21.11.2002

Growth of instability

The growth and stability pact (GSP) is in some trouble. The economic downturn - now officially the "the first simultaneous world slowdown in 30 years", according to our esteemed chancellor Gordon Brown - has meant that the best laid plans of Eurocrats, central bankers and ministers across Europe are having to be readjusted and reassessed. The GSP - to which the euro zone countries signed up as one of the foundations of the new currency - consists of a series of supposedly mandatory targets for public spending and borrowing as a percentage of gross domestic product, as well as other incentives for austerity. According to some prominent people on the left in Britain, it is something akin to the atomic bomb in the hands of Harry Truman at the end of World War II - a uniquely fearsome weapon that can be wielded at will by the gnomes of the European Central Bank. It is also supposed to be a trump card in the hands of the Blair government in its struggle to impose cuts and privatisation on public services. Since it is said that the euro cannot be separated from the GSP, the working class is urged by the likes of the Socialist Workers Party and International Socialist Group to reject the whole package. When Blair calls his referendum we must all vote against the euro and for the status quo of good old sterling - not at all on the basis of nationalism of course, but to deprive the ruling class of this deadly "new weapon". Unfortunately for this line of thought, it seems that the European capitalists themselves are getting less and less keen on the GSP as a means of economically underpinning the euro. Recent events have been quite startling in this regard. First we had the rather outspoken remarks of Pascal Lamy, the EU trade commissioner, describing the pact as "medieval" in its operation. Then it was the turn of the president of the European Commission himself, Romano Prodi, describing the pact and its operation as "stupid" in an interview with Le Monde. When challenged on this by a number of bemused commentators and politicians, he went on to repeat and expand on his criticisms of the working of the pact in front of the European parliament. Now it has been similarly bad-mouthed by our friend, Mr Brown. In the words of The Guardian, he made "criticisms of the EU stability and growth pact for deepening the EU's recession, and called for its relaxation so that countries with low debt-GDP ratios should be able to borrow more for investment to claw their way out of slowdown" (November 19). Furthermore, "Mr Brown now privately believes a majority of the EU commissioners would like to see a relaxation of the pact to allow counter-cyclical demand management." Since the terms of the GSP has now been blatantly breached by France and Germany, the two most powerful components of the euro zone, it appears that it is not as effective a super-weapon as some of our Socialist Alliance comrades would have us believe. When the circumstances where it is supposed to be most crucial actually come about - a recession calling for the strictest austerity - its operation is condemned as "stupid" and "medieval" by those charged with overseeing it. What use is a weapon that is seen as working against the interests of the class it is designed to serve? Such ideal norms of neoliberalism are just as much subject to the laws of class struggle as any other bourgeois economic policy or nostrum, whether within the framework of national states or the EU. Governments, or alliances of governments, can pledge themselves to restrain public spending till they are blue in the face - whether they can actually carry out such pledges is another matter entirely. The bourgeoisie may make all kinds of undertakings as to what ideal, virtuous economic policies they will follow in the future. But something that removes their room for manoeuvre in a crisis will most likely be junked at the first opportunity when such a crisis arrives. QED. Indeed, not only is the GSP a damned nuisance in terms of economic policy: contrary to the bourgeoisie's original intentions that it would be a device to shift economic difficulties onto the backs of the workers, it now threatens them with an unwelcome outbreak of class struggle as well. A quite striking example of this is the recent one-day general strike in Portugal. Using the pact as an excuse, the Portuguese government is trying to push through a package of cuts in state spending, including attacks on working class wages, jobs and conditions, as well as a rise in VAT. The result: a strike involving hospitals, fire services, public transport and even the courts, which brought much of Portugal to a standstill even as the parliament was voting on the austerity measures on November 15. The pact gives the European Commission powers to fine Portugal if its borrowing exceeds the prescribed three percent limit - in fact it has already reached 4.1%. But, as The Daily Telegraph pointed out, "Brussels is handling the task with kid gloves" (November 16). It goes on to note: "For now, the Portuguese public does not appear conscious of the role of the euro in the unfolding drama, but that could change as soon as politicians see an interest in blaming Brussels." Perhaps. But then again, perhaps the Eurosceptic Telegraph, like those sections of the left who tail after the distorted echo of this kind of nationalism, see struggles within the euro zone through 'little British' spectacles. For there is no reason for working class resistance to neoliberalism in Portugal, for example, to take the form of a struggle for the return of the escudo (any more than its form in Britain would be a fight to 'save the pound'). Rather, the class struggle tends to take place within the new framework, involving the working class fighting to impose their own interests on their bosses under the new circumstances. The truth is that, through its promotion of 'left' anti-euro sentiments, the Socialist Alliance majority is placing itself - and, even more damagingly, trying to keep the British working class - outside the arena in which the class struggle will unfold, as European integration under capitalism continues to evolve. Ian Donovan