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This article is extracted from a new CWI publication, Europe in turmoil – a socialist analysis, available, for £1, from: CWI Publications, PO Box 3688, London, E11 1YE or the CWI website:

Europe in turmoil

THE CRUSHING rejection of the proposed EU constitution in France and the Netherlands represents the biggest defeat for the EU ‘project’ since the establishment of the European Union (EU). The referenda results were also a clear rejection of neo-liberal policies and the political establishment.

Reflecting on the consequences, the Financial Times began its longer than usual editorial, ‘Crunch Time for Europe’, gloomily stating, "Two weeks after the French rejected the European Union’s new constitution, Europe’s leaders are in disarray". (13 June) It is a far cry from the dizzy optimism with which Europe’s rulers launched the proposed constitution. One of its main authors, former French president, Valéry Giscard d’Estaing, told his fellow drafters: "This is what you have to do if you want the people to build statues of you on horseback in the villages you all come from".

As the referenda dates neared, most capitalist commentators and politicians had resigned themselves to a No vote. Yet the ruling classes and their representatives have been shaken by the size of the No majorities and the class polarisation reflected in them.

In both, the No vote was overwhelmingly comprised of the ‘have nots’. The Yes vote was overwhelmingly made up of the ‘haves’. One French teacher quoted in The Guardian summed up the attitude of the French workers: "We’re voting no. It is a constitution for the bourgeoisie, for multinationals, for bosses. It is only about the economy, competition, profits, the market and capitalism, we are against all that; we are communists. There isn’t any progress for workers. Most workers want to say ‘merde’, to stick two fingers up at them. We are fed up with saying yes to the politicians". (28 May)

The class divide reflected in the referendum was most clearly seen in France where on a 70% turnout a decisive 56% voted No. An estimated 80% of blue-collar workers voted No. Amongst young voters, 59% of 18-24- and 25-34-year olds voted No.

The same class polarisation took place in the Netherlands. In the poor districts of Amsterdam the No vote was crushing. In Amsterdam Noord, 73% voted No. In Volewijck and Buiksloterham, the No vote scored a massive 79%. The turnout in the Netherlands was higher than that for the European elections. This crushed the argument that a high turnout would secure a Yes victory.

The overwhelming rejection was despite the fact that the ruling class and its institutions tried to mobilise everything to win a Yes vote. In France, the three largest political parties, the media, and international political leaders, were all mobilised for the Yes campaign but to no avail. In the Netherlands, all the main political parties, including the Dutch Labour Party, the trade unions, the media, and all the institutions of capitalism, argued for a Yes vote: only to be defeated by a massive 62% to 38%, an even bigger majority than in France. The radical Dutch Socialist Party was the only substantial party to argue for a No vote.

It was a massive miscalculation by the French and Dutch governments. Both failed to understand that the referendum would be seen as a plebiscite on neo-liberalism, the market and the anti-working class policies that they have implemented. The ruling elite underestimated the massive opposition that exists to privatisation, budget cuts and labour flexibility, which were introduced during the 1990s.

Following this defeat, however, the ruling class is still determined to push ahead with carrying out further neo-liberal policies. The new government in France has made this clear. Jacques Chirac has attempted to distinguish his ‘social model’ from the programme of ‘Blairism’ (strident support for the Anglo-Saxon neo-liberal economic model) but the only difference is that Chirac favours Tony Blair’s neo-liberalism, but in slow motion – death by a thousand cuts. The Financial Times made clear that neo-liberal policies must continue. Its editorial urged EU leaders to "commit themselves to making progress on economic reform". This policy, however, will bring the capitalists into greater collision with the working class and is a recipe for greater social explosions. It also poses the need for a clear socialist alternative as the only way to resist neo-liberal capitalist policies.

In both countries, an upturn in struggle is now likely to follow. In the Netherlands, following the referendum, 15,000 local government workers attended a demonstration on the day they took strike action, as part of their campaign for higher wages. Even the police are considering strike action over wages and conditions.

In France, the revolt against the EU constitution has exposed the depth of the crisis facing the ruling class. One analyst, Dominique de Montvallon, correctly concluded: "The country is now in such a state of paralysis, worry and anger that one thinks straightaway of May 1968".

Following the referendum defeat, Jean-Pierre Raffarin was replaced as the French prime minister by the aristocratic Dominique de Villepin. But the very appointment of Villepin, who has never been elected to anything, reinforced the wide perception of the French people of a ‘democratic deficit’ in the country, with a massive erosion in the credibility of all the bourgeois institutions and all the major political parties.

Villepin’s new government has initially attempted to present a ‘softer image’, promising to defend the ‘social model’. Yet this will not prevent further attempts to introduce more ‘flexibility’ in the labour market. The government has also pledged that it will continue with its privatisation plans and that public spending will remain frozen. This is a recipe for a massive collision between the classes in France.

Despite his efforts to project an alternative image, 60% of voters think Villepin’s government will mean more of the same. The No victory has boosted the confidence of the working class which now confronts a fundamentally weakened government. The strikes and protests of the metal workers, within days of the referendum result, indicate that strikes and mass protests are likely to now escalate: 70% in one poll indicated that they thought social struggles and conflict was likely to increase in the coming months.

The euro in question

ON A European-wide scale, the events which have followed the rejection of the proposed constitution are not episodic. They indicate the qualitative change which has taken place in the situation facing the ruling classes of Europe, vindicating the analysis of the Committee for a Workers’ International (CWI) that they are unable to unify Europe to construct a capitalist ‘United States of Europe’, as even some Marxists outside the ranks of the CWI believed.

The EU ‘project’ for greater economic and political integration was rooted in the pressure on the European capitalists from competition from US imperialism and, more recently, China. This drove them towards increased collaboration and led to illusions that this would result in a politically unified Europe. This trend, along with the process of the globalisation of the economy and the growth of multi-national and trans-national corporations, illustrated how the productive forces have outgrown the limitations of the national state and, to a certain extent, have even outgrown continents. The big companies increasingly look towards the world market rather than simply their national or regional base. At the same time, this process has its limits and comes up against the insurmountable barriers of the separate nation states and the national interests of the capitalists. In the aftermath of the referenda these factors have reasserted themselves, exposing clearly a clash of interests. This process of unravelling will worsen in the event of a serious economic crisis, recession or slump, including its impact on the common currency, the euro.

The introduction of the euro was a political and economic gamble by the capitalists, pushed through in the teeth of some opposition from their own side, during the triumphalist wave which followed the collapse of the Berlin wall. The Bundesbank, for example, opposed its introduction but was compelled to accept under political pressure. The stability pact was introduced as a ‘safety net’, which was intended to prevent governments resorting to ‘profligate spending’.

Yet, the whole idea of the euro was tailored to a situation of continued growth of the European economies, with no real account taken of what would happen in the event of a slow down, stagnation or recession. The mood expressed in the referenda and recent workers’ struggles also reflects dissatisfaction that the economic growth, jobs and higher living standards promised with the introduction of the euro have not materialised.

The ruling classes attempted to impose an economic union in the absence of an existing political union. As we explained at the time, this has never succeeded in the past. Without a political union, moving towards the establishment of a unified nation state, an economic union or currency could not survive indefinitely. Now the Financial Times belatedly warns that "all large-country monetary unions that did not turn into political unions eventually collapsed" (8 June).

There is a vast difference between the EU and a federal state, such as the US, which can distribute funds to local state governments in a relatively easy fashion on the basis of an agreement. The distribution of resources or funds cannot be done in the same way, in a Europe composed of different nation states, as the current struggle over the EU budget shows.

While an immediate collapse of the euro or the EU is not the most likely short-term perspective, the sharp increase in political and economic tensions between the representatives of the various ruling classes will intensify. However, the onset of a deep economic recession, slump or world financial crisis will sharpen these conflicts further and could then provoke a relatively rapid collapse of the euro. The withdrawal of Britain from the ERM in 1992, on ‘Black Wednesday’, shows how diverging national economic conditions can drive the capitalist class of a country to break from a currency or monetary agreement. Although there are differences, and it will not be repeated in exactly the same way, the euro can break up, with one or more country withdrawing or even being expelled from it.

Even before the French and Dutch referenda, the question of the sustainability of the euro in the face of divergent growth and inflation rates was beginning to be discussed amongst capitalist strategists. At one private meeting, on 25 May, involving German finance minister, Hans Eichel, and Axel Weber, president of the Bundesbank, a representative from the Morgan Stanley investment bank, Joachim Fels, expressed concern about the sustainability of the euro. According to the Financial Times, even the extreme pro-EU lobby group, the Centre for European Policy Studies, published a report in early June that raised the prospect of the collapse of the euro.

Following the Franco-Dutch referenda, three Italian ministers, members of the Northern League party, called for the reintroduction of the lira. Although partly an attempt to embarrass Romano Prodi, former chair of the European Commission and de-facto leader of the centre-left opposition alliance, l’Union, who took Italy into the euro, the very fact this has been discussed by a ruling coalition party, reveals the constrictions the euro is placing on the ruling class in Italy and other countries. It is no accident that the strongest opposition to the euro is in the Netherlands, France, Italy and Germany – countries either in economic stagnation (recession in the case of Italy) or suffering from high levels of unemployment. The euro, with a fixed uniform interest rate and state budget rules, has added to the deflationary pressures in these countries.

However, it is not necessarily Italy, or one of the weaker eurozone economies, that could torpedo the euro. Commentators like Wolfgang Munchau, writing in The Financial Times, recently pointed out that France or Germany, in the event of a watered down stability pact and increased inflationary pressures, may eventually conclude they would be better off outside the eurozone, with their preference for price stability. One analyst from Deutsche Bank warned: "The pressure to leave the eurozone will not come from its weak members but from its strong members". Indeed, it is from the strongest of the eurozone economies, Germany, that the pressure to leave could become greatest because of the dramatic social, economic and political crisis which has developed in that country.

A turning point in Europe

ALTHOUGH THE Red-Green coalition government of chancellor Gerhard Schröder did not face a referendum on the EU constitution, the regional elections in North Rhine-Westphalia were the equivalent of Chirac’s referendum defeat for Schröder. For the first time in 39 years, the Social Democratic Party (SPD) was voted out of office in this state.

The Red-Green coalition has carried out a vicious neo-liberal policy. With privatisations, cuts in social services, and official unemployment standing at over 11% – higher than in France – the ‘social consensus’ that was established during the upswing of capitalism after the second world war has been shattered. Yet even this has not been enough for the German ruling class.

Fearful that pressure from the working class would strengthen the resolve of the ‘left-wing’ of the SPD in parliament, making Schröder’s pro-capitalist government unreliable, the ruling class has apparently opted for Angela Merkel, leader of the Christian Democratic Union (CDU), and backed early elections. As the Financial Times Deutschland put it: "We tried to reform through the left and now we need to go back to classical right-wing reform. This will provoke social resistance which we have not seen for decades but we now need to prepare for".

This could prove to be a major miscalculation by the German ruling class. A further round of attacks by a CDU-led government is certain to provoke massive resistance by the working class. To date the ruling class has relied on the ability of the trade unions to hold back a powerful movement of the German working class against Schröder’s SPD-led coalition. But union leaders will not be able to exert the same control over the working class under a CDU government. Even during the last weeks of the Schröder government, groups of workers, such as those at Bosch-Siemens in Berlin, supported strike action to fight redundancies, emboldened by the evident weakness of the government.

In some countries, the working class through struggle has been able to slow down the neo-liberal offensive. In 1995 the French workers were able to stop the Juppé plan. In Italy, Berlusconi was unable to implement his proposed pension ‘reform’. In countries like France and Germany it has not yet been possible to carry through neo-liberal policies to the extent that the ruling class would like to. They have not gone as far as Thatcher was able to do in Britain. Yet, the failure of the trade union leaders to organise mass resistance and offer a socialist alternative has enabled the capitalists to continue their offensive, and attempt to drive ahead with further attacks.

Capitalism cannot unify Europe. The working class must unite across national borders to combat the threat of neo-liberalism and capitalism. The alternative to the crisis of the EU, and capitalist national conflict, is to fight for a democratic socialist federation of Europe. This is the only alternative to the turmoil and national antagonisms that are now breaking out in the EU.


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