Heading for the rocks

At the Socialist Alliance conference on the euro, one of the main arguments put forward by advocates of the 'no' position - not least leading comrades from the Socialist Workers Party - was that the adoption of the European single currency was inseparable from the growth and stability pact - a deadly "new weapon" that would overwhelm the working class. For example, John Rees informed the conference that the pact - an attempt to impose economic convergence of the individual European Union states using fiscal discipline - would "eradicate by law any alternative to neoliberalism". It is certainly true that inevitably the bourgeoisie will try to enforce such discipline at the expense of the working class, but, there again, when have our rulers ever not tried to implement change in this way? As speaker after speaker argued at the October 12 conference, this being the case, the key surely is the class struggle itself. The bourgeoisie may want to make us pay, but will they be able to get away with it? The evidence from the principal EU countries is that at present their plans to cut services, slash jobs and hold down wages are meeting with strong resistance. In France, Spain, Italy and Germany, governments are constantly having to take into account the militancy of the working class and redraft plans accordingly. In Britain too at last sections of our class are flexing their muscles. In the past few months rail, tube and local government workers have taken strike action and now the firefighters are set to join them. The truth is, in or out of the euro, capital will try to resolve its difficulties by attacking our conditions, but workers will resist - no matter what pact, agreement or other document the bourgeoisie waves before us. It was already clear before the conference that, in the words of Chris Jones of the Revolutionary Democratic Group, the growth and stability pact (GSP) was "heading for the rocks". Gordon Brown, now staring at a possible £7 billion shortfall, had let his own misgivings be known. Because of lower than expected growth, tax receipts have increased by only around two percent, while government spending has shot up by eight percent. As a result borrowing may overshoot by £5 billion in the current year. Unless Brown either makes substantial cuts in his spending plans - which in any case would only return them to pre-Labour 1997 levels in proportional terms - or starts to raise taxes, this shortfall could unexpectedly leave Britain in a situation where by 2003-04 its budget deficit would be close to exceeding three percent of gross domestic product, the GSP ceiling. Portugal has already breached the pact, while France and Italy are on the verge of doing so and even Ireland's deficit could approach three percent of GDP by next year. Of the 15 EU countries only Finland and Greece are at present running surpluses. No wonder the original GSP ruling that deficits must be eliminated altogether by 2004 had already been put back two years. All of this information, as comrade Jones pointed out, was common knowledge. The financial press was also full of stories about tensions between EU states and within the European Commission over difficulties in implementing the terms of the pact. There has been a more or less public rift between Romano Prodi, president of the commission, and economic affairs commissioner Pedro Solbes. But the SWP's Alex Callinicos dismissed comrade Jones's suggestion that the GSP was on the verge of collapse: he simply had "not been reading the financial press carefully enough", said comrade Callinicos - without of course offering us any devastating new insight as to why the pact was untouchable. Apparently the fact that the Solbes wing of the EU bureaucracy and sections of the bourgeoisie favour adhering to every last clause means that the GSP is set in stone - after all, the commission has the power to fine transgressing countries billions of euros for exceeding the three percent barrier. Since the conference such nonsense has been well and truly exposed. Last week Prodi, the man charged with overseeing the GSP's implementation, damned it in an interview with Le Monde as "stupid" and too "rigid" (October 18). Despite the uproar caused by this comment, Prodi stuck to his guns. It would be folly, he said, to cause a European slump by "enforcing the pact inflexibly and dogmatically, regardless of changing circumstances". EU trade commissioner Pascal Lamy joined in the chorus of condemnation, which more and more was beginning to sound like the last rites: the growth and stability pact was not only "crude": it should be replaced, he said. Last week German finance minister Hans Eichel said Berlin was likely to breach pact rules. The figure of three percent was just "not achievable", he said. Gerhard Schröder has desperately been trying to comply with the GSP by breaking election promises not to put up taxes, but with four million unemployed and deflation looming, his task seems impossible - especially in view of the fact that the German working class remains strategically undefeated. The same problem faces president Jacques Chirac of France. His finance minister, Francis Mer, last month defied the European Commission by announcing plans for tax cuts and increased spending next year. Mer has openly stated that the French budget will still be in the red even in 2006, the latest 'final deadline'. "The growth and stability pact is in its death throes," concludes Guardian journalist Larry Elliott (Radio 4 The world this weekend October 20). Evidently, you might say, but Elliott is strongly anti-euro from a left Keynesian perspective and has been quoted favourably by SA advocates of a 'no' vote who still seem to believe the GSP is alive and kicking. Speaking on the same station later in the day, former Tory chancellor Kenneth Clarke bemoaned what bourgeois Europhiles like himself regard as a disastrous state of affairs. The problem with these weak-kneed governments, he said, was that they all have to face elections and are therefore too easily tempted to make concessions. Unlike our SWP comrades, he recognises that policy must always be determined and put into practice in the light of real events, which are themselves shaped by the contending class forces. As John Pearson of the CPGB asked at the SA conference, why must the balancing of budgets inevitably mean attacks on our class? We must "fight for what we need and for the capitalist class to pay". If the bourgeoisie insists it must cut spending, then why not target the armed forces or the monarchy instead of workers' health and education? If it needs to raise additional revenue, then - to use a phrase which the SWP is familiar with - tax the rich! Of course, when the working class really starts to move, balancing the books will be the last thing on the minds of the bourgeoisie. They will pay whatever price it takes to defend their system. So insisting that adoption of the euro must bring with it successful attacks on our class is nothing short of political illiteracy. A similar insistence that the ratification of the Nice treaty must mean the enforced privatisation of healthcare is equally unpersuasive - clearly the Irish were not convinced by such arguments in last week's referendum. Whether Britain enters the single currency or not, the bourgeoisie will continue to try and solve its crises at our expense. That is why, instead of saying 'yes' or 'no' to one section or the other of the ruling class, we need our own independent, working class solutions. Peter Manson