Europe in crisis

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Europe in crisis
11 January 2010

At the start of the last decade, in March 2000, the European Union
heads of state announced the Lisbon Strategy. Its aim, by 2010, was to
make Europe “the most competitive and dynamic knowledge-based economy
in the world, capable of sustainable economic growth with more and
better jobs and greater social cohesion.” This would create “the
conditions for full employment and the strengthening of regional
cohesion in the European Union.”

As the second decade of the 21st century begins, the aspirations set
forth in the Portuguese capital have evaporated. Instead of full
employment, Europe is gripped by mass unemployment; instead of
economic growth, there is stagnation; in place of cohesion, there is
discord. Even the common currency, the foundation of the lofty plans
of Lisbon, is in acute danger.

The Lisbon Strategy was the expression of widespread illusions that
Europe, by means of EU enlargement and deeper integration, could catch
up with or even overtake the US as a major power. This would happen
entirely as a result of a united Europe’s economic power, without the
social tensions and political and military conflicts of an earlier period.

These illusions found their clearest expression in a speech by
then-German Foreign Minister Joschka Fischer (Green Party) in May 2000
at Berlin’s Humboldt University. Fischer called for the transformation
of the European Union from a loose alliance of states into a federation.

Through the “close integration of their vital interests and the
transfer of national sovereignty rights to supranational European
institutions,” said Fischer, the European states would signal their
rejection of the national conflicts that had torn apart the continent
prior to 1945. Only in this way would Europe be able to “play its due
role in the global economic and political competition.”

Since then, Fischer’s idea that Europe could be harmoniously organized
on a capitalist basis has proven to be pipe dream. In Paris, and
especially in London, his proposal was interpreted as an attempt to
subjugate Europe to the dictates of Berlin. The EU’s enlargement into
Eastern Europe has turned out to be a double-edged sword. It has
brought not only the expansion of the internal market, but also
political strife and instability.

In 2003, the US attacked Iraq, dividing Europe. While the British and
Polish governments fully supported the war, the German and French were
opposed. The American administration used the conflict to drive a
wedge between “old” and “new” Europe.

The European Constitution, what remained of Fischer’s concept, failed
in 2005 at the hands of French and Dutch voters, who interpreted it
correctly as an attempt to subordinate the people of Europe to the
dictates of the most powerful financial and economic interests. After
a diplomatic and political tug of war that lasted several years, the
basic framework of the European Constitution came into being in the
form of the Lisbon Treaty. But by then, Berlin and Paris had largely
lost interest. This was demonstrated in the appointment to the two new
key positions—the council president and the European foreign
minister—of secondary figures without any authority.

With the coming to power of Nicolas Sarkozy and Angela Merkel, France
and Germany had turned again to a more independent foreign policy,
with a stronger focus towards the US. In 2005, German Chancellor
Gerhard Schröder (Social Democratic Party) had left office
prematurely, amongst other things because his foreign policy
orientation towards Russia had led to his increasing isolation. But
the hope that Washington would respond with increasing concern for
European interests has remained unfulfilled, even after the change
from President George W. Bush to Barack Obama.

The international financial and economic crisis has now brought all
the unresolved contradictions of European domestic and foreign policy
to the surface. In the conflict between the US and China, which
increasingly dominates the world stage, Europe is being pushed to the
edge and torn apart.

The German and French governments are bitter that Washington decided
on a massive expansion of the Afghan war without prior consultation
with its NATO allies. On the one hand, they do not want to leave the
strategically important region to the sole influence of the United
States; on the other, they fear that in an ever escalating war they
could become mere agents of the USA. The failure of the Copenhagen
climate change summit, which Europe lays at the door of the American
and Chinese governments, has caused further anger.

The economic crisis has laid bare the inherent weakness of the
European economy. The huge budget deficits in Greece, Ireland, Italy,
Portugal and Spain threaten to break the euro’s back. So far, the
common currency has prevented a massive devaluation and accompanying
surge in inflation, but the high value of the euro, coupled with
rising interest rates, makes it impossible for the Eurozone countries
to overcome the crisis on the basis of the free market. Brussels has
responded by calling for draconian cuts in government spending,
particularly in the social sector.

Britain, which is not a member of the Eurozone, is becoming the sick
man of Europe. Its economy is heavily dependent on the financial
sector. In the last ten years, the number of manufacturing jobs in the
UK has declined by 30 percent. Over the same period in Germany and
France, the decline was far less, 5 and 10 percent respectively. To
rescue the financial sector from collapse, the British government has
taken on debt on a vast scale. The value of the pound has fallen
correspondingly. Another banking crisis would quickly raise the
specter of a British default on its sovereign debt.

For Germany, and, to a lesser extent, France, their relative economic
strength has proven to be their Achilles’ heel. Industrial production
in Germany, as a percentage of gross domestic product, is more than
twice the figure for the US. The relative strength of German
industrial production is bound up with a massive increase in German
exports. Over the past 20 years, Germany’s production for export has
risen from about 20 percent to 47 percent of GDP. Even China’s exports
account for only 36 percent of its GDP.

This large dependence on industrial exports has made Germany
especially vulnerable to the impact of the international economic
crisis. Last year, economic output declined by 5.3 percent.
Engineering production is currently running at only 70 percent of
capacity, and according to experts, the prospects for improvement are
slim.

The German export industry is under massive pressure from both the US
and China. The United States has exploited the low dollar and its low
wage levels, established with brute force as part of the
reorganization of the US auto industry, to gain a competitive
advantage against its European competitors. Symbolic in this respect
was the partial shift of production of the Mercedes S-Class from
Germany to the United States. For its part, China is now pushing into
market segments that were once the preserve of the Germans, due to
their high quality standards.

The European and German elite are reacting to the growing problems and
contradictions as they did at the start of the last century: with
social and political attacks on the working class and with increasing
militarism.

Many governments seem paralysed, given the growing foreign policy
problems and internal conflicts. The Christian Democratic-Free
Democratic government in Berlin has succumbed to internal squabbles
since taking office in November. Chancellor Merkel has been accused on
all sides of a lack of determination and weak leadership. But behind
the scenes, there is an intensive search for new mechanisms of rule to
facilitate the shifting of the consequences of the economic crisis
onto the working class, the methods of social compromise having been
largely exhausted.

It is in this context that the ongoing assault on democratic rights is
being intensified, in part through the fomenting of terrorist scares
and the stoking up of resentment against Muslims. Among those at the
forefront of these reactionary efforts are the German Social Democrat
Thilo Sarrazin and the former Socialist Party politician and current
French Immigration Minister Eric Besson. The Swiss referendum against
the construction of minarets has been followed attentively and
sympathetically by these circles. Such measures represent an attempt
to divert attention from class issues and mobilize right-wing layers
of the middle class to be thrown at some point against the working class.

Working people must draw their own conclusions from the failure of the
bourgeoisie’s European plans. European workers must unite in order to
defend their own social and political interests. They must fight for a
socialist Europe, under the banner of the United Socialist States of
Europe.

Peter Schwarz

http://wsws.org/articles/2010/jan2010/pers-j11.shtml

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