From Socialist Voice, March 2010

More sticks and no carrot

As the old tradition dictates, never miss the opportunity of a crisis to push forward your demands. The deepening crisis in Greece is concentrating the minds of the political elite throughout the European Union but most importantly in Germany, the most powerful state driving EU integration.
     What we are witnessing is a further consolidation of power in Brussels, with Berlin pulling the strings. The Greeks continue to be given plenty of stick, with the chorus of demands coming from the EU Commission and the German government demanding massive cuts in public spending as well as savage pay cuts, cuts in pensions, and increasing the age of retirement. But what has surprised the establishments throughout the European Union is the extent and depth or resistance from Greek workers.
     The ruling right-wing social-democratic party, PASOK, is meeting well-organised resistance and is not able to impose its will fully on the workers of Greece.
     This has posed severe problems for the political elite, who have not yet managed to come up with a carrot with which to placate the Greek people and to get them to accept the savage attempts to impoverish the mass of the people and to accept massive transfers of wealth from workers, small and medium farmers and small family businesses to wealthy banks and finance houses.
     The threats and bullying are similar to those that preceded the budget adopted by the Irish Government in December 2009, with its dire warnings of the end of the known world if there was not a massive transfer of wealth from workers to Irish and global bankers and if we did not give priority to the needs of the property speculators, international banks and financial institutions over the public good. The European Union is now micro-managing the Irish economy, determining budgetary priorities and what has to be cut.
     The central dilemma for Germany is how to protect and sustain one of its central goals, carefully constructed over many decades, and one of its main strategic achievements: the euro. The euro was and is central to closer EU integration. It is the symbol of the European Union as a global power, challenging the US dollar’s global dominance.
     Germany would like the rest of the member-states of the European Union to be like itself, which means tight control on spending, both public and personal, and exporting more. The problem is that if you export, someone has to import, and if wages are depressed the gap between people’s consumption needs and their disposable income is bridged by credit.
     Germany and the Commission have to make one of two choices: force tighter monetary controls, which would strengthen the euro but would have a negative effect on the much-desired “deep cohesion,” or give greater support to those countries in trouble: Portugal, Ireland, Greece, and Spain.
      The problem then emerges of the credibility of the monetary policies, and the euro would become a target of monetary speculators and financial forces in the United States only too willing to see the euro go under.
     So the political elite of the European Union will have to make a very difficult choice, between the interests of finance capital and the political stability of the European Union itself. If they try to tighten the financial pressures on Greece, followed possibly by Spain, Portugal, and perhaps even Italy, the peripheral countries will become locked into an intense struggle with the EU Commission and Germany.
     The elites of those countries may well be forced to take sides with the European Union against their own people. Reconciling the interests of transnational corporations with those of the people is presenting profound difficulties for political establishments throughout the European Union.
     Additional sticks being spoken about for beating the smaller countries into line and ensuring that the diktats of Brussels and Berlin are followed are the suspension of EU subsidies, the so-called “cohesion funds”; the suspension of voting rights at ministerial meetings; possible suspension from the euro zone (but still being allowed to use the euro); and the rigorous enforcement of the fines already permitted under the Growth and Stability Pact.
     This last one could prove problematic, as it could mean that the French, together with a number of other countries, would have to cough up the fines as well. Imposing fines on countries already struggling with massive debits would only provoke further opposition and create further instability, which would in turn create more openings for democratic forces to push forward. Either way, the contradictions for the ruling class can only intensify.
     The most recent proposal that has come out of Berlin is the possibility of establishing a “European Monetary Fund,” along the lines of the International Monetary Fund.
     The possibility of the IMF intervening in the Irish crisis has been presented as the final humiliation: “if you think the cuts are bad now, wait till the men with the briefcases emblazoned with the IMF logo are finished”—this has been the cry in the establishment press, all geared towards instilling fear and paralysis, particularly among working people, which has worked up to now.
     The likelihood of Germany allowing the IMF to interfere in a euro-zone country was slim to nil, as it would have exposed and undermined the euro itself. Institutions such as the IMF were established to impose the policies of imperialism externally on weaker countries and on the countries of the global south: they were not constructed to operate within the imperialist entities themselves, such as the United States or the European Union.
     Another reason that the EU Commission and particularly Germany would resist such intervention is the fact that the IMF is dominated and controlled by the United States.
     If the European Monetary Fund does become a reality it will be a further erosion of national democratic control and accountability, leading to a further strengthening of the power of finance and industrial capital over the smaller countries. It would give even greater power to banks and finance houses over governments and peoples. It could well mark the final hollowing out of what is left of national democratic politics, with all the hallmarks of a corporate state.
     The placards in one of the many demonstrations in Greece proclaimed: “We are Greeks, not Irish.” Workers of Greece, keep carrying the placards!

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