failures to achieve the goals of the Agenda but also a worsening international economic environment after the crisis that erupted in summer in word credit markets, and growing popular grievances and social tensions. The Summit took place, while a two hundred thousands strong rally of Portuguese workers was assembled in front of the place where the European leaders were deliberating, while in the heart of the Euroland, in France and in Germany, the axis of the entire EU construction, powerful strikes of transport workers challenged the neoliberal agenda of the respective Sarkozy and Merkel/SPD governments.

The only result of the 2007 Summit in Lisbon was the final decision for a "new (non -constitution) reform treaty fro Europe" (as Karsten Staehr has called it [1]), a downsized version of the EU Constitution rejected by the French and the Dutch voters in a 2005 referendum. Oligarchic power between the four strongest EU countries-Germany, France, Britain, and Italy- is reshuffled, and their consensus is imposed to the other 23 member states through over-centralized EU institutions, which now involve a new President of the European Council to be (s)elected for two and half years at a time, replacing the previous system of semi-yearly rotating presidents from each country, a High Representative for foreign affairs as vice -president of the Commission, and new voting rules and additional limits on national veto to be phased in over a period of time.

The new Treaty, scheduled to be signed on December 13, will be ratified by the national parliaments i.e. the ruling parliamentary majorities by-passing any expression of popular will in a special referendum. The bitter lesson of the referendum of 2005, when the "No" to the Draft EU Constitution had triumphed, in spite of the full support to a "yes" enthusiastically given by all main parliamentary parties and mass media is learned by the rulers.

Therefore, while the ambitious Lisbon Agenda 2010 expires unsuccessfully, the sole step taken by the EU rulers was to ignore the ruled, to avoid their democratic decision on their fate. In a way, the EU governments apply the ironic advice given by a famous poem by Bertolt Brecht in 1953: if the people disagrees with the government, then the government has to dissolve the people and elect another one.

2. The construction of the European Union entered its most crucial stage after the collapse of the Soviet Union in 1991 preceded by the collapse of all Warsaw Pact regimes in Eastern Europe. The strategic answer to the new challenged was formulated by the German and French governments that put aside other disagreements and established a new framework of European integration in the Maastricht Treaty of 1992 (while the Yugoslav peoples have to pay first the price of this integration by the disintegration of their own country).

Perry Anderson, in a recent article promptly titled "European Hypocrisies" [2], investigates European economic and political integration following the Maastricht Treaty. It is important to keep in mind that Perry Anderson was the historic editor of New Left Review (NLR) the most influential New Left journal in the English speaking world for decade. Anderson, although sympathetic that period to the United Secretariat to the Fourth International, kept always himself in an intellectual ivory tower, in safe distance from the organized workers movement and its political struggles. Following the collapse of the Soviet Union, NLR had plunged into a deep crisis until its re-emergence later in the 1990s, while Perry Anderson moved towards a center left position adapted to the spirit of the times. This summary of his political course enlightens more the importance of his present balance sheet on the European Union: it comes not from any radical left or ultra-left view but from a rather moderate perspective that does not challenge the capitalist framework. Nevertheless, without embracing any revolutionary perspective, Anderson's analysis put in relief the failure of the EU project.

The analysis proceeds along three main axes by examining:

A. the advent of monetary union with the introduction of the euro (European Monetary Union-EMU);

B. the new role of Germany after its re-unification;

C. the expansion of the EU in Eastern Europe.

"Of its nature", Anderson remarks, " the introduction of a single currency, adopted simultaneously by 11 out of 15 member states of the EU[Greece joined as 12th member of the EMU in 2002] on the fist day of 1999, was the most punctual and systematic transformation of the three". But the results were "not visible, and most clear cut", if only "in the most limited technical sense", the administrative substitution of a dozen monies by one. "Otherwise", Anderson continues, "contrary to general expectations, the net upshot of the monetary union that came into force in the Eurozone eight years ago remains undecidable. The state purpose of the single currency was to lower transaction costs and increase predictability of returns fro business, so unleashing higher investment and faster growth of productivity and output. But to date the causes have failed to generate the results." [3]

Already the Single European Act of 1986 that it was estimated to add between 4.3 % and 6.4% to the GDP of the Community, it have failed to yield just a little over 1%... "So far", Anderson points out, "the pay-off for EMU has been even more disappointing". Growth in the Eurozone initially slowed down, from 2.4% the five years up to 1999 to 2.1%, then it accelerated a bit but always below the level of the 1980s. The EU has so far a growth rate below of that of the US and it has lagged far behind China, where average wages are well over 20 times lower than in Europe.

Currently, according to the European Commission's interim forecast in September 2007, euro-area GDP should grow by 2.5% for the year as a whole and it is predicted a slowdown for 2008 under the impact of the international financial turmoil of 2007 after the bursting of the US sub-prime mortgage market bubble and the rise of oil prices. [4]

Economic growth forecasts are, indeed, slashed for the next two years: The European Commission estimates that growth in the bloc will drop from 2.9% in 2007 to 2.4% in 2008-2009. Eurozone growth also will drop from 2.6% this year to 2.2 % in 2008 and 2.1% in 2009. [5]

3. The point made by Anderson has to be strengthened further in this new economic environment. The European Union is vulnerable to the current world credit crisis on many fronts:

* The European banks are exposed to the sub-prime market debacle in the other side of the Atlantic, particularly via "structured finance"- the dispersion of the risk by techniques of securitization into all kinds of exotic derivative financial instruments (Collateralized Debt Obligations- CDOs etc.). The massive injection of liquidity by the European Central Bank on August 10 and 13, 2007 to avoid the systemic danger from the illiquidity crisis manifested on August the 9th, as well as the intervention of the Bank of England to dissipate the panic produced by the Northern Rock Bank's problems are clear demonstrations of the fragility of the credit system in Europe and the implications of a credit squeeze.

* The slowdown of the world economy produced by the international financial turmoil will hit particularly the sluggish EU economy.

* The interest rate cuts introduced by the US Federal Reserve to increase liquidity drive downwards the weak US dollar appreciating the euro and European commodities, eroding the competitive position of the EU.

* The skyrocketing oil prices connected both with the fall of the dollar and the Middle East chaos hit particularly hard the oil-depended Europe.

The impact of all these interconnected factors on Europe affects the entire social fabric fuelling a new wave of mass social struggles.

4. Before examining the increasing social tensions in Europe let's review the other two axes of European integration examined by Perry Anderson.

Re-unified Germany, undoubtedly, re-won its position as the central land, the most populous nation and the strongest economy in the Continent. But the cost of re-unification was enormous: "the bill has come to more than a trillion dollars, saddling the country for years with stagnation, high unemployment and mounting public debt" [6]. Recovery came quite late, in 2006, thanks to a squeeze of jobless benefits and workers' wages, mainly performed under the Schröder SPD-Green government and now continued under the Merkel CDU-SPD government: "Between 1998 and 2006, unit labour costs in Germany actually fell- a staggering feat: real wages declined for seven straight years." [7] thanks to the historically oldest and internationally most powerful Social Democratic Party! The tension between the neo-liberal "Agenda 2010" of the SPD and the trade unions traditionally connected with Social democracy provoked a split from the left, the formation of WASG of Oscar Lafontain that merged with the PDS (former Communist Party of East Germany) to the newly found Party "Linke" (Left). Meanwhile the SPD lost 30% of its membership from 1998 until 2007. This is the reason for the attack on "Agenda 20010" by the re-elected Chairman of the SPD Beck in the recent Congress of the German Social Democratic Party and an apparent "left turn" that already provoked the angry reaction of the Social democrat Vice-Chancellor in Merkel's government.

Together with France, while for other social economic and political reasons, Germany, the motor engine of the European economy, enters a new phase of social and political tensions. Expansion of the EU to the East was linked to the needs and antagonisms in and between the core countries around the German-French axis.

Initially, reunified Germany under Helmut Kohl wanted to limit the expansion of the EU only to the Central European ex-Socialist countries, the Czech Republic, Hungary, and Poland, in other words in a German dominated resurrected Mitteleuropa, splitting again Eastern Europe between a more developed central and a poorer eastern/ south-eastern part. But antagonism with France demanding Romania's entry(and thus making Bulgaria's entry also unavoidable), pressures from Sweden in favour of Estonia, with the same effect on Latvia and Lithuania, and the policy of the Commission under Prodi for a comprehensive EU enlargement led in May 2005 to a EU of 27 member states (including Cyprus).

But an entire new set of contradictions now emerge.

This "unification" of Western with Eastern Europe simultaneously raises new barriers of separation. Eastern Europe is seen mainly as a pool of cheap, non organized labour, in an atomized society disintegrating under the control of corrupt ruling elites profitably cooperating with European capital. While European corporations and banks freely invade this new periphery, a wall of separation is erected in the West to prevent the mass exodus of destitute people coming as immigrants from the East. At the same time re-location of companies in the East is used as a weapon to cut wages and living conditions, to discipline workers in the West under the constant threat of factory closures and mass unemployment. A new class re-composition is taking place on a continental level.

Apart from the social there is a geo-political dimension affecting EU enlargement to the East. This space on the borders of Russia, and where also all the oil transfer lines from Caucasus and the Middle East cross has acquired a crucial geopolitical importance becoming an arena of EU-US rivalry. Most of the ruling elites of the new EU member states in Eastern Europe are closely connected, politically, militarily, and economically, with the US, hosting even CIA prisons and interrogation centres for prisoners from Iraq and Afghanistan in the way to Guantanamo Bay and ready to offer all the facilities for the establishment of the new US missile system targeting Russia. It is obvious that these new member states could function as an American Trojan Horse in the EU, as many in Brussels are rightly convinced.

5. As international geo-political tensions are growing and social economic contradictions are sharpening, ruling classes and governments in the EU are rushing to impose a series of anti-popular measures misnamed as "reforms" to dismantle all social conquests and rights of workers and poor, in the name to fight "labour market rigidities" that prevent the EU economy to become more competitive.

Sarkozy is the emblematic figure of the new period, having the ambition to become a new Thatcher. His tough stand against the rebellion in the ghettos around Paris in November 2005 and against the mass youth movement against the CPE (Contract of First Employment), his landslide electoral victory and his program for a social Blitzkrieg to impose, in the briefest period of time, a series of "reforms", starting by the abolition of long established pension rights, became a rallying call for all European ruling classes. In a certain manner, France is still the political center of the Continent.

Some commentators had said that Sarkozy had won the Presidency already in November 2005 when, as Minister of Interior, mobilized the repressive apparatus against the youth of the poorest neighborhoods rebelling against not solely of police repression but also because of their appalling social conditions of 50% unemployment, constant discrimination and status of social exclusion. The truth is that it was not Sarkozy that won already in 2005; it was the French Left that had lost by remaining paralyzed, indifferent or even hostile to the rebellion of the "wretched of the earth", blind to the depth of the social problem as a whole and rejecting the need of a program for radical social change on socialist lines. The paralysis of the Left, including the far left, and the absence of a convincing alternative socialist way out from the crisis pushed to the "hard" Right the wavering middle strata.

This problem is not a French "peculiarity". A similar situation can be seen in all European countries, major and small.

The formation of ghettos, under-graded secluded urban spaces in and around contemporary mega-cities, the emergence of a Third World within the First World, social exclusion on a mass scale are not a "collateral damage" of capitalist social development but a condition of possibility for social exploitation, especially in a situation of worsening systemic crisis.

For the moment the fragmentation of the labouring population between fully employed, partially employed (flexible or "black work") and chronic unemployed, between "included" and excluded, exploited, over-exploited, and "underclass", is working as a method of control by the ruling class.

But the developing crisis fuels centripetal forces bringing in the arena of struggle all the still separated sections, even initially in a disparate way. Few months after the revolt in the banlieu, in February and March 2006, Paris itself and all urban centers were overwhelmed by millions of youth and workers fighting the new legislation on "flexibility of labour" and obliging the Chirac-De Villepin- Sarkozy government to withdraw the CPE.

When the fight of the French youth victoriously ended early April, immediately after, in May 2006 the Greek students entered en mass in struggle, occupying for months all the Universities in the country fighting against privatization of education. University Professors and teachers joined them, the struggle continued against police repression, thanks to an widespread popular support until March 2007, and the government was forced to a partial retreat and then in early elections.

As Sarkozy himself found the hard way, when he became the center of the governing power in 2007, social problems cannot be solved and resistances cannot be defeated solely by a radical right wing voluntarism nor by simply using police state repression. Thatcher had entered the scene in the early phase of rising neo-liberalism and finance globalization; now, in this advanced stage, neo-liberalism shows signs of exhaustion and capitalist globalization plunges in crisis. A new historical landscape starts to be shaped.

European integration along capitalist lines collides to systemic barriers and becomes more and more problematic. An alternative re-organization and unification of the Continent is possible only on new social bases, renewing the perspective for a United Socialist States of Europe.

40 years after the revolutionary event of May 68, the first re-appearance of the specter of socialist revolution in Europe, decades after the initial revolutionary wave of 1917-23, the Old Continent finds itself again in crossroads.

Where is Europe going? In these times of uncertainties, the only sure and certain is that Europe has entered the season of storms. It is up to its exploited masses and to its workers' vanguard to transform the storm under way into a new "storming of heaven".

Athens, 25 October 2007 __________________________ [1] Europe EconoMonitor October 23, 2007

[2] Perry Anderson, European Hypocrisies, London Review of Books, 20 September 2007

[3] Op. cit. p.13

[4] See European Commission Directorate-General for Economic ands Financial Affairs, Quarterly Report on the Euro Area, Volume 6 No 3(2007)

[5] See Stratfor Intelligence Summary 11.09.2007

[6] Perry Anderson op. cit. p.14

[7] Op. cit.

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