European Union

Economic and monetary union in practise

www.socialistworld.net, 24/08/2003
website of the committee for a workers' international, CWI

"Cuts necessary in Poland after Yes to the EU", was the headline in the Swedish daily, Dagens Nyheter, the day after the Polish referendum of 8-9 June. The establishment was relieved because they avoided the feared fiasco of less than half the electorate voting (58 per cent voted), notes the reporter, Michael Winiarski. However, he continues, "In the midst of joy there is reason to consider a number of problems which the referendum campaign exposed". He quotes a EU opponent, "Crushing pro-European propaganda" was necessary to reach 50 per cent participation.

On the 14 September, there will be a referendum in Sweden on joining the EMU and the Euro. The following is an editorial from Marxismen Idag (Marxism Today), the journal of Rättvisepartiet Socialisterna (CWI Sweden). It deals with the real EMU - in stark contrast to the picture of a prosperous and stable euro-zone given by the ‘Yes’ campaign. Since the article was written in June, the French president, Chirac, has openly asked for a softening of the EMU demands on budget deficits.

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The reporter then points to the coming problems, "Still, in the remaining eleven months before joining the EU, Poland has to create order in politics and economics, both of which are in bad shape…Close to twenty per cent unemployment shows no sign of decreasing, at the same time as the budget deficit, according to the EU rules, has to be drastically reduced".

Winiarski’s conclusion is that the government now must, "force through the painful cuts (mainly in education and health) which are needed". The leading international capitalist newspaper, the Financial Times, is more exacting "Spending is burdened by heavy social transfers to pensioners and others, including some of the developed world’s most extensive disability payment schemes". The FT quotes the economic adviser of the Polish president who says that, "Poland ideally needs deep reforms - cutting such spending and reducing taxes". Further privatisations and a ‘liberalised’ labour market are other capitalist demands in Poland.

This is what the EU and the Economic and Monetary Union, the EMU, are about: to increase the pressure to abolish reforms and improvements which workers achieved from the 1950s to the 1970s. The programme is one of privatisations of state companies and public services; massive cuts in the public sector; slaughter of social benefits and pensions; undermining trade union rights both on wages and on employment rights; extreme pay rises for bosses, politicians; tax reductions for the rich and big business. This is done to make the multinational companies within the EU "competitive" on a world scale.

The EU and the EMU are instruments for these attacks. The EU is pushing for the coordination of markets, trade policies, transit rules etc. Linked are the ideas of common borders against commodities and against refugees. From that and the need for a common "order", spring the first steps towards a military force. However, the deep splits this spring over the war against Iraq show that the EU is far from the picture of unity painted by the Swedish PM Göran Persson. The splits at the top reflect deep-going conflicts between the capitalist classes, but also the growing resistance from workers and others in society to their plans. Later, the "unity" will be replaced by even deeper crises and splits.

Mass strikes

The EMU in reality looks completely different from the adverts of the Yes campaign. The mass strikes in France in May and June were directed against enormous cuts, which are linked to the budget conditions of the EMU. "France is not going to escape from the necessary measures to reduce the budget deficit", said a spokesperson for the French government after the meeting of the EU finance ministers in May. The budget deficit is predicted to grow to around 4 per cent of the GDP this year, far beyond the 3 per cent rule in the EMU’s Stability and Growth Pact. Also, the state debt is on its way to 61 per cent of Gross Domestic Product, one unit over the EMU limit of 60 per cent. In May, the French government was given a new deadline - 4 October - to show how the deficit will be reduced. Otherwise, fines of up to 0.5 per cent of the GDP could be charged.

The threats of EMU fines are used by the French government to stick to the austerity plans. The main issue is worsened pensions. Those who retire after the year 2008 will get 20 per cent less in their pension than today’s pensioners. Originally, the government attempted to push through an "education reform" at the same time. In Sweden in the 1990s, such a "reform" meant councils taking charge of education. That was the first step towards commercialisation and privatisation. In addition, it separated the national protests of teachers and school students, because decisions on cuts are taken school by school. The French reform, however, was postponed so as not to coincide with the movement on pensions.

Raffarin has full support from politicians and capitalists internationally. The Swedish finance minister, Bosse Ringholm, was among those lecturing France on budget discipline at the meeting in May. "Don’t give in", writes The Economist in an editorial, and continues: "In France it would certainly be worth a few weeks of chaos if the outcome were to be victory in the battle over pension reform". The British Prime Minister, Tony Blair, has praised "the personal courage" of Raffarin. The French right-wing social democratic Socialist Party is also in favour of a pension reform, despite their criticism of Raffarin on the issue.

The counter reform on pensions will not be enough to reduce the budget deficit in line with the EMU. Raffarin has already said that state costs cannot increase by "a single euro" next year. President Jacques Chirac has raised the need for "health reforms" to lower the costs in the public health service. There have, for a long time, been ongoing cuts in that sector, which have caused a number of strikes from doctors and health workers.

Six weeks of strikes and demonstrations did get broader support than the government expected. This confirms that the movement was channelling a general discontent with neo-liberal policies. This is aggravated by the downturn in the economy and increasing unemployment, to 9.3 per cent in March. To propose even further cuts in this situation is inevitably provoking resistance, despite the conciliatory position of the trade union tops.

The EMU is not an aim in itself but a mechanism for the ruling class. In a crisis, as in France, it gives support for the government’s position of austerity measures and cuts, which the French capitalist has been demanding for a long time anyway. The employers’ federation, Medef, is already complaining that Raffarin is not going far enough. This is despite decisions which limit the right to strike and make it easier to sack workers in companies with less than 20 workers.

The neo-liberal policies did not start with Raffarin or the EMU. Lionel Jospin’s government (the "Socialist" party) made the biggest privatisations ever. Jospin’s reform in working hours, to a 35 hour working week, meant that "flexible" hours were introduced in the workplaces. "Jospin was not the socialist he aimed to appear as", The Economist commented.

Raffarin will not achieve all his aims. Most of Chirac’s promised tax reductions have already been postponed. The pension reform could be modified further. And the long-term target of the EMU, a balanced budget, is completely out of reach without further vicious attacks on the working class.

US - lead economic boom

An important difference during Jospin’s period in office was the US - lead economic boom in the end of the ‘90s. The speculators willingly bought privatised companies. With growing state incomes, taxes were reduced. The present economic downturn, however, has worsened the state finances in all capitalist countries. This was also one of the aims of neo-liberalism, to prepare the ground for even more drastic cuts.

Growth in the French economy has fallen drastically. The prediction this year is for around one per cent, but even that could be too optimistic, since the fall is already faster than for example in Germany. In Germany, the government of Social Democrats and the Green Party has produced an extensive plan for cuts - Agenda 2010. "We must say goodbye to much that has become dear to us, but is also, sadly, too expensive", Chancellor Gerhard Schröder told the SPD special congress. 20 billion euros worth of health cuts is one part of Agenda 2010.

The German finance minister, Hans Eichel, claims that the cuts are needed to keep the budget deficit within the three per cent limit of the EMU. But at the same time, the government is preparing tax cuts of 26 billion euro in a desperate attempt to re-start the economy. This means breaking the EMU rules, but not changing the anti-working class policies.

Almost every EMU country has been shaken by massive strikes and demonstrations in the 2002-2003 period. "More and more of the Southern European trade union struggle is now taking place on the streets", wrote Tommy Öberg, the industrial reporter in the daily Svenska Dagbladet (June 2003). He then went on to say that the struggle has spread north of the Alps. German unions were mobilising against Agenda 2010 and Austria saw the biggest strikes in 50 years. In Austria and Greece, the big strikes were against reduced pensions. Last year’s general strikes in Italy and Spain were directed against "labour market reforms" which would make employment more insecure. In other countries, workers have gone on strike against privatisations and the loss of thousands of jobs, like the postal workers in Portugal and workers on Alitalia.

The struggles put the role of the trade unions in focus. For the last 15 years, the unions in most countries have lost members, while the leaderships have made more efforts than ever to cooperate with employers and politicians. Unions rights have been undermined in order to make wage contracts etc more individual. But workers in country after country have, particularly this Spring, exposed the mistaken claim that industrial struggles and strikes belong to history.

Also, very right-wing leaderships have been forced to organise strikes and demonstrations. These big mobilisations can achieve concessions; but for real victories, new union leaderships with a programme for struggle are needed. Fighting, democratic trade unions which coordinate an all-European struggle would be an embryo to a workers’ alternative to the EU and the EMU.

The Swedish Prime Minister Göran Persson is warning that Sweden will become an "outsider" if there is a No vote in the EMU referendum on 14 September. But in reality, workers, pensioners, youth and others in the EMU countries are also "outsiders" when decisions are made on the Stability Pact, the ECB, the Lisbon process for deregulation and privatisation etc. Workers are not just on the sidelines, they are actively fighting against the EMU policies.

Socialist opposition to the EMU is not in defence of the Swedish currency – the krona - or today’s Swedish policies. Socialists and workers must have an alternative. That starts with supporting and linking up with the workers’ struggle around Europe in order to defeat the Yes campaign in the referendum with internationalism and workers’ policies - for a socialist Europe.

Editorial in the summer issue of Marxismen Idag (Marxism Today), the journal of Rättvisepartiet Socialisterna (CWI Sweden).