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Europe

Austerity locked-in with EU economic governance package

www.socialistworld.net, 05/10/2011
website of the committee for a workers' international, CWI

Implications of so-called "six-pack of economic governance measures", voted on in the European Parliament last week, are vast

Paul Murphy, MEP, Socialist Party (CWI Ireland), first published in the "Irish Left Review"

What was described by European Commission President as a “silent revolution” was passed in the European Parliament on Wednesday with hardly a mention in the mainstream media. The implications of the so-called six-pack of economic governance measures are vast. This package represents a qualitative leap forward in terms of the institutionalisation of austerity and neo-liberal economic policies at the heart of the EU and backwards in terms of a further undermining of democracy within the EU structures.

These pieces of legislation, ostensibly a response to the economic crisis, are actually a fulfilment of long-held desires by the capitalist establishment in Europe to develop a strong authority in the EU that would ensure that national governments implement austerity policies. The six-pack does this by establishing the European Commission as an effective policeman for austerity across Europe. It is also a step towards the fiscal unity that key sections of the establishment believe is necessary in order to save the euro.

Even if the media is ignoring it, the European establishment is aware of the significance of this victory from its point of view. Speaking in June 2010 about this package, European Commission President Barroso correctly stated that:

“The Member States have accepted - and I hope they understand it exactly - but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of the public finances.”

What the package means:

In order to achieve this, the package centralises power in the hands of the un-elected European Commission, establishes a scoreboard of austerity, and gives the Commission power to impose massive fines on countries. There are many different elements to these six different pieces of legislation. However, the central basis of it is establishing a mechanism to put significant pressure on national governments to implement austerity and neo-liberal policies.

Essentially there are three key aspects of the mechanism to ensure that governments keep within neo-liberal economic orthodoxy. The first is the notion of “budgetary surveillance” and the “European semester”. What this means is a timetable across Europe for the presentation of draft national budgets at an early stage to the European Commission and Council. These draft budgets will be discussed by these bodies in advance of any discussion in national parliaments. The purpose of the discussions is clear - to put significant political pressure at an early stage on national governments to implement what the Commission and Council consider to be necessary policies.

The second is a qualitative strengthening of the “Growth and Stability Pact” - which limits countries’ public debt to 60% of GDP and annual deficits to 3% of GDP. In the past, this has been a relatively toothless mechanism, which has been ignored by both the major powers and the more peripheral less developed economies. Now this will be backed up by an enforcement mechanism.

Those who breach the targets and ignore warnings and recommendations from the Commission will be faced with a fine, consisting of either an “interest-bearing deposit” or a “non interest-bearing deposit” equivalent to 0.2% of GDP, which will be converted into a fine if the situation does not improve. This fine can then be increased with repeated failure to follow the Commission’s recommendations. These fines will amount to hundreds of millions of euro - being taken out of the pockets of states that are evidently facing real financial difficulties.

The third is the extension of this enforcement mechanism well beyond the strictures of the “Growth and Stability Pact”. Now countries will be monitored not just on their public debt and their annual deficit, but on a range of other measures as part of a “scoreboard” system. The details of what will be measured has still not been revealed, but Commission recommendations are to “cover the main economic policy areas, potentially including fiscal and wage policies, labour markets, product and services markets and financial sector regulation.” (’Prevention and Correction of Macroeconomic imbalances‘).

This gives a sense of how these proposals are not simply about tackling excess debt of deficits - but about giving the Commission a means to push right-wing economic policies generally and put pressure on countries to liberalise their labour markets and public services. Failure to act in response to warnings and recommendations from the Commission on the scoreboard issues, or being deemed to have acted “imprudently”, will open countries up to face fines. This is clearly a way for the Commission to push neo-liberal policies generally - including the liberalisation of the labour market and the privatisation of public services.

Assault on democracy

One of the most obnoxious features of this package is the fact that the already extremely limited democracy within the EU has been trampled upon in order to ensure that this austerity will rule. This attack takes a number of forms.

One is the strengthening of the power of the Commission. The majority in the European Parliament voted for a number of amendments designed to strengthen the power of the Commission. This is always the position of the right-wing in the Parliament who see the Commission as an ally in the fight for a “European” position as opposed to one rooted in the interests of the countries represented at the Council. The effect, however, is to remove decision making even further from ordinary people. The role of the Commission from the point of view of the establishment is to articulate a “European” strategy for the capitalist class in Europe. It is able to do this because it is relatively immune from the political pressure that national governments can face - precisely because the Commissioners exist in a bubble in Brussels and don’t have to face election.

Another attack is the stripping of the right to vote from “miscreant” countries on the question of sanctions. So if the Commission proposes that a country be punished by a fine of hundreds of millions of euro for example, that country and all other countries that have been deemed to be acting imprudently and have been subject to sanctions will not have a vote in this decision. You could therefore have a situation where most of the peripheral European countries have their votes taken away from them and it is the Northern European countries who are voting on the sanctions to be applied to these countries.

The other element is how this voting is to take place. The six-pack introduces a new form of voting which is breathtaking in its cynicism. Instead of a straight vote with a need for a majority of countries, or the traditional qualified majority system (which means getting 255 weighted votes out of 345, representing at least two thirds of the countries and at least 62% of the EU population), the qualified majority system is turned on its head. Now it is referred to as “Reverse qualified majority” voting. What this means is that the Council is presumed to agree with the sanctions, unless a qualified majority vote against it. This means that to overturn the sanctions, you would need to get a huge majority to vote against it. So even if the peripheral European nations still had their votes, they wouldn’t have a chance of defeating it if the major northern European governments were in favour of it! Of course, this was fully endorsed by the Parliament, and the agreed document (Enforcement measures to correct excessive macroeconomic imbalances in euro area ) argues that the procedure for the application of the sanctions should be “construed in such a way that the application of the sanctionon those Member States would be the rule and not the exception.”

Who is driving this agenda and why?

It is not indulging in conspiracy theorising to suggest that a large element of this six-pack is making sure not to “waste a good crisis”. This is posed as a response to the economic crisis. It is no such thing. It is part of the march of entrenching neo-liberal orthodoxy across Europe. The Corporate Europe Observatory (www.corporateeurope.org), an excellent research and campaign group working against the power of corporate lobbyists in the EU, has established how the major organisation of big business on a European level, the European Roundtable of Industrialists (ERT), has been pushing for such an agenda for over a decade.

Their chairman proclaimed in 2000 that a “double revolution” was underway. “On the one hand we are reducing the power of the state and of the public sector in general through privatization and deregulation… On the other we are transferring many of the nation states powers to a more modern and internationally-minded structure at European level. European unification is progressing and it helps international businesses like ours.” In 2002, the ERT were calling for ”at the drafting stage, the implications of national budgets and of major national fiscal policy measures [to be] reviewed at the level of the Union” - precisely what will now happen.

European big business wants this, because, like their political representatives in the establishment parties, they want the certainty of knowing that what they deem to be “prudent” policies will be implemented. The uncertainty of democratic debate and discussion with different economic policy options on offer is simply too much of an inconvenience. Likewise, the ability of mass movements to put pressure on their governments to withdraw some of their worst attacks is a threat to the certainty of austerity. Therein lies the need for a central authority (the Commission) that through its sanctions and political pressure will act as a counterweight to the pressure of potential mass movements.

Can this package be stopped?

The Council is due to discuss and finally agree this six-pack on 4 October, which means that the package will enter into force at the end of 2011 or at the latest by the start of 2012. Effectively, the battle inside the institutions of the Parliament and the Council has been lost, given the overwhelming majority for the right-wing parties (including so-called social-democracy) in both institutions.

The battle now moves onto the plane of the streets and the protest movements. The movement against cuts and attacks that are aimed at making working people pay for the economic crisis is redeveloping in southern Europe. A major mobilisation by the unions is being organised in Portugal, while Greece will see a general strike on 19 October. While Ireland is currently behind these developments, with the passage of time and in particular the passage of their own savage budget in December, the ability of the new government to blame the old government and avoid facing responsibility and major movements will be reduced.

The Left has a crucial responsibility to build these movements and also to intervene into them, raising the need for a European-wide fightback as well as putting forward a socialist alternative to this crisis of capitalism. With lies being told about “lazy Greeks”, it is particularly important to stress the similar problems that working people face across Europe and raise the need for a common fight-back, including a 24 hour general strike against austerity across Europe. Part of this intervention must be publicising the effect of this economic governance package and injecting opposition to this European shock doctrine into the movements.

Paul Murphy is the Irish Socialist Party / United Left Alliance (ULA) MEP for the Dublin constituency



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NEWS

Britain: Blairite coup against Jeremy Corbyn
29/06/2016, Peter Taaffe, Socialist Party (CWI in England & Wales) general secretary:
Defend anti-austerity struggle

Mexico: Teachers continue strike despite extreme repression
28/06/2016, Adam Ziemkowski, Socialist Alternative, USA:
Working people in Mexico need fighting unions, an independent left party, and socialism

Scotland: After Brexit, SNP government threaten second Indy referendum
27/06/2016, Philip Stott, Socialist Party Scotland (CWI) :
Leave vote higher than average in many working class areas

Britain: After the referendum
24/06/2016, Hannah Sell, Socialist Party deputy general secretary:
Tories Out! General election now! Fight for a 24 hour general strike

Pakistan: Budget 2016-17
24/06/2016, Muhammad Khan Ahmedani Socialist Movement Sindh, Pakistan:
The digits change but reality remains a nightmare for most

Britain: EU referendum
23/06/2016, Editorial from the Socialist, paper of the Socialist Party (CWI in England & Wales):
Whatever the result, political turmoil is ahead

Taiwan: Student protests win important victory
23/06/2016, CWI Taiwan:
Education ministry retreats over increased tuition fees

Italy: Prime Minister Renzi’s party routed
22/06/2016, Chris Thomas, ControCorrente (CWI Italy):
Five Star mayors elected in Rome and Turin

Ireland: The left wing case for leaving the EU
22/06/2016, Originally published on sluggerotoole.com:
Article by Paul Murphy, Irish MP and former MEP and CWI member

Hong Kong: New protests as kidnapped bookseller speaks out
22/06/2016, Dikang, Socialist Action (CWI in Hong Kong):
Gangster methods of China’s regime exposed

Ireland: This weak government can be beaten
21/06/2016, By Paul Murphy, Anti-Austerity Alliance MP and Socialist Party (CWI in Ireland) member:
“The reality is that a small clique of hard-left, Trotskyite politicians, who are quite upfront about seeking to overthrow the current system, are now arguably setting the political agenda.” (Shane Coleman, Irish Independent 17 May 2016)

Pakistan: Women health workers protest in Sindh
21/06/2016, Sughran Khaskheli:
Lady Health Workers organisation protests at non-payment of wages

Britain: EU referendum
19/06/2016, Editorial of the Socialist, issue 906:
Whatever the result, political turmoil is ahead

US: Stand together against bigotry, war and terrorism
17/06/2016, Tom Crean, Socialist Alternative:
Orlando – massive wave of solidarity with LGBTQ community

Middle East: ISIS under pressure on several fronts
15/06/2016, Niall Mulholland, CWI:
Working classes, through bitterest of experiences, will take to road of mass struggle again

France : Massive protest demonstration in Paris
15/06/2016, Naomi Byron in France for The Socialist, paper of the Socialist Party (CWI in England and Wales):
Workers march as Senate debates hated labour law reform

US: Over 100,000 sign petition for independent Sanders challenge
13/06/2016, socialistworld.net:
Surge in support for petition initiated by socialist councillor Kshama Sawant

US: Orlando massacre
13/06/2016, Immediate reaction from Kshama Sawant, Socialist Alternative councillor, Seattle:
Stand with our LGBTQ Sisters and Brothers! Fight back against Scapegoating & Islamophobia!

Belgium: New trade union action plan
13/06/2016, Nicolas Croes, PSL-LSP (CWI in Belgium):
“The cup is full !”

Egypt’s workers in revolt
12/06/2016, Christine Thomas:
Review of "The Egyptians: a radical story"

Environment: EU green myths
11/06/2016, Claire Laker Mansfield, originally published in Socialism Today, magazine of the Socialist Party (CWI in England & Wales):
The truth about the EU and the environment

History: China’s ’Cultural Revolution’ 1966-67
10/06/2016, Edited version of article written by Socialist Party general secretary Peter Taaffe for Militant (predecessor of the Socialist) in February 1967.:
50 years ago the ’Cultural Revolution’ began in China.

Britain: Youth and the EU referendum
09/06/2016, Editorial from the Socialist (weekly paper of the Socialist Party – CWI England & Wales):
Fight for our future, starting with a Leave vote to smash the Tories

China: 1989 mass movement and June 4 massacre
08/06/2016, Socialist Action (CWI) reporters in Hong Kong:
Video by CWI comrades in China and Hong Kong

Greece: Victory for Athens bus cleaners
07/06/2016, Eleni Mitsou (Xekinima - CWI Greece) and Apostolis Kasimeris (Board Member of OASA - Athens Bus Workers’ Union):
Strike action wins major concessions from contractors and bus administration

Northern Ireland: Biggest union votes to support exit from the EU
06/06/2016, Kevin Henry, Socialist Party (CWI in Ireland):
Union and Labour leaders should join NIPSA and other combative unions in opposing bosses’ club

CWI Comment and Analysis

ANALYSIS

Britain: Referendum revolt
27/06/2016, Peter Taaffe, from Socialism Today (issue No.200, July-August 2016):
Capitalist establishment shattered

Asia: Conflict in the South China Sea
16/06/2016, This is an abridged version of an article by Vincent Kolo, originally published on chinaworker.info.:
Territorial disputes resemble pieces on a ‘geopolitical chessboard’ as the US and China struggle for hegemony in Asia

EU: Left parties turning against bosses’ Europe
10/06/2016, Danny Byrne, CWI:
Progress in Portugal and Spain, confusion in Britain

Muhammad Ali: A fighter who inspired millions
09/06/2016, Hugo Pierre, Socialism Today (originally published in 2003):
Establishment forced to incorporate his legend into re-writing of history

Review: The working-class case against the EU
08/06/2016, Hannah Sell, article from Socialism Today, magazine of the Socialist Party (CWI in England & Wales):
Review of ‘And The Weak Must Suffer What They Must?’ by Yanis Varoufakis

France: Fight against Valls/Hollande government intensifies
31/05/2016, Clare Doyle, CWI:
Gauche Revolutionnaire statement underlines vital need for political alternative

Austria: Only 31,026 votes prevent far right’s Hofer becoming president
24/05/2016, Sonja Grusch, SLP (the Austrian section of the CWI):
‘Breathing space’ offers chance to build a fighting, democratic left alternative

Britain: EU referendum exposes gaping political fault-lines
24/05/2016, Peter Taaffe, from Socialism Today (monthly magazine of the Socialist Party England & Wales):
New road can open up for labour movement if working class relies on its own forces

Brazil: Fall of President Dilma Rousseff unleashes offensive against working class
19/05/2016, André Ferrari, LSR (‘Freedom, Socialism and Revolution’ - CWI Brazil):
The impeachment process and historic crisis of the PT (Workers’ Party)

Ireland: ‘Jobstown trials’ to go ahead
18/05/2016, Kieran Mahon, Anti-Austerity Alliance / Socialist Party Councillor, Dublin:
Government loses battle on water charges but wages war on Left

Saudi Arabia: Gathering storms over the House of Saud
13/05/2016, Serge Jordan, CWI:
Collapse of oil prices expose fragile foundations of oil Gulf monarchies

France: New stage in battle over labour law
12/05/2016, Clare Doyle, CWI:
Hollande’s decision to over-rule parliament provokes another round of struggle

Ireland: 100th anniversary of the execution of James Connolly
12/05/2016, Three articles on Connolly’s life and ideas :
Revolutionary socialist, militant workers' leader and internationalist

Belgium: Trade unions announce new plan of action
11/05/2016, LSP/PSL (CWI in Belgium) Reporters:
Call for two national demonstrations, building towards general strikes

Britain: 90th anniversary of epochal general strike
05/05/2016, Peter Taaffe, Socialist Party (CWI England & Wales) general secretary:
When workers tasted power

Israel/Palestine: The Marxist left, the national conflict and the
Palestinian struggle

29/04/2016, Socialist Struggle Movement (CWI Israel-Palestine):
The necessity of a class approach and a socialist alternative

France: One-day strike set for 28 April
26/04/2016, Alex Rouillard, Gauche Revolutionnaire (CWI in France):
A final stage before indefinite action against Hollande’s government?

US: The un-Democratic Primary
22/04/2016, Kshama Sawant, Socialist Alternative Seattle, originally published on counterpunch.org:
Why we need new party of the 99%

Capitalism: a failing system
18/04/2016, Peter Taaffe, from May edition of Socialism Today, magazine of the Socialist Party (CWI in England & Wales):
A new book, The Rise and Fall of American Growth, analyses the downward course of the US economy – and the limits of the whole capitalist system

Review: ’Militant’ by Michael Crick
14/04/2016, Peter Taaffe, Socialist Party (CWI in England & Wales) general secretary:
Lessons of Militant vital for anti-austerity struggles today

US election turmoil
01/04/2016, By Tony Saunois (CWI Secretary) who recently visited the US for meetings of Socialist Alternative:
Bernie Sanders campaign - an opportunity to build a new party of the 99%

Britain: A new moment
28/03/2016, Socialist Party (CWI in England & Wales), published in April 2016 issue of Socialism Today:
Extracts from a statement discussed at the Socialist Party’s recent congress

Ireland: 100th anniversary of Easter 1916 Rising
26/03/2016, Cillian Gillespie, Socialist Party (CWI Ireland):
A revolt against imperial power and war

History: When Khrushchev denounced Stalin
26/03/2016, Niall Mulholland, from Socialism Today (April 2016 issue of the monthly journal of Socialist Party, England & Wales):
1956 ‘secret speech’ a devastating blow to Stalinist regimes

11th CWI World Congress: World Perspectives
22/03/2016, socialistworld.net:
Amended agreed version of the World Perspectives document agreed by the CWI’s 11th World Congress