Europe’s Crisis: An Explanation and an Internationalist Alternative

March 16th, 2013

Published on New Socialist, by Özlem Onaran, March 10, 2013.

Europe is now the centre of the global crisis. It is a crisis of the capitalist system, sweeping across Europe and not limited to just one country. The crisis erupted five years ago under governments of both the traditional Left and Right as they all pursued similar neoliberal policies …  //

… Contradictions within the EU: … //

… Bailouts and austerity: … //

  • Following speculations about Greece’s default and exit from the Eurozone, the Eurozone governments hesitated for months before implementing the first bailout package in May 2010 together with the IMF. This was followed by speculative attacks and bailout packages for Ireland and Portugal in 2010-11.
  • The bailout packages of the Eurozone governments were designed to protect European banks, mostly based in Germany and France, from losses on their holdings of government bonds in the event that the countries of the periphery had to restructure their debts. However, these packages did not calm the markets, so in the summer of 2011 a decision was made to ramp up the European Financial Stability Facility EFSF. Along with a new bailout package for Greece there was some restructuring of the Greek debt and banks had to accept that they would bear some of the costs.
  • The crisis has also spread to countries like Spain, which has a low level of public debt but high private debt, and Italy, which has high public debt but a low budget deficit. Even France is being questioned based on its commitment to guarantees via the EFSF, particularly if Italy needs a bailout. The financial markets were temporarily calmed down in 2012 when the ECB announced that it would do “whatever it takes” to save the euro. However, the ECB’s interventions will be limited to intervening in the bond markets to prevent hikes in the interest rates on government bonds of the peripheral countries; in exchange, the ECB will require that any country it “assists” adopt a harsh austerity programme.

… The future of the Eurozone: … //

… Resistance and alternatives:

  • Faced with a concerted ruling-class offensive, we need a European-wide mass movement of resistance. Four demands are key: 1) opposition to austerity policies and all cuts; 2) higher taxes on the income and wealth of the rich, corporations and financial transactions, as well as controls on the movement of capital; 3) bringing the banks into public ownership under democratic control; 4) auditing the debt and cancelling the parts which are illegitimate.
  • There is a growing consensus within the radical left across Europe around these issues. But we also need to build a bridge from an emergency programme that responds to the crisis to an internationalist Europe of the people as an alternative to the Europe that works in the interests of capital though the current institutions of the EU.
  • The radical left in Greece, Spain, Portugal and elsewhere across Europe is focussing on fighting austerity. It is opposing deep cuts in public services, wages and pensions and calling instead for banks, corporations and the rich to pay for the crisis which they created. If these movements succeed, they would push for renouncing the neoliberal treaties of the EU and cancelling illegitimate debts. This would encourage and spread resistance across Europe.
  • Withdrawal from the EU or exit from the Eurozone is not a precondition in our fight against austerity and for radical change. If one country in Europe rejected austerity plans and refused to pay the debt, this could lead to a massive domino effect of mobilization across Europe. Protectionist alternatives on a country-by-country basis, such as withdrawal from the EU or exit from the euro, do not have the same power to spread the resistance. They would also lead to currency devaluation. This would have disastrous consequences for ordinary people, especially in countries such as Greece, as the costs of imports and of domestic goods produced with imported inputs would soar while the purchasing power of wages and pensions would collapse. Moreover the exit of one country from the Eurozone would likely lead to the exit of others, which would start a currency war via a series of devaluations across countries.
  • The way to unite the power of people across Europe is to build on the common interests that we have across borders. The austerity packages in every country, driven by the interests of banks and corporations and coordinated through institutions such as the IMF and the ECB, are creating mass unemployment and driving down the living conditions of the working class. Even workers in rich countries like Germany have not been spared: at the turn of the 21st century, wages, unemployment benefits and pensions were attacked to make German companies more profitable.
  • Reversing austerity in Germany as well as in Greece is crucial to solve the crisis in Europe. The austerity policies to deal with debt are intended to bail out the banks. But these policies bring countries such as Greece, Ireland and Portugal to the edge of insolvency by means of a deepening recession. This has consequences for working-class people in Germany, France and Britain, who will again be pressured to bail out the banks that have driven these countries into an ever-increasing level of debt which cannot be repaid. The only way to end the vicious circle of austerity and bailouts is to cancel major parts of the debt and nationalize the banks under democratic control in both the richer and poorer countries of Europe.
  • The questions we must ask are not only “why should we pay for the crisis?” and “can we pay back the debt?” but also “why should we continue paying for the growing debt caused by the ever-deepening crisis?” Recognition of the need to cancel the debt is also important given the ecological limits to growth, which pose a constraint to the traditional Keynesian policies of paying down debt through capitalist economic growth.
  • An international mobilization against austerity must lead to a radical change in economic priorities in Europe, a challenge to the dictatorship of the EU, IMF and the banks, and a new and democratic way of organizing society. Fiscal, monetary, and industrial policy should aim at full employment, ecological sustainability and equality. Minimum wages, social benefits and public services across Europe should be financed by a European budget funded by increased progressive taxation of corporations, banks and the rich. Fiscal transfers within Europe are also consistent with the interests of the working people in the core countries: a low-wage periphery that attracts corporations is a threat to workers in the core as well. The ECB should be replaced by a Peoples’ Bank of Europe that would be responsible for the supply of funds needed for green investments and to meet the needs of people rather than demands for private financial profits. Monetary policy should reflect the priorities adopted by a Peoples’ Assembly of Europe, not those of the unelected European Council.
  • Across Europe we have to not only reject the austerity programmes but also the logic of the capitalist system by proposing another way of distributing wealth and challenging the private ownership of finance and industry. It is within this framework that we should work towards the convergence of struggles across borders and collaborate with different anti-capitalist movements across Europe. The resources of the continent could be used to meet the needs of people and the planet, tackling poverty, inequality and climate change. But this cannot be done within the existing framework of the EU, which was set up to create a free market for capital and to maximise profits. Resistance against austerity is starting at a national level, but the scale of the crisis is such that radical solutions are required at the level of Europe. This calls for a movement of resistance and alternatives that unites workers and peoples across the continent.

(full long text).


Living Lab: Urban Planning Goes Digital in Spanish Smart City, on Spiegel Online International, by Marco Evers, March 14, 2013. March 14, 2013 (Photo Gallery): Cities around the world aim to become “smart cities,” but in Santander, Spain, the goal has already become a reality. Thousands of sensors help alert residents to traffic jams, regulate the watering in city parks and dim the street lamps …;

Murder Plot: Germany Cracks Down on Salafists, on Spiegel Online International, March 14, 2013. March 14, 2013 (Photo Gallery): Islamist extremist in Germany are under scrutiny once again after raids on members of Salafist groups coincided on Wednesday with the foiling of a suspected murder plot by individuals linked to the movement. One senior politician wants to make it easier to deport radicals …;

see also the Graphic of Municipal Big Brother: How the smart city concept work.

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