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EU enlargement, but no celebrations
On 1 May ten countries joined the European Union (EU)
after months of negotiations and a series of successful referendums. ‘New
Europe’, as famously described by Donald Rumsfeld, has married ‘Old Europe’. But
is this the wedding that will lead to the break up of the EU? KARL DEBBAUT
reports.
THE TEN NEW member states bring another 75 million people
into the EU, making it the world’s biggest single market in population terms. EU
leaders should be rejoicing with further European expansion and integration. The
European capitalists are now putting into practice ideas that formed part of
their euphoric propaganda following the collapse of the former Stalinist regimes
in the 1990s. However, they are now far from euphoric, faced with the reality of
what their policies mean in a different economic and political situation.
‘The joy of unification has been replaced by bitterness:
they don’t want us’, is how Gazeta Wyborcza, one of Poland’s leading newspapers,
summed up the mood now Poland, along with seven other central European states,
has joined the EU. The rush to impose restrictions on the free movement of
labour from the ten new member states has led to an outpouring of anger in the
Central European states. If people in Poland, the Czech Republic, Hungary,
Slovakia, Slovenia or the Baltic countries needed any further proof that they
are being treated as second class citizens, this is it. It comes on top of
worries about food price rises, reduced subsidies for farmers and small food
retailers, and the fear that Western European corporations will gain even more
control over their economies through privatisation and mergers. The press in
Latvia has campaigned against a sudden rise in foreigners buying land and
property. The paper, Latvijas Avize, warned that if this went unchecked,
Latvians would become ‘renters and servants’ in their own country.
In total, the ten new EU countries will receive €40.8
billion (£27.3bn, $48.5bn) worth of aid as part of the Common Agricultural
Policy (CAP) and structural funding for poorer regions. That is only part of the
story though. To be allowed to join the club, the new members have to pay €15
billion in dues. (€1 = £0.67, $1.19) As a result, some, like Poland, will be net
contributors to the EU budget during the first years. The disparity between how
much money is available for the new member states and the current 15 EU
countries sticks in the throat of many in the East. Poland will receive only €67
per person in aid from Brussels for the first full year of membership in 2005,
Hungary €49, Slovenia €41 and Czech Republic €29. By contrast, in 2000, Greece
received €437 per capita, Ireland €418, Spain €216 and Portugal €211.
The 2.7 million Polish farmers, most of them subsistence
level producers, who make up almost one fifth of Poland’s 14-million workforce,
have reason to be worried. The subsidies they will be getting are only one
quarter of what French, Greek or Spanish farmers will receive. This means that
they will not be able to compete with the giants of EU agribusiness. An even
greater fear is the possibility that the majority of smallholders will not
fulfil EU criteria for grants at all.
Although the total packet of aid the ten new members will
receive is only equivalent to about 0.05% of the aggregate gross national
product of today’s EU, the pressure from existing members to restrict the costs
of the operation – in particular from Germany, the biggest contributor to the EU
budget – reflects the economic crisis hitting Europe and the growing
contradictions inside the EU.
The economies of the countries in the eurozone grew by a
mere 0.4% last year. States across the eurozone are struggling to keep their
deficits inside the limits of the stability pact. The lights in the German
powerhouse of the European economy are flickering. France looks set to breach
the pact for the third year in a row. Even the Dutch finance minister, Gerrit
Zalm, one of the strongest critics of countries that have failed to keep their
deficits below the 3% laid down by the pact, had to admit that the Netherlands,
too, is joining the ‘instability club’.
The stability pact is dying a certain death as Europe’s
governments face massive popular opposition to attempts to accelerate cuts in
public expenditure, privatisation and attacks on the welfare state. It is
unlikely that the member states will agree with the plans of the European
Commission to raise the annual amount available for expansion in the EU’s
2007-13 budget.
‘We want to be like Ireland’
THOSE POLITICIANS IN Poland, the Czech Republic and Hungary
who believe that joining the EU is a capitalist fast track to wealth and
prosperity are becoming increasing isolated from their populations. Nonetheless,
they continue to follow this road and quote Ireland as the example to emulate.
They argue that when Ireland joined in 1973 its per capita income was 62% of the
EU average, and that the diet of cutting corporate tax, slashing public
expenditure, privatising public services and attracting foreign direct
investment, pushed it up to 121% by 2002.
Slovakia, for example, has adopted brutal, neo-liberal shock
therapy. The government of Mikulas Dzurinda introduced a flat tax on income,
corporate profits and retail sales of 19%, partly privatised the pension system,
and raised the retirement age from 58 for women with children and 60 for men to
62 for everyone. The latest measure, a 50% cut in basic welfare benefits,
triggered food riots in Eastern Slovakia. The Roma minority attacked
supermarkets. The government answered by sending in the police and army and
closing off entire villages. Brutal repression followed and at least one Roma
died at the hands of the police. Unemployment stands at 16% and the national
average income is about €250 per month. However, near the capital, Bratislava,
incomes are about 90% of the EU average, a sign of how the gap between a very
rich minority and a poor majority has opened up rapidly since the reintroduction
of capitalism, accelerated by the drive towards EU membership. The results of
the neo-liberal shock are that the working class and poor foot the bill to
ensure the profits of capitalism.
The countries of Central Europe have attracted foreign
direct investment in the run-up to EU entry as they offer a highly-skilled
workforce for very low wages. The majority of these investments have been to buy
up assets in the privatisation frenzy. The benefits for the working class and
poor have been meagre as the growing economy went hand in hand with rising
unemployment and poverty. Now they finally get to join the EU, part of the
foreign investment is jumping ahead in the search for even lower wages and costs
in South-Eastern Europe. Romania’s monthly average wages are $130 compared to
$597 in Poland. A report by the Economist Intelligence Unit estimates that
Romania, Bulgaria, Croatia and their neighbours on the Balkan peninsula will
attract an average of $5.6 billion of foreign direct investment a year through
to 2007. The effects on the ten new member states are becoming clear.
While they had growth rates of up to 5% in the second half
of the 1990s they now perform more modestly, with an average of about 2.3% GDP
annual growth. Even if they could go back to growth of around 4% a year for the
foreseeable future, the wealth gap is so large that it would take Slovakia
almost 40 years and Poland 60 years before they caught up with Western Europe.
On the basis of capitalism this is clearly out of the question.
The capitalist classes do not have the resources or the
intention of undertaking the level of investment necessary to develop the new EU
members. The net sum the EU proposes to transfer to them from 2004-06 is €25
billion. This compares to €97 billion (at current prices) that was transferred
from the US to Western Europe in the Marshall Plan, 1948-51. A more recent
comparison is from the 1990s when West Germany transferred €600 billion to East
Germany – which, however, has not resulted in Eastern Germany catching up with
the West.
Immigration
THE ISSUE OF immigration and the recent rush in most of the
EU-15 countries to impose restrictions on the movement of labour from the
accession countries has created enormous resentment in Eastern Europe. In
Slovakia, the British ambassador made a television appearance to warn that only
‘genuine’ jobseekers will be welcome, and the British embassy is considering a
leaflet campaign to press the point home. The lawful access to European labour
markets and the chance to travel and work more freely were seen as one of the
few immediate and real advantages of joining the EU. Politicians referred to it
in their campaigns for a yes vote in the referendums on joining. Now a feeling
of betrayal is spreading, as expressed by an opinion poll in Poland in which
only 10% of people believed the EU will keep its promises to Poland.
The pro-EU camp has been forced by public opinion to go on
the offensive on the issue. Poland’s government officials went on record
threatening retaliation against restrictions on its workers: "One option that we
will seriously consider is ‘an eye for an eye and a tooth for a tooth’." Hungary
has announced employment curbs for EU countries intending to apply them against
Hungarians. Even if these are largely empty threats, the issue of immigration
will come back to haunt the EU. Although the European Commission is paying Dana
Hübner, Poland’s newly appointed commissioner, about five times the salary of
her country’s president, she was forced to reflect public opinion in Poland in
her first major interview: "We are tremendously disappointed! And we were
already disappointed when we negotiated the chapter on the free movement of
people…" She went on to warn the EU about the possibility of a backlash when
Poland holds a referendum on the European constitution. "Politically we cannot
avoid [organising a referendum]. The challenge again will be voter
participation, we need 50% minimum. I do not know if we can make it now".
While people in the ten new member states will have to wait
until 2011 before restrictions on travel to Germany, Austria and Italy
disappear, they are supposed to immediately introduce tight border controls of
their own against the non-EU countries on their Eastern border. The prospect
worries Hungary, which wants to keep close ties with ethnic Hungarian minorities
in Serbia and Ukraine, and Poland, which would prefer more open borders with
Ukraine. Last year, Ukrainians made six million journeys across the border with
Poland, Byelorussians, four million. Most were small traders buying goods for
resale at home and bringing in cheap consumer goods, like alcohol and tobacco,
to sell in the town-square markets of Eastern Poland, the poorest part of the
country.
Political instability
THE REINTRODUCTION OF capitalism to Eastern Europe has
created political instability. For a while the population had some patience with
neo-liberal ‘reforms’ because they hoped their living standards and liberties
would increase in the longer term. In the early stages, people had illusions
that EU enlargement would deliver better working and living conditions. Now that
European enlargement is happening, these illusions are disappearing fast and
patience is running out. This has accelerated political instability. The
difference, however, with the 1990s is that the ruling class is running out of
options, as pro-capitalist ‘reformers’ are being replaced with populist,
nationalist forces, far from being entirely under the control of the ruling
class. An Economist survey on EU enlargement in November 2003 commented: "If you
plan a political career in Central Europe, then hang on to your day job.
Countries changed their governments every 20 months, on average, in the first
decade after communism". Latvia and Lithuania have each had twelve governments
since 1993, Estonia nine, Poland eight, Slovakia six, Czech Republic and Hungary
five each, and Slovenia two.
Lithuania wrote European history last month by being the
first country to impeach a sitting president. Rolandas Paksas was voted out by
parliament for shady dealing with a Russian businessman. The Czech government is
in trouble, too, as talk spreads of an alliance between ‘disloyal’ social
democratic MPs and an ‘unreformed Communist Party’, in opposition to the ruling
social democrats.
In Slovakia, trade unions and an opposition party organised
a petition campaign against the neo-liberal reforms of the government, and for a
referendum on early parliamentary elections. They succeeded in getting the
600,000 signatures needed to call a referendum, but it failed to get the
required 50% turnout. Nevertheless, the referendum took place on the same day as
the first round of the presidential elections. Both candidates of the ruling
parties failed to make the second round. Ivan Gasparovic, a former minister in
Vladimir Meciar’s government, won the presidential election with the backing of
the main opposition party, Smer. Smer is a left populist party, a split from the
social democratic Party of the Democratic Left, and has gained substantial
support in the last few months.
Slovakia’s prime minister, Dzurinda, should go and visit the
freshly redundant prime minister of Poland, Leszek Miller. They could boast to
each other about their own unpopularity. Dzurinda’s approval ratings sank to 5%
in November 2003 and have shown some consistency in that regard. Miller’s
personal approval ratings fell to 3%, but it had taken him less than three
months to come down from about 20%.
No surprise then that Miller is the first ex-prime minister
of a new EU country, resigning on the second day of his country’s EU membership.
He appointed a new prime minister and the country’s political elite wants to
avoid new general elections at any cost. Opinion polls reveal that the outgoing
coalition of the Democratic Left Alliance (SLD) and the Union of Labour (UP)
would not get a single seat. They formed a government in 2001 when the SLD
polled 41%. According to the latest polls, SLD would gain only 7%, repeating the
fate of its predecessors in Jerzy Buzek’s government. Marek Borowski, speaker of
the lower house of parliament, led 20 rebel deputies out of the SLD to form a
new party, Polish Social Democracy (SDPL). SDPL claims to be on the left of the
SLD. However, in one of the first statements Borowski made as spokesperson for
the party he promised support for the Hausner plan of drastic cuts in benefits
and social provisions. The Hausner plan is the current government’s ‘piece de
resistance’ to reduce the public debt and budget deficit, named after the SLD
economics minister, Jerzy Hausner.
Currently, the most popular party is the populist Samobroona
(Self-Defence) on 29%, beating the official neo-liberal opposition, the Civic
Platform (PO), into second place. In reaction, PO leaders have made an about
turn on their support for the Hausner plan. But it seems as if Jan Rokita, head
of the PO parliamentary caucus, was right when he said "whoever touches the SLD
now will catch a horrible disease". This horrible disease leaves the Polish
ruling class sweating for the future. President Aleksander Kwasniewski is trying
to find a cure by appointing a non-party technocrat to be the next prime
minister. Marek Belka, a former finance minister, has started negotiations to
win the backing of a majority of MPs. The new prime minister flew in from
Kuwait, where he was in charge of the economic policy for the US-led
administration in Iraq. He is known as an arch neo-liberal and will try to
accelerate privatisation and cuts in social spending. The remnants of the SLD
and their new offshoot, SDPL, have announced that they will support Belka.
Not so for Samobroona. Its leader, Andrzej Lepper, built the
party by appealing to the poor layer of farmers, and those in the countryside
who suffered most during the restoration of capitalism, on a political programme
that combines Polish nationalism and agitation against foreign economic
influence with nostalgia for the ‘stability’ of Stalinist rule. With his
opposition to the EU and neo-liberal reforms, Lepper has made inroads, at least
electorally, amongst layers of the working class as well. He calls for vastly
increased government spending and cites the government of Edward Gierek* in the
1970s as the best government Poland has ever had: "I think Gierek was going in
the right direction. How many factories were built under him, how many roads,
how many hospitals? Now we have millions of people out of work, 80% of the banks
are in foreign hands and we are almost €83 billion in debt". (Financial Times, 7
April)
The development of populist forces shows the enormous
political vacuum that exists in these countries, in the absence of independent
working-class parties capable of challenging neo-liberal reform and capitalism,
and fighting for the demands of workers, the unemployed, and the urban and rural
poor. There are possibilities and dangers present in the situation. The working
class needs its own independent party. Such a party would have to draw up a
detailed balance sheet of Stalinism and capitalist restoration and develop a
strategy and programme for genuine democratic socialism. Far from unifying
Europe, the effects of the euro and EU enlargement will be to sharpen the
dangers of the development of right-wing populist and nationalist forces in
opposition to the policies of the major EU powers. It will lead to more rigorous
clashes of interests between the different EU powers.
Capitalism, European or American, is not able to provide a
decent living standard to the workers of Eastern and Central Europe. Pro-market
policies coerce the peoples of Europe in a union of exploitation. Only workers’
opposition with socialist policies can prevent this and lay the basis for a
genuine co-operation between the peoples of Europe by breaking the power of
capitalism. A socialist confederation of Europe would mean the end of
capitalism, mass unemployment and poverty, and a massive raising of living
standards for all.
* Edward Gierek took over from Wladislaw
Gomulka as Stalinist leader of Poland in 1970. Living standards initially
increased, but price rises in 1976 provoked riots, which Gierek forcibly
suppressed. Further food riots in 1980 led to the formation of the trade union,
Solidarnösc. Gierek was replaced by Stanislaw Kania, who was ousted by General
Wojciech Jarulzelski, who imposed military rule in 1981.
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