Europe: EU leaders in a “condition of shock”

Crushing ‘No’ vote in French and Dutch referendums leads to EU summit collapse

"I fear a long, creeping almost imperceptible weakening …a disparate and blurred future that cannot be described."

This spring’s EU Chairman, Luxembourg’s premier, Jean-Claude Juncker, was full of gloom when last week’s EU summit collapsed: "People will tell you Europe is not in a crisis…[but] it is in a profound crisis…My enthusiasm for Europe has suffered to great degree today”, he sighed. And Juncker was far from alone. The European Union can slide into “permanent crisis and paralysis”, warned José Manuel Barroso, President of the European Commission. “The EU is in a state of shock and today no-one has a solution for the crisis”, was the resigned comment of the Commission’s Vice-President, Margot Wallström.

“This crisis [is the] deepest darkness and the highest leadership of Europe is, without luck, reaching for the emergency exit. This is about several different interlinked crises. It makes today, from [the point of view of] several aspects, worse than any critical condition EU co-operation suffered from before”, concluded Rolf Gustavsson, EU commentator in the Swedish daily, Svenska Dagbladet. And so on. Indeed, last Sunday, there were more than 900 articles on the EU crisis on the website service, Google News.

The heated debates at the summit were about the EU long-term budget, but, behind it, are more profound factors. Political discontent and mass protests have been significant in many EU countries over the last few years, but the strong No victories in France and the Netherlands made the crisis acute. Since the polls, public confidence in French President Chirac dropped to 24 per cent (his lowest ever) and the Dutch premier, Balkenende, is down to 20 per cent. Ruling politicians in all EU countries now fear this wave of opposition.

In fact, the referendums and the constitution was such a hot issue that the summit avoided it. There was no discussion on the reasons for the No victories and no attempt to resurrect the corpse. No-one even pretended there will be any second referendums, as was done earlier in Denmark and Ireland over the Nice Treaty. As with other catastrophes, however, the previously declaration of death takes some time to be made.

EU leaders are trying to use the debates over the budget as a ‘lifeline’. Balkenende demanded lower fees for the Netherlands, Chirac spoke in favour of “French interests”, Tony Blair defended the British rebate on the EU fee etc. Not least nationalistic, was the Swedish Prime Minister, Göran Persson, who, at an early stage in the summit, threatened to use his veto.

The tone in last weekend’s summit debates underlined all the weaknesses of the EU and the fact that capitalism and its political representatives cannot unite Europe.

The budget was to a large degree a symbolic issue. Juncker and Barroso wanted to show that the EU still can take decisions. But the outcome was the opposite.

A pathetic moment

“A pathetic moment”, was Chirac’s description of Blair’s refusal to compromise over the British rebate, currently at 4.6 billion euro a year. Blair replied by demanding a cut of the CAP (Common Agriculture Policy), which stands at 48 billion euro, this year (of which France receives 10bn). Blair referred to the rebate won by the former British Conservative Prime Minister, Margaret Thatcher, in 1984, and Chirac leaned on decisions on the CAP from 2002.

In the midst of this battle were the governments of the ten countries that joined the EU a year ago. Chirac attempted to win them over by offering part of the British rebate. The Polish and Czech representatives, in turn, said they were prepared to cut the cash they would receive to get a deal. For a short while, all ten new EU member states threatened stay in the summit meeting room until agreement was reached!

The German Chancellor, Gerhard Schröder, branded Blair, Balkenende and Persson for “national egotism” and described the EU crisis “one of the worse crises Europe has known”. In the run-up to Germany’s autumn elections, Schröder is competing with Christain Democrat (CDU) leader, Angela Merkel, to be a “good German”.

In the British media, Göran Persson is presented as a ‘hero’ for standing, side by side, with Blair. Persson’s aim, however, was to get credit for cutting the Swedish fee to the EU. Sweden pays 26 billion SEK (Swedish krona), of which 11bn is paid back to Swedish companies, farmers and EU projects. The governments of Austria, Germany, the Netherlands and France, also aimed to cut their fees.

The “pause for consideration” the EU tops proclaimed at the summit, is dismissed as “quite pathetic”, by Swedish EU journalist, Ingrid Hedström, in the paper, Dagens Nyheter.

No amount of “dialogue” can change the fact that a growing number of people disagree with the EU elite.

The crisis can develop a domino effect. Danish EU officials warn that the paralysing situation can go on for years. Common initiatives – the plan for continued enlargement; the lifting of the arms embargo against China; the grand schemes for common foreign policy etc – can all end up in the same freezer as the EU Constitution.

Economic developments will decisive in determining the length and dept of the crisis, which look far from bright at the moment, in combination with struggles of the working class. The growing nationalism of the politicians must be answered with new mass internationalist and socialist parties, built from worker’s struggle.

The future of Europe?

Does Göran Persson, the Swedish Prime Minister, together with Tony Blair, represent the future of the EU? Will the neo-liberal policies of the EU change following the present crisis?

Persson refers to the “reform group” of the EU. Several capitalist commentators praise Persson and Blair as “modernisers”, for their demand for cuts in the CAP. Their EU would be a looser union, in which aid for agriculture and regions in a higher degree becomes national.

But if Persson and Blair stand for anything politically, it is a faster pace of privatisations and deregulations. Both have, for example, deregulated and privatised the railways, in contrast to most of the rest of the EU. They are praised by capitalist media for exactly the sort of policies that led to the overwhelming No vote victory in France and the Netherlands.

The struggle within the EU, between Blair/Persson and Chirac/Schröder, however, is not between two camps with different policies. The most drastic neo-liberal attacks on workers within the EU, over the last year, have taken place in Germany. When the neo-liberalism of the EU was blocked it was because of the resistance of workers and because of weak economic results.

The EU leaders that now blame each other for the crisis are all responsible for high employment, growing social inequality and economic stagnation. Even capitalist economists are now warning that the euro will be affected. Credit Suisse Asset Management, in a new analysis, estimates there is 20-25 per cent risk that the euro currency will fail. Last week, Lucas Papademos, Vice President of the ECB (the European Central Bank) admitted in a speech that the monetary union was disappointing.

It is the capitalists of Europe and their politicians that have failed. But as long as they are not replaced by real alternatives, more or less the same course will continue, even if the pace might be slower. A new report on France from the OECD (an economic organ for 27 industrialised countries) demands that is should be easier to fire workers, that wage costs should be cut and that the state continues to sell out parts of telecom, energy etc. Against this stands the working class’s willingness to struggle – with new strikes and protests since the referendums. This class struggle is the real future of Europe.

This article appears in this week’s Offensiv, paper of the Rättvisepartiet Socialisterna (cwi Sweden)

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June 2005