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Europe isn't
king
What has happened to the grandiose Maastricht plans for a
capitalist Euro-state? Lynn Walsh writes.
OR MOST PEOPLE going to the polls on 9
June, the Euro elections will not be primar-
lly about the European Union (EU) or its
future. Throughout the Twelve, the vote will be a referendum on the policies of the national governments. In Britain especially the result is likely to be a massive vote of no confidence in the ruling party, an omen of defeat in a subsequent general election. Nevertheless, Euro-issues will also be put to the test - and there is hardly a government in Europe which does not fear a rising tide of anti-EU sentiment.
Throughout Europe there is an inchoate but strengthening mood that the EU is (at least partly) to blame for economic stagnation, rising unemployment, and government cutbacks in social spending There is undoubtedly a narrow, nationalist strand in this mood - which is being ruthlessly exploited by ultra-right and racist parties striving to divert attention away from the capitalist roots of current problems. But there is also a widespread awareness that the EU is the Europe of big business and state bureaucracies, not the Europe of working people.
In an age of global economy and communications, national economies are outdated entities. But Europe - the Common Market, the EEC, the EC and now the EU - has not delivered the promised miracle of economic growth and prosperity. On the
contrary, since the 1970s Europe had slower growth and suffered from higher unemployment than either the United States or Japan.
Unity, moreover, seems as elusive as ever. No sooner was the ink dry on the Maastricht Treaty than new quarrels broke out between national governments - over GATT, for instance, and the reform of the astronomically expensive and wasteful Common Agricultural Policy (which France fights to retain while Germany, Britain, and others demand reductions in farm subsidies).
The British Tory government, despite gaining an opt-out from the Social Chapter and Economic and Monetary Union (EMU), recently provoked a new row over the distribution of votes between states in an enlarged EU after the accession of Norway, Sweden, Finland and Austria). Under pressure from the Tory Euro-sceptics, the British foreign secretary, Hurd, began to voice doubts about raising the "blocking minority' from 23 to 27, which he had previously approved at the Lisbon summit. Then, after several days of wrangling at an emergency foreign ministers' meeting in Brussels, Hurd accepted 27 after all - to the fury of the Euro-sceptics.
In immediate, practical terms, however, the elections to the European parliament, whatever the precise outcome, will make little difference. The European parliament is virtually powerless. Deci-
Europe
[page 17]
e power lies with the Council of nisters. This is an inter-governintal body on which, despite alified majority voting' on issues ating to the 'single market, nanal governments retain the right veto on decisive issues. Despite the ro-rhetoric of some capitalist leadi the EU is not a supranational, leral body. That would imply the ordination of member states to a stral European authority, which is t the reality in the EU.
The Council of Ministers decides licy, and policy decisions are transed into legislative proposals and ministrative measures by the tropean Commission, the Council's inding bureaucracy. The European rliament is an advisory body. It s the right to be consulted and to lend legislation. The EUs annual dget, it is true, has to be ratified the parliament. But its power to amend or block e budget is, in practice, very limited as EU venue depends on the willingness of the national vernments to levy taxes and make financial conbutions.
The Euro-parliament has no power at all conring foreign and security policy, which is the erogative of ministers representing national govnments. In reality, it is the major powers, ermany, France and Britain, which have the desive say in this area. The European parliament the most expensive talking shop in the world.
NO
1992 Tory conference.
Euro-rebels
MAASTRICHT
TREATY
aastricht - boom-time
HIS ROUND OF Euro elections was intended to ovide democratic legitimacy to the Maastricht easures, and provide another stepping stone toards greater European unity. In the event, they ill only help to highlight the illusory character of ans to surmount national differences and unite urope on the basis of capitalist ownership of proaction and the anarchy of the market. What happened to the grandiose plans which sued from the Maastricht summit in December )91? According to the European vision of Jacques elors, there would not only be a 'single market' 1. 1992 but also rapid progress towards an ecoomic and monetary union (EMU), with a single uro-currency and co-ordination of economic polies. Delors, in fact, championed the idea of a deral European superstate, with its own defence nd security policy. Even some on the left began • accept the idea that there could be far-reaching, ermanent integration of economies across national ontiers, giving rise in the future to a capitalist uro-state.
Apart from the single
market, however, this vi-
sion has now evaporated. EU 'widening, with the accession of Sweden, Norway, Finland and Austria, is unlikely to be accompanied by further deepening. More members will mean more differences.
What went wrong for the capitalist Europhiles? Their moment has passed! The ambitious federalist plans were the product of a particular combination of factors which emerged in the late 1980s, between the 1985 Cockfield proposals for the single market and the 1991 Maastricht summit. The new conjuncture followed a decade of economic stagnation dominated by the slumps of 1974-75 and 1979-81. The 'widening' of that period, with the accession of Britain, Denmark, and Ireland in 1973, was accompanied by paralysis within the EC, with annual quarrels about the Common Agricultural Policy (CAP) budget and frequent use of the veto by one or other government to block new initiatives.
A review of the factors which emerged late 1980s reveals their temporary nature:
(1) There was a brief spurt of accelerated growth (averaging about 3% per annum, 1985-90), with a temporary fall in unemployment. This was stimulated by low world oil prices after 1986, the speculative Tory boom in Britain 1985-88 (raising demand for imports by 30% and the 'unification' boom in Germany 1988-90 (increasing import demand by 20%). There is always more room for co-operation between competing national capitalist states in periods of economic growth. This, however, has given way to deep recession, first in Britain and now in Germany and France.
(2) Following the trends set by US capitalism under Reagan, there was a worldwide acceleration of 'free market' liberalisation and deregulation. The growing share of services in the advanced capitalist economies and increased cross-border trade in services, especially finance, insurance, etc (facilitated
6 • Europe
[page 18]
le precondition of any strengthening of the EU Commission president Delors. advanced communications technology), inased the pressure to reduce state regulation, monise tax regimes, and allow international ess to domestic markets. The big European Itinational companies were eager to broaden ir home base", to achieve greater economies scale in order to compete with US and Japase corporations. For big business, the 'single urket was long overdue - in theory, it should ve been achieved under the Treaty of Rome ring the 1960s and 1970s.
(3) The "globalisation' of finance capital and › massive fluctuations in the dollar/yen exange rate re-inforced the resolve of Germany, and the Benelux countries, ance, rengthen the European Exchange Rate echanism (ERM) as a haven of stability in a latile sea of floating rates. Following the IM realignment of January 1987, there were e years of relative stability for the EMS. At e beginning of stage one of EMU in July 90, there was a widespread belief that the able 'parity grid of EU currencies had become permanent fixture - an illusion which was attered by the European monetary crisis nich followed the Danes' rejection of Maasicht in June 1992.
(4) After Mitterrand's Socialist Party governreformist programme in ent abandoned its 183 and turned towards 'free market' policies, ere was a strengthening of the Franco-Geran alliance. A firm Franco-German axis was C. The representatives of French capitalism elieved that through enhanced EC structures rance could exert decisive political influence in urope, in spite of the greater economic strength : Germany, whose political influence was limited nder the post-second world war settlement. With le collapse of the Stalinist regimes in Eastern urope, however, the attentiop of German capitalim has shifted from 'deepening' within the EU to videning, especially to draw in Germany's Eastern eighbours. This and other developments have prouced tensions in the Franco-German alliance. conjuncture gave the EC (5) The favourable 'ommission exceptional room for manoeuvre, which resident Delors skillfully exploited. Linked to the single market' proposals, qualified majority voting vas introduced in the Council of Ministers, breakcaused by national ng the log-jam previously 'etoes. Intermixed with the 1992 proposals, which vere rapidly implemented, the Commission introluced federalist' proposals, for monetary union and steps towards political union. The increased eco- 1omic interpenetration of the EC economies ippears to have induced a romantic, utopian strain n the thinking of some capitalist politicians, who or a while naively believed that EC structures could permanently transcend the national interests of rival capitalist economies. Even Thatcher, who welcomed Euro-liberalisation but opposed federalism, appears to have underestimated the scope of the Commission's plans - at least until the Danish referendum, which triggered the beginning of the disintegration of the Maastricht project. Diagnosing the economy: 'Euro-sclerosis' WHILE THE SHORT-LIVED economic expansion of the late 1980s allowed increased co-operation between the EC states, the re-emergence of crisis since 1990 has sharpened the tensions between national states. It has also released centrifugal forces within the nation states - nationalism, regionalism, linguistic particularism - as well as stimulating xenophobic and racist currents diametrically opposed to the idea of European unity. These problems reflect the limited, one-sided character of the 1980s boom in Europe. Over the whole 1979-89 period GDP growth averaged only 2.2% per annum for Western Europe as a whole. A major factor behind this slow growth has been the policies of German capitalism. Germany is the dominant EU economy and was, until recently, the most prosperous. Yet haunted by the fear of renewed inflation, the German capitalists doggedly adopted highly restrictive monetary and budgetary policies. Through its dominant economic position, Europe • 17
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nd especially through the ERM, German sm imposed its slow-growth policies uropean neighbours. The ERM acte traight-jacket for EC members.
Despite the recovery of big business profits, hich have returned almost to 1960s levels, there as been a steep, ten-year decline in investment, ith only a modest recovery after 1985. This failre to expand capacity, combined with the effects * labour-saving technology, has produced a longirm growth of structural unemployment. nemployment in the EC states has been higher an in the non-EU West European states. In the U the percentage of the labour force unemployed se from 2.8% in 1954-73 to 4.8% in 1974-79 and 5% in 1980-89. The comparable figures for the n-EU states (Austria, Finland, Norway, Sweden id Switzerland) were 1.6%, 1.8%, and 2.7%. The employment figures for the EU were partly
capital-
on its d as a
re is the Maastricht 'vision' now?
hed up by high levels of unemployment in the rer, south-European states: Spain, Portugal, and rece. Nevertheless, the slow-growth policies imed by German capitalism undoubtedly resulted higher levels of unemployment in Germany, nce, and other 'core' countries.
Juring the 1980s growth-spurt, investment was centrated in the most prosperous areas, while older, heavy industrial regions and the preninantly agricultural regions continued to ine. The ten poorest regions out of 180) have capita GDP less than a quarter of the richest ons, like Hamburg, London and Lombardy. eover, even in the richer countries there is high mployment amongst young people in the urban is. Since the beginning of the slump in Gerly and France after 1993, unemployment in i those countries has soared to over four million shing the EU rate to over 11%.
large proportion of this unemployment is ctural, that is permanent rather than cyclical, ot merely teinporary unemployment caused by
• Europe
the current recession. However, deep recession and very slow recovery aggravates the problems of mass unemployment and regional decline. The growth rate in Western Europe for 1989-95 is projected to be only 1.2% - that is, below the 1.5% per annum growth of 1929-38, the period of 'Great Depression'.
The limits of the national state
THERE ARE CONTRADICTORY forces at work
within the EU: some pushing towards greater eco-
nomic interconnection, others tending to accentuate
national differences and other forces of disintegra-
tion.
The interpenetration of trade, especially in
manufactures but increasingly in services, has con-
tinued to rise. Over 70% of the major EU countries'
trade is now within Europe. Through their subsidi-
aries and partners, most of the big
multinationals now operate on an all-
EU (or all EU-EFTA) basis. Finance
capital flows freely across the EUs
internal borders.
This process of increased economic
interpenetration will continue, irre-
spective of political and institutional
arrangements, inevitably putting pres-
sure on national governments
continue their efforts to harmonise
their markets. This trend arises from
the inner logic of contemporary capi-
talism - and is irreversible, short of a
massive slump and a turn by the ma-
jor capitalist powers to
beggar-thy-neighbour policies, which
will develop at a later stage. This
would provoke a catastrophic eco-
nomic collapse and social crisis.
A section of British capitalism, for instance, represented by the Tbry Euro-sceptics, fear that competition within the EU will accelerate the decline of the feeble British economy, a fear which is amply justified. The saner representatives of British capital realise that for Britain to withdraw now, when the Nordic and East European states are pushing to enter the EU, would result in an even more rapid decline of British capitalism.
Countering the 'unifying trends', however, are powerful disintegrating tendencies. Underlying all of them is the historic reality that capitalism is organised on the basis of national states, which remain the fundamental unit of the capitalist system. The fact that EU states no longer publish figures for their trade with their EU partners does not mean that economies cannot fall behind in terms of capacity and productivity, or that they can no longer have trade or capital deficits with their BU neighbours.
While the capitalists generally feel that they are gaining from Eu participation, they will continue to support further integration and co-operation. But
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JAI overens konster i danske overens- Unsoner komster i NEJ til Unionen Danish anti-Maastrict demo, 1992.
when their interests begin to be seriously undermined by competition from more powerful EU rivals, the attitude of sections of big business will change. This is reflected in the opposition to the Maastricht Treaty of a number of capitalist parties in France, Germany, and Britain's Tory Euro-scep- Given the overwhelming dominance of the world market and the extreme division of labour internationally, there can be no possibility of 'capitalism in one country'. But while capitalism can partially surmount its national limits through international investment and trade, ultimately class cannot transcend the limits imposed by their national roots. The territorial basis of private propevolution of bourgeois classes with their own national culture and language, and capitalism's organic links with national machines rule out planning on an internanow a prerequisite for scale, which is progress in the development of science, technology, production. In short, the national state remains a fetter on social progress.
Capitalist governments have to attempt to balance the national books in the broader sense. If large sections of the population suffer a decline in living standards - accentuated by competition within the EU - capitalist leaders will face growing social instability and political upheaval. The beginning of such a movement was reflected in the Danish referendum. Rejecting the policies of all the major parties in Denmark, a majority rejected proposals which they identified with growing unemployment, cuts in public expenditure, and other measures designed to achieve the "convergence conditions' for participation in the EMU. The Danish vote forced the modification of the Treaty, the beginning of the unwinding of the grandiose plans for economic and political union. Since then, opposition to the EU has grown even in Germany and France, where capitalist politicians previously assumed massive support for the idea of European integration.
Uneven development within the national states, with declining regions blighted by unemployment and poverty, has stimulated a tendency towards national decomposition. In Britain, this has aroused national sentiment in Scotland and Wales and underlies the conflict in Northern Ireland. Ironically, the idea of a federal Europe, despite regional hostility to central authority, has only fuelled the fire. Why should not Scotland, Lombardy and Catalonia, stand on a par with Denmark, Ireland and Portugal? Denouncing the folly of a federal Europe, as advocated by some politicians, William Rees-Mogg (The Times, 11 April 1994) says: "In such a Europe there could easily be as many as 60 states... The nations put together in the 19th century, particularly Belgium, Germany and Italy, would disintegrate into their separate regions. The work of Bismarck and Cavour would be undone... without Barcelona and Catalan industry would be bankrupt"
Rees-Mogg consoles himself with the thought that, "as with everything about Maastricht, one can see that this is something which cannot happen". Certainly, capitalist states which cannot be sure of maintaining their own national unity on the basis of harmony and prosperity do not have the capacity to secure the unity of Europe. But on the other side, defence of national sovereignty against EU encroachment will not prevent a tendency towards internal disintegration.
The end of the 'social' market WHAT DEGREE OF integration has actually been achieved by the European capitalists? What are the prospects for the EU?
The EU is not a single, unified project. There are different elements, reflecting different trends within capitalism and the disparate aims of national capitals and even fractions within the national capitalist classes.
Within the 1992 Maastricht package, there are two major projects, which are intertwined but are ultimately contradictory:
(1) There is the neo-liberal, laissez-faire project for the realisation of a 'single market' through liberalisation and deregulation with the EU acting Europe • 19
[page 21]
'ringmaster"; (2) And there is the federalist project for a cial' Europe, in which a supra-national EU govnment, on the basis of the single market, would economic and social welfare throughout omote e EU.
The neo-liberal internal market RIOR TO '1992', tariffs had been reduced to negible levels. The 'internal market' measures were med at removing non-tariff obstacles to free ade: abolishing technical barriers' (quality standds etc), harmonising tax and insurance laws, and ening up public-sector purchasing to non-national ppliers.
Many of these measures are now being impleented. But some governments e dragging their feet. Only out half of the 230 single marbeen have it measures iplemented throughout all 12 ates, and in some they are not ing rigorously enforced. Tax rmonisation is still a long way :, although big concessions have en made to the multinationals.
Plans for EMU are also linked the neo-liberal project. Big isiness, the argument goes, will t be truly free to invest, proice, and trade across frontiers iless they are assured of exange-rate and interest-rate ability. But such stability re- 'convergence' of money, tires idgetary, and other economic licies. And the logic of such codination is the establishment of single currency regulated by a uropean central bank - the MU.
Even if all these steps could be ken, however, the project would still face a fun- Intensive profit-driven imental contradiction.
mpetition between the big multinational corporains in a free market would inevitably accelerate e polarisation of wealth.
Investment and growth is inevitably concenated in the more prosperous areas, aggravating e decline of the poorer areas. Poverty and unemoyment inevitably fuel protests from regions and itional minorities against the destructive social fects of the centralised European market. In the se of mass protest, national governments sooner later attempt to soften the effects of the unfetmarket - by resorting once more to red otectionist measures.
The collapse of the ERM in the currency crisis 1992-93 was itself the result of the growing vergence between the economies, which widened with the onset of recession. The pegging of the pound at the unsustainable rate of DM2.95 forced the Tory government to maintain high interest rates in the midst of a deep slump, increasing unemployment and postponing an upturn. The Danish referendum raised doubts over the whole EMU project, and the massive flow of speculative hot money against the 'overvalued' pound and Italian lira brought down the whole ERM edifice. Britain and Italy remain outside the ERM, while the participating currencies have settled for the wider 15% fluctuation band. Not one EU state currently fulfills all four EMU criteria. The German public-sector debt in 1995 will excede the EMU convergence target of 60% of GDP because of subsidies to the former East Germany. While Greece is considered a basket case', with a national debt of 114% of GDP, this is exceeded by Heading for a divergent Europe?
Italy (116%) and Belgium (138%).
Throughout Europe, there are now capitalist parties denouncing the EMU plan as a grave threat to national sovereignty. This now includes Germany and France, where the capitalist leaders were previously overwhelmingly advocates of monetary union.
2. The 'social' Europe THE OTHER PROJECT, championed by the French social democrat, Jaques Delors, embraced the 'single market' and EMU, but linked them to plans for a federal Euro-government, which would implement the Social Chapter' and administer regional subsidies to compensate for uneven growth.
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Under the Social Chapter, there would be 'harmonisation upwards'
spreading the most favourable employment conditions and welfare benefits from the economies (Germany, France, Belgium, etc) to the poorer economies (Britain, Spain, etc. When the Maastricht plans were being formulated, big business in Germany, France, etc, favoured equalisation. They did not see why they should be obliged to compete with bosses in other countries who got away with much lower employment costs and social contributions. But in Britain Major and his Euro-sceptic opponents were virulent hostility to the Social Chapter, and Major secured an opt-out so British bosses could pay poverty-level wages and abandon protective legislation.
With the economic downturn in Germany and France, however, the attitude of big business has changed. The bosses are now blaming the crisis on labour rigidities' and demanding 'flexibility: the scrapping of national agreements in favour of plant bargaining; job flexibility, flexible hours, cuts in bonuses, holidays and pensions; and the curbing of health and safety and other protective legislation. The Euro bosses, in other words, are abandoning the 'social market' or 'welfare state' which developed under pressure from the labour movement during the postwar upswing and are now taking the Reagan-Thatcher road: low pay, part-time and casual working, minimum worker protection, minimum employment and welfare benefits. capitalists in Germany, France, Belgium, and also in the prospective member-states once their welfare provision (Sweden, Norway, etc) are now turning to the same crisis-policies adopted by the US and British capitalists during the 1980s. Regardless of the promises embodied in the Maastricht Treaty, Delors' social democratic vision of a united Europe is now being abandoned. In addition to high unemployment (now over of the labour 11% the workers of Europe will be offered low pay, insecurity, and poverty.
Subsidies to the poorer regions, through the "structural funds', will also be increasingly squeezed. At the 1992 Edinburgh summit, it was agreed to raise these regional funds by 35% in Even if achieved, this would still be less than 0.5% of total EU output of goods and German capitalism, moreover, is no longer prepared to provide additional funds for an ambitious The polarisation the rich and poor regions will continue, in parallel with the growing polarisation between the classes in all the EU states.
For a Socialist United States of Europe THE MAASTRICHT TREATY is now "less a monument to European unity than an embarassing white elephant", writes a commentator in The Times (Janet Bush, 5 January 1994). This is not to say that the EU is about to break up. A Europe of autarchic capitalist states would not be viable. Driven by the logic of the market, the European economies will no doubt take further steps towards an integrated single market. But there will also be frequent resort to national protection. The Maastricht plans are in tatters, and no doubt they will be shredded by the time of the EU summit in 1996. Again, this is not to say that there will be no further attempts to refurbish the EMS or to strengthen political co-operation. But capitalism, which can no longer assure growth, prosperity, or democratic rights within the national states, will not be able achieve the harmonious integration of Europe's economy or lasting co-operation on federal lines. Given a further 20 or 30 years of economic upswing, European integration could go further. But in a period of economic depression and growing social crisis, the prospect is for fissure and conflict between the European states - which will eventually erupt in crisis.
The unification of Europe is beyond the historic capabilities of the capitalist class. The task must be taken up by the working class, which, in oppo to the Europe of big business oppressive state machines, must raise the banner of the Socialist United States of Europe. This will be accomplished on the basis of a socialist planned economy and workers' democracy, which will enable society to travel far beyond the cramped allotments of capitalism.
French protests at Euro food policy. Europe • 21
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