Saturday, January 7, 2012

Whither Europe today?

World crisis of production inflames EU’s inborn conflict


BY JOHN STUDER
On Jan. 1, 2002, fireworks exploded across Germany, France, Italy, Spain and the rest of the 11 countries that issued the first euro coins and notes, marking their agreement to replace their national currencies, ostensibly ushering in an era of “peace and prosperity.”

Today, 10 years later, there are no celebrations. Declining production and trade, resulting financial crises, and increasing nationalist frictions have dispelled the myth of a “united Europe” and portend the disintegration of the currency union.

German Chancellor Angela Merkel, presiding over the area’s dominant manufacturing and trade economy, said glumly in her New Year’s message that Europe faces its “harshest test in decades.” The new year is “full of risks,” French President Nicolas Sarkozy chipped in, adding that France’s future hangs in the balance.

“In Italy, Giorgio Napolitano used his New Year’s speech to warn Italians they will have to make sacrifices to avoid financial collapse,” the British Telegraph reported January 2. Napolitano, long associated with the Communist Party, is Italy’s president.

The seeds of the European Union were planted by Europe’s capitalist rulers in the aftermath of World War II. U.S. imperialism emerged as the overwhelming economic and military victor. Germany and Japan were crushed. Great Britain, France, Italy, and other European capitalist countries and infrastructure were devastated.

U.S. capital expanded rapidly with little competition, sank its tentacles deeply into Asia, installed its navy as the sea power over the region, replaced European competitors as the dominant colonial power, and reaped billions investing in the rebuilding of capitalist Europe and Japan. U.S. plunder fueled what the rulers over-optimistically dubbed “the American century.”

Faced with this, French and German capitalists, and others in Europe, began discussion of the formation of a common market in order to gain a stronger competitive position. They looked to combine the benefit of a freer market within Europe for goods, capital and labor with protective barriers against imperialist rivals outside the continent.

But it was fraught from the beginning with one major contradiction: the constriction of national sovereignty. The capitalist rulers’ ability to wield borders and a national currency is critical to defend their class rule, profits and prerogatives.

The long road to the establishment, first of the European Union, now a 27-nation single market and protectionist barrier, and then the eurozone with its common currency, was a stormy process. Shrouded in verbiage about peace and prosperity, the rulers jockeyed for national advantage at every stage along the way. Their competing capitalist classes each have distinct, separate interests along with varying levels of industrial development, productivity and social conditions.

The first step was taken in 1951, when France and Germany, along with Italy, the Netherlands, Belgium and Luxembourg, established the European Coal and Steel Community, to consolidate control over these basic industries from the U.S.-led postwar occupation regimes and seek markets for profit, especially in Africa.

In 1958, these six countries founded the European Economic Community in an effort to expand their economic collaboration in regional and world economic markets.

These formations merged in 1967 as the European Communities, and, over the next three decades, Denmark, Ireland, the UK, Greece, Portugal, Spain, Austria, Finland and Sweden joined.

In 1991 these capitalist regimes formalized their economic bloc as the European Union. Though rife with internal divisions at each stage, based on fundamentally antagonistic national interests, their rulers felt driven to proceed along these steps by the lash of sharpening competition.

In 2002, 11 of these nations launched a common currency, the euro. Today the eurozone comprises 17 nations. With the additional step of establishing a common currency the ruling classes in these European countries sought to further bolster their competitiveness with U.S. imperialism, including their common goal of inflicting blows on labor to shore up their declining rates of profit.

Britain, Denmark and Sweden, fearing loss of maneuvering room their own currency provided against their rivals, chose not to participate, while maintaining membership in the common market for goods, capital, and labor.

Temporary gains mask differences

Initially, the deep differences between the capitalist regimes sharing the euro were masked by temporary gains for all. The more developed and productive exporting economies, led by Germany, the region’s manufacturing powerhouse, stepped up their export of merchandise and capital to the less developed nations, such as Greece and Portugal. The latter in particular gained access to much cheaper loans than they would have otherwise, which—for a time—fueled faster growth. In this way the union accelerated the mounting indebtedness of European governments, particularly the least developed.

Worldwide capitalist rates of profit, and therefore investment, in industrial production continued to slow down, spurring speculative “investment” and ballooning overall debt.

The contradictions bound up within the eurozone deepened, and came to the fore under the pressure of the 2008 depression in world capitalist markets. This downturn flowed from a decades-long slowdown in production, employment and trade, a process endemic to the workings of the capitalist system.

One country after another, from Greece to Ireland to Portugal, now to Italy and Spain, faced soaring interest demands for their national bonds and mounting debts to banks.

Pressure to kowtow to the demands of the creditors, especially Germany, and hand over increasing chunks of national sovereignty in order to pay the debts have mounted. The alternative is to break out of the eurozone and face isolation and economic chaos. Either way, depression conditions deepen.

As the euro unwinds, and the rulers “kick the can” down the road to buy time for a “solution” that never comes, the only course they can agree on is brutal “austerity”—make the working class pay for capitalism’s crisis. Attacks on workers’ jobs, wages, social rights and unions—what the bosses call “reforming labor markets” to “lower their unit-labor costs” are the order of the day. The economic crisis and assaults on the working class have just begun.

Over the last two years, 6 million jobs have been slashed across the eurozone. Youth unemployment averages more than 20 percent, reaching 45 percent in Greece and nearly 50 percent in Spain.

One indication of what the crisis has meant for working people can be seen in the changing migration patterns of immigrant labor, with workers fleeing Europe to former colonies in search of work. In the last year tens of thousands have left Portugal, 54,000 to Brazil and 10,000 to Angola, many of them construction workers looking for building jobs. Some 40,000 left Ireland, many going to Australia, and 600,000 left Spain for Germany.

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