Capitalist Europe and its lies

Bush's war in Iraq split the European Union and NATO into two. Now after Aznar lost his job as Spanish Prime Minister, and Berlusconi has been dramatically weakened does this mean that the European powers can find a common ground? In reality they all hang together because divided they could not survive in the world market, but there are still deep divisions. By Claudio Bellotti, Originally published in FalceMartello number 176, May 27, 2004.

The crisis facing US strategy in Iraq is having profound repercussions all over the world. As we have explained many times, George Bush's Iraqi adventure cannot be explained simply as a matter of oil, important though that is, or as being directly inspired by any single current issue. It could however prove to be decisive in the complex unfolding of the crisis of US hegemony. Its implications can be understood only if we examine them organically on a world scale.

In attacking Iraq the US intended to send two messages to the world. The first is addressed to the oppressed peoples of Africa, Asia and Latin America: "We are still the policeman of the world. If anyone thinks of raising their head, be sure we can hit them how, when, and where we want, with overwhelming force". In effect, this is a declaration of war against the perspective of new upheavals in the poor countries of the world, those most oppressed by capitalist exploitation and increasingly on the brink of rebellion.

The second message is for the other imperialist powers, mainly to the countries of Europe: "We can pursue our interests with you, without you and, if we want, against you. We don't care a dime about your fussing at the UN Security Council or even at NATO. You can choose to support us (Blair, Aznar, Berlusconi) or become irrelevant (Schroeder, Chirac). Those who stay with us will be rewarded. The others will pay the political and economic price for their opposition."

Changes in Europe

Bush and Rumsfeld's challenge split the European Union and NATO into two opposite factions. Now, the deepening of the crisis unleashed by the US in the Middle East is shuffling the cards in the relationship between the two sides of the Atlantic.

The foremost effect is the weakening of pro-US "New Europe". Aznar lost his job as Spanish Prime Minister. Berlusconi has been dramatically weakened and is under huge pressure. The severe defeat in the European elections could even topple his government in the near future. Kwasniewsky has made a massive U-turn, from staunchly supporting the US to raising serious criticisms of Bush's policies. Even Tony Blair is no longer as safe as he was, and his "faithful" friends are beginning to discuss the succession.

The vote in the Italian Parliament was also significant. Those in the Olive Tree (centre-left) coalition who were most openly in favour of a military presence in Iraq (e.g. Prodi, Amato, Marini, Ranieri, De Benedetti) had to bend and accept the common position of the left, supporting the withdrawal of Italian troops.

Some on the left think that all this indicates a strengthening of Europe in relation to the US. They see it as a new opportunity to push forward the process of European integration that was halted when the Intergovernmental conference at the end of last year (with Berlusconi as President at that time) failed to agree on the draft of the new European constitution (see "L'Europa incagliata", FalceMartello no. 172, in italian).

The economic clash

The battle between Europe and the US is unfolding on several fronts. The US is fighting France for the control of Central and North Africa, fighting Germany in the Balkan area, as well as contesting the strategic oilfields of Central Asia and the Caucasus with Russia. Recent developments will surely help France and Germany win back or consolidate their hegemony over those "New European" countries that are not certain to become Washington's satellites. The Polish U-turn is the clearest example of this tendency. However, this is not to say that Europe has a clear road to success, or that its internal contradictions will be reduced to a tolerable level. Far from it.

Europe is suffering a US economic counteroffensive that is severely damaging its economy. A weak dollar means a disaster for European exports. While Asian economies profit from the relative growth in the USA, Europe is sinking. At present, Europe is the world region with its economy in the worst condition. The strongest countries, France and Germany can survive thanks to their influence in Europe and elsewhere. But the weaker economies such as Italy will pay a very high price.

EU enlargement

Eastward enlargement is strengthening the German position inside the EU. But the entrance of ten new countries is bound to lead to increased contradictions. Enlargement increases the population of the EU by 20% but its GDP by only 5%. The bourgeoisie promises the people of the new member states an eldorado, but the reality will be very different. East European countries will bear the consequences of European integration: price rises, the destruction of entire sectors of their economies and colonisation by foreign capital. Agriculture will face massive competition, with the heaviest impact falling on Poland. In fact, as most people know, the biggest chunk of EU money goes on agricultural subsidies fixed by the CAP (Common Agricultural Policy) to prevent the bulk of European agricultural enterprises from going bankrupt. There will undoubtedly be new struggles for a share in this money. The entrance of a big agricultural country like Poland will make dividing up the cake more difficult.

The provisional agreement signed last year between France and Germany implies that the weaker countries will be disadvantaged in the distribution of EU funds. This will inevitably lead to new conflicts either at government level or within society as a whole (remember the frequent demonstrations of the French peasants and the case of the milk-quota bills in Italy).

The winners from eastward enlargement will be the industrial and financial monopolies, most notably the Germans, as they win new markets and profits, and the bosses of small businesses, such as those of North-East Italy, who will outsource and displace low-tech production such as textiles, shoemaking, and the furniture industry.

What future for the stability pact?

One year ago the enormous pressure the US brought to bear kept France and Germany united, forcing them to lean on one another in the dispute at the UN Security Council. But in the future the divergence of their interests will be decisive, all the more so if European economic problems remain unsolved. Differences will arise over economic issues, areas of influence and strategies in European and international institutions.

A major issue will be the management of the Euro and the European Central Bank. The Bank seems paralysed and unable to react to the world financial crisis. This is not an accident. It is the clear result of the contradictory interests it is called upon to deal with.

Public finances are worsening in many countries, not in just in Italy, where the debt to GDP ratio may start growing for the first time in ten years, but also in France and Germany. The notorious stability pact "parameters" have been happily sent to hell. When the Commission, chaired by Prodi, proposed to fine Germany and France for breaking the 3% limit on annual budget deficit growth, the economic ministers of the EU countries had a good laugh and decided to discuss something else. But things will not always run so smoothly. Though France and Germany are currently keen on mutually absolving themselves, what will they do if the limits are infringed by Italy, for example?

Disequilibrium in world finance, with US finance being the most important, could lead to a massive rise in interest rates after the long period of rate reductions. If, or more precisely, when this happens, it will cause the cost of debt servicing to rocket for the economies of Europe. This is particularly true for Italy, whose debt is one of the highest. In this scenario of growing tensions, it is clear that the stronger countries will impose heavy austerity measures on the weaker economies, which are in greater financial danger.

"Social Europe" rhetoric

In these circumstances, the emerging picture in European perspectives is not of a peaceful integration process, nor of social and economic improvement. On the contrary, we will see tough policies directed against working people, together with new attempts to arm Europe to fight for a bigger slice of the world market.

Traditionally, these policies are "sexed up" with democratic, "social" and even "pacifist" rhetoric. Europe back to arms? Only in the name of "peace" and "stability"! Pensions, the welfare state, wages and workers' rights slashed? In the cause of the "European model of civilization"!

It is no surprise that the leaders of the socialist parties stand in the front rank in these campaigns. It is through them that the ruling class will try and convince the workers to accept this perspective. It is no surprise that European social democracy, mainly its right wing, accepts this hideous task as it has done many times before. But we cannot remain silent on the role that left parties are playing, including those which style themselves radical. The leaders of the Italian PRC and the recently founded European Left Party are completely fooled by this pro-European rhetoric and try to sell this reactionary position as a new birth of "internationalism".

But we are no longer in the 1990s. The workers, especially in Italy, have paid with their blood, sweat and tears "for Europe". They have experienced ten years of worsening conditions in order to find out that joining the Euro area does not mean the end of their efforts. On the contrary, it entails a new and dramatic fall in the purchasing power of their wages and pensions, sneaking de-industrialisation, and a relentless race towards a social situation that is more and more unbearable.

The struggles we have witnessed in these last few months are the signal for bigger movements in the future. European workers are fighting back after twenty years of defeats. Capitalist Europe, built on sacrifice, austerity and arms will be more and more opposed by the mass mobilisation of the workers all over the continent.

Originally published in

FalceMartello number 176,

May 27, 2004