SocialismToday           Socialist Party magazine

EU enlargement after the Irish referendum

EUROPEAN UNION backers breathed a sigh of relief when a second referendum in Ireland ratified the Treaty of Nice. This treaty lays the basis for incorporating ten additional states into the EU. It also details a neo-liberal programme of water, post and education privatisation.

This time round, Ireland’s establishment politicians left nothing to chance. ‘Yes’ was supported and funded by the main political parties, as well as big-business organisations, the Irish Congress of Trade Unions, the Irish Farmers’ Association, the mainstream press and the Catholic church.

The mounting anger at the corruption scandals involving Bertie Ahern’s Fianna Fail government and imminent cuts in health and education was diverted away from this vote. The Labour Party, for example, called for a ‘different kind of yes’: ‘Hold your fire, Fianna Fail can wait. Europe can’t’, urged one of its posters. In the end, 63% voted Yes on a 49% turnout. The first referendum in June 2001 had rejected the treaty with 54% against on a 34% turnout.

This vote is unlikely to hold back the growing resistance to Ahern’s anti-working class policies. The Irish economy has taken a turn for the worse, growing by 5.7% last year, as opposed to around 10% in the late 1990s. Inflation is 4.5%, the highest in the EU. The government has produced an emergency budget to tackle a €570 million deficit (after last year’s €4.7bn surplus), including tax increases and spending cuts.

The Irish referendum out of the way, there are still many hurdles to jump before the current 15 members of the EU are joined by ten others: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Several problematic deals have to be struck at EU summits in Brussels in October and Copenhagen in mid-December before the formal accession treaty is signed in Athens next April. The ten applicants could then join in 2004.

The seemingly interminable process, the spreading economic slowdown and rising working-class militancy are fuelling anti-EU sentiment. With good reason, people fear that membership will result in their markets being swamped by subsidised Western produce and that rich foreigners will buy up property. Value added tax, imposed by the EU, has risen. Subsidies on energy, housing, transport, hospitals and education have been scrapped.

In Poland, 7,500 Solidarity union members from Silesia threw tear gas, bottles and homemade grenades at government offices and police on 15 October. They were protesting against pit closures and the threat to 40,000 jobs linked to restructuring to prepare for EU entry. Silesia has an unemployment rate of 30%, compared with the national average of 17.4%.

The new EU entrants will be treated as second-class Europeans. The applicant states are set to receive agricultural subsidies which are much lower than those paid to farmers in the present EU. The same is true of financial aid to the poorer regions, although the details are still to be finalised.

The Dutch, German, Swedish and British governments are trying to link enlargement to reform of EU farm policy. But an agreement between France and Germany at the Brussels summit means that the Common Agricultural Policy will not be substantially restructured in the short term.

In the Netherlands, where the government coalition has collapsed, opposition to applicants such as Poland, Latvia and Slovakia has been raised. Germany, however, will not entertain enlargement without Poland – a neighbouring country of 40 million people, a huge new market for German goods, with cheap labour and natural resources to exploit. And the continued division of Cyprus has to be resolved.

These issues, along with how to organise voting within the larger EU, are deeply divisive as the representatives of each nation state try to secure the most favourable terms. The battles are set to intensify. Politicians in France, Spain and Italy are campaigning against EU funding being ‘diverted eastward’. In Germany and Austria the fear of rising unemployment is being used by right-wing politicians. Countries such as Ireland, Portugal and Spain fear that they will lose out on EU grants as poorer states join, and that their say in decision making will be undermined. France, Germany, Britain and Italy will maintain their dominance over the smaller states.

Behind the tensions is the poor growth of the eurozone economy. The problems of maintaining the single currency are being increasingly exposed, reflected in the startling comments by Romano Prodi, the European Commission president, that the stability and growth pact was "stupid" and should be replaced by "more intelligent", "more flexible" mechanisms (Financial Times, 18 October).

After years of forcing austerity measures on other European states, both Germany and France have fallen foul of the stability and growth pact, which dictates that deficits must not exceed 3% of gross domestic product, and locked all the eurozone countries into a one-size-fits-all interest rate. This has further angered many current EU members as well as the applicant states. It is a clear demonstration that there is one set of rules for the weaker states and a completely different and preferential set for the dominant powers.

The German economy has been hit hard by the slowdown in the US. Chronic high unemployment – over four million (an average of 10% but with over 18% in the East) – has resulted in an increase of €2.5bn this year in social security payments. At the same time, tax income has declined, leaving a €58bn deficit. The Dax index of leading shares has plunged 48% this year – the worst performance of any of the world’s leading stock markets.

The German finance minister, Hans Eichel, admitted that Germany would fail to keep this year’s budget deficit in line with the rules for Europe’s common currency. Eichel paid lip service to getting back on track in a couple of years, by raising taxes and cutting spending next year. Francis Mer, the French finance minister, simply refused to do anything about France’s budget deficit. French president, Jacques Chirac, has prioritised funding tax cuts and increased spending, especially on the military – promises made in this year’s presidential and parliamentary elections. The right-wing government, however, is nervously eyeing the organised working class. Fresh in the memory is the fate of the last conservative government which collapsed after a massive strike movement by public-sector workers in 1995. The government would like to carry out a whole series of attacks on workers’ rights, conditions and pay, but is trying to introduce them by stealth. All the signs are that mighty movements of working-class people are being prepared.

Meanwhile, the EU is adding fuel to the fires of opposition to the EU bosses’ Europe: "But none of these changes to the stability pact or economic management are imminent, and for the time being Europe must live with the system it has. So ministers in Germany and Portugal now face the immediate problem of explaining to hostile electorates that they are imposing austerity measures to honour the stability pact, officially described in Brussels as ‘stupid’." (Financial Times, 18 October)

The economic rationale behind the EU and enlargement is clear: the development of a large European trading bloc of global significance. But as it grows, so the economic and political strains increase. The momentum remains in the direction of enlargement, but it is not yet a done deal. It remains to be seen how far it will go. It is only a matter of time, however, before the economic crisis and its attendant social and political upheavals result in the collapse of the euro and put the EU structures under severe pressure.

Manny Thain


Home About Us | Back Issues | Reviews | Links | Contact Us | Subscribe | Search | Top of page