Facing the left-wing challenge in the European Union

by Eric Toussaint

It is shocking to see that the right-wing government in power in Italy since Summer 2018 refuses to reduce the budgetary deficit while so-called left-wing governments bow to the constraints of austerity. It is now, when the peoples of the Eurozone are ever more disgusted by the policies imposed by European leaders and big capital, that the radical left should start fighting the structures of the European Union and the Eurozone. The time is ripe to expose their legitimacy crisis and use it as a means of tackling the challenges populations are faced with. The left needs to adopt an internationalist, anticapitalist break strategy and push ahead with an eco-socialist federation of the peoples of Europe. A large part of the population aspires to radical change; if the left shows that it has strong proposals and is ready to commit fully to bringing them about, it could win popular support. The left must gear up to taking a profoundly radical course of action that is internationalist, feminist, environmentalist, antiracist, socialist, communist and not tethered by any dogma. [1]

One of the central and most concrete themes that the break should cover concerns the way public indebtedness is used to justify austerity policies.

The way governments have managed the economic and banking crisis that began in 2007-2008 has led to a massive increase in public debt. As of May 2010 the debt issue became a central concern for Greece and for the rest of the Eurozone. The first programme of €110 billion, imposed by the Troika that was constituted for the purpose of implementing it, resulted in a brutal increase in Greek public debt. This was also the case in Ireland (2010), Portugal (2011), Cyprus (2013) and Spain. This programme had five fundamental objectives.

1. Bail-out the private banks [2] with public funds so that they may avoid the damaging consequences of their own private credit bubble, and so avert a new major international financial crisis. [3]

2. Give the new public creditors, [4] who replaced the private creditors, enormous coercive powers over the governments and institutions of the peripheral countries in order to impose policies of radical austerity, deregulation (wearing down large numbers of labour and welfare benefits), privatizations and stricter authoritarian controls (see 5 below).

3. Preserve the Eurozone perimeter (in other words, keep Greece and the other peripheral countries within the Eurozone), which is a powerful instrument in the hands of the multinational corporations and the major economies of the Zone.

4. Bring neoliberal policies to bear more heavily on Greece, in particular, but also on the other Eurozone peripheral countries as an example to all the European populations.

5. Reinforce, Europe-wide (as much for the European Union generally as for each member State), authoritarian forms of governance, without resorting to new experiments resembling Fascist or Nazi regimes or that of Franco, Salazar or the Greek colonels (1967-1974). This aspect is insufficiently taken into account because the accent is placed on the economic and social repercussions. The authoritarian tendency within the EU and the Eurozone is a key issue and goal of the European Commission and the big corporations. This touches on executive powers, expeditious voting procedures, limiting or violating many rights, disregarding electors’ choices and, among more, increased repression of dissent.

There are lessons to be learned from the failure of the policies adopted by the Alexis Tsipras Government in 2015 to break the bonds of austerity. Also, it is necessary to realize the limits of the socialist minority government of Antonio Costa in Portugal. [5]

Alternative policies in the people’s interest must at the same time deal with austerity, public debt, private banks, the Eurozone, oppose authoritarian tendencies and launch the process of creating a new constitution. The experiences in the Eurozone over the 2010-2018 period clearly show that: it is impossible to break with austerity unless responses to, at the least, all the above problems are put forward. Of course, the climate and environment crises must also be addressed. So must the humanitarian crisis caused by Europe’s fortified-borders policy – the cause of so many deaths in the Mediterranean of immigration and asylum seekers –, the Middle East crisis, the far-right and the rise of racism. Since the election of Trump, and also since the appearance of the radical movements that gathered around the Bernie Sanders candidacy and are called into the front line of opposition against Trump and his programme, the European radical left, trade unions, feminists and environmentalists must create links with the forces of resistance in the U.S. It is also vital that the European radical left develop close collaboration with the British left and the Corbyn tendency.

A large part of the radical left who have sitting members of Parliament had and still have a mistaken idea of what EU integration and the Eurozone is. To put it simply, they seem to see more advantages than disadvantages in the EU. They consider that the EU, as much as the Eurozone, is compatible with a return of social-democratic policies, somewhat less injustice and Keynesian measures to relaunch the economy.

Considering the experiences of 2015, it is fundamental that those who have no illusions about the EU or the Eurozone, and are proposing authentic ecological and socialist perspectives in rupture with the EU, as it exists, be strongly supported. It is clear that neither the EU nor the Eurozone can be reformed. It was demonstrated that it is impossible, on the basis of the legitimacy of universal suffrage or democratic debate, to talk the European Commission, the IMF, the ECB and the conservative governments in power over most of Europe into taking measures that are respectful of the Greek people’s, or broadly any other country’s, rights. The 5th July referendum, which the institutions rejected tooth and nail by blackmail and coercion (such as forcing the Greek banks to close for five days preceding the referendum), did not bring them to make any concessions. On the contrary, totally ignoring all democratic principles, their demands became considerably more oppressive.

Certainly, there are many measures that could and should be taken at the European level to stimulate the economy, reduce social injustice, make the debt sustainable and invigorate democracy. In February 2015 Yanis Varoufakis, then Greek minister of the economy, presented proposals along these lines suggesting that Greek debt be exchanged for two new kinds of bonds – either growth-indexed obligations or ‘perpetual’ obligations –, on which the Greeks would only repay the interest, but perpetually. [6] These proposals, although moderate and perfectly feasible, had no chance at all of being accepted by the European authorities.

This is the case with many proposals aiming to ease Greece’s and numerous other countries’ debt (joint debt recognition, Euro-denominated mutual bonds, etc.) Technically these proposals are all viable but what is wanting is the will, in the present political context and balance of power in the EU. A progressive government cannot hope to be heard, respected and, even less, assisted by the European commission, the ECB and the European Stability Mechanism.

The ECB can paralyse a Eurozone country’s banking system by cutting off its banks’ access to liquidities. The arbitrary power of the ECB and the banking union used these means to reinforce the coercive powers of the European institutions over Greece in 2015 to be sure that the attempt at progressive government would fail.

In view of the upcoming European elections in May 2019, several left-wing forces have put forward proposals similar to those suggested by Varoufakis, even though there is no chance whatsoever of their being implemented. For it only requires a few Eurozone governments to oppose them for such measures to be rendered impracticable, since they would need the approval of the ECB.

The treaties have become extremely restrictive on matters of debt and deficit. The European authorities, in control of policies, could easily decide to derogate regulations in consideration of the state of crisis (they do this for governments that suit them [7]), but they clearly had no intention of doing so. On the contrary, all the negotiating parties fiercely fought the Greek government even though it gave proof of great moderation (to say the least). The mainstream media and numerous European leaders treated Alexis Tsipras and Yanis Varoufakis as rebels, or even radical anti-Europeans. The Troika fought against the Greek government’s experiment, between January and July 2015, in order to have the European people believe that there is no alternative to neoliberal capitalism.

The capitulation of the first Tsipras government was not enough to satisfy the IMF or the European leaders. Pressure continued to be laid on the second Tsipras government to apply ever more neoliberal policies, especially attacking common property and the welfare and retirement systems, and assisting big capital through the introduction of further judicial and legal measures that constitute fundamental structural regression and favour privatization processes.

There follows an incomplete list: a change of legislation so that in case of a firm going bankrupt, creditor banks would take precedence over the firm’s employees and pensioners; the complete marginalization of the public authorities in the share ownership of banks; increased powers for the independent tax-collecting body; further regression in the system of retirement pensions; further regression in labour laws and the exercise of the right to strike; further privatizations; adaptation of legislation to permit the forced eviction of indebted households from their homes and the forced auctioning off of goods belonging to indebted individuals via internet; repression of citizens who lend assistance to people under threat of eviction; a mechanism of automatic budget cuts, should the budget surplus objectives set in stone in the 3rd Memorandum not be met. Furthermore, household indebtedness increased. When Greece officially left the 3rd Memorandum on 20 August 2018, the same budgetary constraints were nevertheless maintained. The Tsipras government made a commitment guaranteeing a primary budget surplus for the next ten years. All these new measures and counter-measures produced greater injustice and precariousness. Greece was not granted any reduction of debt-stock and continues to reimburse the ECB and the IMF on the nail. [8]

This is the first lesson: The Peoples and the authorities they have entrusted to break with austerity programmes cannot put an end to the Human Rights violations perpetrated by the creditors and the big corporations unless they take strong unilateral measures of self-defence.

Some would argue that should a leftist government come to power in Madrid, it could use the weight of the Spanish economy (4th largest GDP of the Eurozone) to negotiate concessions that Tsipras was unable to obtain. What concessions? Relaunch production and employment through heavy public spending and deficits? The ECB and Berlin along with at least five or six other capitals would oppose such policies! Taking strong measures against the banks? The ECB, with the support of the European Commission would reject such policies.

What is also sure is that if the radical left entered into the government of a country like Cyprus, Ireland, Portugal, Slovenia or one of the three Baltic States, they would not have the weight, before an unyielding European Commission or board of the ECB, to convince these institutions to let them renounce austerity, stop privatizations, develop public services and drastically reduce the debt. These countries will have to resist and take unilateral measures in the interest of their populations. Could several progressive governments of Eurozone countries form a common front for renegotiations? It would certainly be very welcome if this could happen, but the possibility is remote, if only for reasons of electoral agenda.

Should a French left-wing candidate win the next presidential election in France in 2022, and his radical left coalition win the general election that follows, could a French left-wing government achieve a reform of the Euro? The Mélenchon camp believes so. It is reasonable to have doubts about that possibility. Suppose Mélenchon had won and formed a government intending to introduce social policies and tried to reform the Euro. What would be feasible? It is quite within the realms of possibility for a French government to disregard the current treaties, but it will not achieve a far-reaching reform of the Eurozone. To do this would take simultaneous progressive electoral victories in the major countries as well as in peripheral countries. This said, it is clear that the government of a defiant France and its allies, taking measures in favour of the French population and the peoples of the World (for instance, by abolishing Greece’s and developing countries’ debts towards France) could have a positive effect throughout Europe.

Having said that, the way out of the crisis is not a Nationalist approach. It is as important now as it ever was to adopt an Internationalist strategy and aim for a European integration that binds all the peoples opposed to the present form of integration that is totally dominated by the interests of big capital.

There is also a need to keep up new campaigns and coordinated actions at the continental level and beyond on issues of debt, the right to accommodation, the reception of migrants and refugees, public health, public education, the right to work, the struggle to close down nuclear power plants, the radical reduction of use of fossil fuels, combating tax dumping and tax havens, the fight for the socialization of banks and insurance companies, actions against increasingly authoritarian methods of governance, the struggle to defend and extend women’s rights and the rights of LGBTI people, promoting common goods, and launching constituent processes.

The weak links in the inter-European chain of domination are to be found in the peripheral countries, in France and UK. If Syriza had adopted a correct strategy in 2015 it could well have been a turning point. It didn’t happen.

Other weak links where the radical left may gain power in the not so distant future are Portugal and Spain and perhaps Cyprus, Ireland and Slovenia etc. A new progressive advance would be dependent on the capacity of the radical left to learn the lessons of 2015 and thus make anti-capitalist and democratic proposals that rouse support. Without doubt, the force of popular mobilisation will be a decisive factor. If the pressure for real uncompromising change does not invade the streets, the neighbourhoods and the work places, the future will be very grim.

Footnotes

[1This text has been written for the collective publication Que faire en Europe ? co-edited by Alexis Cukier, Benjamin Bürbaumer, and Marlène ROSANO-GRANGE published by La Dispute, Paris. Scheduled date of publication: March 2019

[2In Greece, about 15 major Belgian, Dutch, French, German and Greek banks were involved. For a detailed analysis see http://www.cadtm.org/Preliminary-Report-of-the-Truth June 2015 Ch. 1 and 2; Eric Toussaint’s presentation of the Preliminary Report of the Truth Committee 17 June 2015, and “Banks are responsible for the crisis in Greece” http://www.cadtm.org/Banks-are-responsible-for-the 23 December 2016

[3The major banks are greatly involved in the US and UK financial markets and banking systems. They had access to large Federal Reserve lines of credit. It’s for this reason that the Obama administration took an interest in the European banking crisis and the Greek and Irish situations in particular.

[4In the case of Greece, this was the fourteen Eurozone countries, represented by the European Commission, the EFSF – the European Financial Stability Facility (which was replaced by the ESM – European Stability Mechanism) –, the ECB and the IMF.

[5The outgoing right-wing coalition won the most votes in the 4 October 2015 general election but did not win the ruling majority. Various left-wing groups won the majority of seats in the Assembly of the Republic: the Socialist Party was 2nd with 32.4%; the Bloco de Esquerda (Left Block), was 3rd with 10.3 %, and 19 seats (from 8 in 2011); The Portuguese Communist Party gained one seat to make 15; the Green Party maintained its 2 seats. A governing agreement was concluded in November 2015: the PS governed alone and the BE and the PCP, although they refused to enter the government, would give their support when they thought it suitable.

[7To cite the least of examples: France under Nicolas Sarkozy and Germany under Angela Merkel were never sanctioned for their continual non-respect of deficit limits; more recently, the European Commission has been equally ‘understanding’ towards the Mariano Rajoy government in Spain through 2015-2016.

[8Eric Toussaint, “The Troika’s Policy in Greece: Rob the Greek people and give the money to private banks, the ECB, the IMF and the dominant States of the Eurozone”, published 28 August 2018, http://www.cadtm.org/The-Troika-s-Policy-in-Greece-Rob-the-Greek-people-and-give-the-money-to

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