Tag Archives: Brexit

The European Union and the Left

The EU & the Left

Dispatches From The edge

Jan. 10, 2017

 

When European Union President Jean-Claude Juncker addressed the European Parliament in Strasbourg this past September, he told them the organization was facing an “existential crisis” and “national governments so weakened by the forces of populism and paralyzed by the risk of defeat in the next election.”

 

Indeed it has been a bad year for the huge trading group:

  • The “Breixit,” or the United Kingdom’s vote to withdraw.
  • Rome’s referendum to amend the country’s constitution was trounced, and several Italian banks are in deep trouble.
  • The austerity policies of the EU have kept most of its members’ economies either anemic or dead in the water. Even those showing growth, like Ireland and Spain, have yet to return to where they were before the 2008 economic melt down. Between 2007 and 2016, purchasing power fell 8 percent in Spain and 11 percent in Italy,

 

It is also true that number of national governments—in particular those in Germany and France—are looking nervously over their shoulders at parties to their right.

 

But the crisis of the EU does not spring from “populism,” a term that many times obscures more than it reveals, lumping together neo-fascist parties, like France’s National Front and Germany’s Alternative for Germany, with left parties, like Spain’s Podemos. Populism, as Juncker uses it, has a vaguely atavistic odor to it: ignorant peasants with torches and pitchforks storming the citadels of civilization.

 

But the barbarians at the EU’s gate did not just appear out of Europe’s dark forests like the Goths and Vandals of old. They were raised up by the profoundly flawed way that the Union was established in the first place, flaws that did not reveal themselves until an economic crisis took center stage.

 

That the crisis is existential, there is little doubt. In fact, the odds are pretty good that the EU will not be here in its current form a decade from now—and possibly considerably sooner. But Juncker’s solutions include a modest spending program aimed at business, closer military ties among the 28—soon to be 27—members of the organization, and the creation of a “European Solidarity Corps” of young volunteers to help out in cases of disasters, like earthquakes. But there was nothing to address the horrendous unemployment rate among young Europeans. In short, rearranging the Titanic’s deck chairs while the ice looms up to starboard.

 

But what is to be done is not obvious, nor is how one goes about reforming or dismantling an organization that currently produces a third of the world’s wealth. The complexity of the task has entangled Europe’s left in a sharp debate, the outcome of which will go a long way toward determining whether the EU—now a house divided between wealthy countries and debt-ridden ones—can survive.

 

It is not that the European left is strong, but it is the only player with a possible strategy to break the cycle of debt and low growth. The politics of racism, hatred of immigrants, and reactionary nationalism espoused by the National Front, the Alternative For Germany, Greece’s Golden Dawn, Denmark’s People’s Party, and Austria’s Freedom Party, will not generate economic growth, any more than Donald Trump will bring back jobs for U.S. steelworkers and coal miners and “make America great again.”

 

Indeed, if the anti-immigrant Alternative for Germany Party gets its way, that country will be in deep trouble. German deaths currently outnumber births by 200,000 a year, a figure that is accelerating. According to the Berlin Institute for Population and Development, to have a sufficient working-age population that can support a stable pension system, the country will require an influx of 500,000 immigrants a year for the next 35 years.

 

Many other European countries are in the same boat.

 

There are several currents among the European left, ranging from those who call for a full withdrawal, or “Lexit,” to reforms that would democratize the organization.

 

There is certainly a democracy deficit in the EU. The European Parliament has little power, with most key decisions made by the unelected “troika”—the International Monetary Fund (IMF), the European Central Bank, and the European Commission. The troika’s rigid debt policies mean members have lost the ability to manage their own economies or challenge the mantra that debt requires austerity, even though that formula has clearly been a failure.

 

As economists Markus Brunnermeier, Harold James, and Jean-Pierre Landau point out in their book “The Euro and the Battle of Ideas,” growth is impossible when consumers, corporations, and governments all stop spending. The only outcome for that formula is misery and more debt. Even the IMF has begun to question austerity.

 

But would a little more democracy really resolve this problem?

 

Nobel Laureate Joseph Stiglitz, a long-time critic of austerity, argues that while the EU does indeed need to be democratized, a major problem is the common currency. The euro is used by 19 of the EU’s 28 members that constitute the Eurozone.

 

Stiglitz argues that the Euro locked everyone into the German economic model of modest wages coupled with a high power export economy. But one size does not fit all, and when the economic crisis hit in 2008, that became painfully obvious. Those EU members that used a common currency were unable to devalue their currency—a standard economic strategy to deal with debt.

 

There is also no way to transfer wealth within the EU, unlike in the U.S. Powerful economies like California and New York have long paid the bills for states like Louisiana and Mississippi. As Stiglitz points out, “a lack of shared fiscal policy” in the EU made it “impossible to transfer wealth (via tax receipts) from richer states to poorer ones, ensuring growing inequality between the core and the periphery of Europe.”

 

Stiglitz proposes a series of reforms, including economic stimulus, creating a “flexible” euro, and removing the rigid requirement that no country can carry a deficit of more than 3 percent of GDP.

 

Former Greek Finance Minister Yanis Varoufakis, however, argues that the Union “is not suffering from a democratic deficit that can be fixed with a ‘little more democracy’ and a few reforms here and there.” The EU, he says, “was constructed intentionally as a democracy-free zone” to keep people out of decision-making process and to put business and finance in charge.

 

Is the machine so flawed that it ought to be dismantled? That is the opinion of British Pakistani writer and journalist Tariq Ali and King’s College Reader in politics, Stathis Kouvelakis, both whom supported the Brexit and are urging a campaign to hold similar referenda in other EU member countries.

 

But since that that position is already occupied by the xenophobic right, how does the left argue for Lexit without entangling itself with racist neo-Nazis? Varoufakis, a leading member of the left formation, DiEM25, asks whether “such a campaign is consistent with the Left’s fundamental principles” of internationalism?

 

He also argues that a Lexit would destroy the EU’s common environmental policy and the free movement of members, both of which find strong support among young people.

 

Is re-establishing borders and fences really what the left stands for, and wouldn’t re-nationalizing the fossil fuel industry simply turn environmental policies over to the multi-national energy giants? “Under the Lexit banner, in my estimation,” says Varoufakis, “the Left is heading for monumental defeats on both fronts.”

 

DiEM25 proposes a third way to challenge the disastrous policies of the EU, while avoiding a return to borders and “every country for itself” environmental policies. What is needed, according to Varoufakis, is “a pan-European movement of civil and governmental disobedience” to create a “democratic opposition to the way European elites do business at the local, national and EU levels.”

 

The idea is to avoid the kind of trap that Greece’s left party, Syriza, has found itself in: running against austerity only to find itself instituting the very policies it ran against.

 

What DiEM25 is proposing is simply to refuse to institute EU austerity rules, a strategy that will only work if the resistance is EU-wide. When Greece tried to resist the troika, the European Central Bank threatened to destroy the country’s economy, and Syriza folded. But if resistance is widespread enough, that will not be so easy to do. In any case, he says, “the debt-deflationary spiral that drives masses of Europeans into hopelessness and places them under the spell of bigotry” is not acceptable.

 

DiEM25 also calls for a universal basic income, a proposal that is supported by 64 percent of the EU’s members.

 

Portugal’s left has had the most success with trying to roll back the austerity measures that caused widespread misery throughout the country. The center-left Socialist Party formed a coalition with the Left Bloc, and the Communist/Green Alliance put aside their differences, and restored public sector wages and state pensions to pre-crisis levels. The economy only grew 1.2 percent in 2016 (slightly less than the EU as a whole), but it was enough to drop unemployment from 12.6 percent to 10 percent. The deficit has also declined.

 

Spain’s Podemos and Jeremy Corbyn of the British Labour Party have hailed the Portuguese left coalition as a model for an anti-austerity alliance across the continent.

 

Debt is the 800-pound gorilla in the living room. Most of the debt for countries like Spain, Portugal and Ireland was not the result of spendthrift ways. All three countries had positive balances until the real estate bubble pumped up by private speculators and banks burst in 2008, and taxpayers picked up the pieces. The “bailouts” from the troika came with onerous austerity measures attached, and most of the money went straight to the banks that had set off the crisis in the first place.

 

For small or underdeveloped countries, it will be impossible to pay off those debts. When Germany found itself in a similar position after World War II, other countries agreed to cut its debt in half, lower interest rates and spread out payments. The 1952 London Debt Conference led to an industrial boom that turned Germany into the biggest economy in Europe. There is no little irony in the fact that the current Berlin government is insisting on applying economic policies to debt-ridden countries that would have strangled that German post-war recovery had they not been modified.

 

It is possible that the EU cannot be reformed, but it seems early in the process to conclude that. In any case, DiEM25’s proposal to practice union-wide civil disobedience has not really been tried, and it certainly has potential as an organizing tool. It is already being implemented in several “rebel” cities like Barcelona, Naples, Berlin, Bristol, Krakow, Warsaw and Porto, where local mayors and city councils are digging in their heels and fighting back.

 

For that to be successful throughout the EU, however, the left will have to sideline some of the disputes that divide it and reach out to new constituencies. If it does not, the right has a dangerous narrative waiting in the wings.

 

—30—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Spain’s Turmoil and Europe’s Crisis

Spain’s Turmoil & Europe’s Crisis

Dispatches From the Edge

Oct. 7, 2026

 

While the chaos devouring Spain’s Socialist Workers Party (PSOE) mixed elements of farce and tragedy, the issues roiling Spanish politics reflect a general crisis in the European Union (EU) and a sober warning to the continent: Europe’s 500 million people need answers, and the old formulas are not working.

 

On the tragedy side was the implosion of a 137-year old party that at one point claimed the allegiance of half of Spain’s people now reduced to fratricidal infighting. The PSOE’s embattled General Secretary Pedro Sanchez was forced to resign when party grandees and regional leaders organized a coup against his plan to form a united front of the left.

 

The farce was street theater, literally: Veronica Perez, the president of the PSOE’s Federal Committee and a coup supporter, was forced to hold a press conference on a sidewalk in Madrid because Sanchez’s people barred her from the Party’s headquarters.

 

There was no gloating by the Socialists main competitors on the left. Pablo Iglesias, the leader of Podemos, somberly called it “the most important crisis since the end of the civil war in the most important Spanish party in the past century.”

 

That the party coup is a crisis for Spain there is no question, but the issues that prevented the formation of a working government for the past nine months are the same ones Italians, Greeks, Portuguese, Irish—and before they jumped ship, the British—are wresting with: growing economic inequality, high unemployment, stagnant economies, and whole populations abandoned by Europe’s elites.

 

The spark for the PSOE’s meltdown was a move by Sanchez, to break the political logjam convulsing Spanish politics. The current crisis goes back to the Dec. 20 2015 national elections that saw Spain’s two traditional parties—the rightwing People’s Party (PP), led by Prime Minister Mariano Rajoy, and Sanchez’s Socialists—take a beating. The PP lost 63 seats and its majority and the PSOE lost 20 seats. Two new parties, the leftwing Podemos and the rightwing nationalist party Ciudadanos, crashed the party, winning 69 seats and 40 seats, respectively.

 

While the PP took the most seats, it was not enough for a majority in the 350-seat legislature, which requires 176. In theory, the PSOE could have cobbled together a government with Podemos, Catalans and independents, but the issue of Catalonian independence got in the way.

 

The Catalans demand the right to hold a referendum on independence, something the PP, the Socialists and Ciudadanos bitterly oppose. While Podemos is also opposed to Spain’s richest province breaking free of the country, it supports the right of the Catalans to vote on the issue. Catalonia was conquered in 1715 during the War of the Spanish Succession, and Madrid has oppressed the Catalans’ language and culture ever since.

 

The Catalan issue is an important one for Spain, but the PSOE could have shelved its opposition to a referendum and made common cause with Podemos, the Catalans and the independents. Instead, Sanchez formed a pact with Ciudadanos and asked Podemos to join the alliance.

 

For Podemos, that would have been a poison pill. A major reason why Podemos is the number one party in Catalonia is because it supports the right of Catalans to hold a referendum. If it had joined with the Socialists and Ciudadanos it would have alienated a significant part of its base.

 

It is possible that’s what Sanchez’s had in mind, reasoning that Podemos’ refusal to join with the Socialists and Ciudadanos would hurt it with voters. Sanchez gambled that another election would see the Socialists expand at the expense of Podemos and give it enough seats to form a government.

 

That was a serious misjudgment. The June 26 election saw PSOE lose five more seats and turn in its worst ever performance. Ciudadanos also lost seats. While Podemos lost votes—at least 1 million—it retained the same number of deputies. The only winner was the Popular Party, which poached eight seats from Ciudadanos for an increase of 14. However, once again no party won enough seats to form a government.

 

The current crisis is the fallout from the June election. Rajoy, claiming the PP had “won” the election, formed an alliance with Ciudadanos and asked the PSOE to either support him or abstain from voting and allow him to form a minority government. Sanchez refused, convinced that allowing Rajoy to form a government would be a boon to Podemos and the end of the Socialists.

 

There is a good deal of precedent for that conclusion. The Greek Socialist Party formed a grand coalition with the right and was subsequently decimated by the leftwing Syriza Party. The German Social Democratic Party’s alliance with the conservative Christian Democratic Union has seen the once mighty organization slip below 20 percent in the polls. England’s Liberal Democratic Party was destroyed by its alliance with the Conservatives.

 

The ostensible reason Sanchez was forced out was that he led the Socialists to two straight defeats in national elections and oversaw the beating the PSOE took in recent local elections in the Basque region and Galicia. But the decline of the Socialists predated Sanchez. The party has been bleeding supporters for over a decade, a process that accelerated after it abandoned its social and economic programs in 2010 and oversaw a mean-spirited austerity regime.

 

The PSOE has long been riven with political and regional rivalries. Those divisions surfaced when Sanchez finally decided to try an alliance with Podemos, the Catalans and independents, which suggests he was willing to reconsider his opposition to a Catalan referendum. That’s when Susana Diaz, the Socialist leader in Spain’s most populous province, Andalusia, pulled the trigger on the coup. Six out of seven PSOE regional leaders backed her. Diaz will likely take the post of General Secretary after the PSOE’s convention in several weeks.

 

The Andalusian leader has already indicated she will let Rajoy form a minority government. “First we need to give Spain a government,” she said, “and then open a deep debate in the PSOE.” Sanchez was never very popular—dismissed as a good looking lightweight—but the faction that ousted him may find that rank and file Socialists are not overly happy with a coup that helped usher in a rightwing government. This crisis is far from over.

 

In the short run the Popular Party is the winner, but Rajoy’s ruling margin will be paper-thin. Most commentators think that Podemos will emerge as the main left opposition. While the Socialists did poorly in Galicia and the Basque regions, Podemos did quite well, an outcome that indicates that talk of its “decline” after last June’s election is premature. In contrast, Ciudadanos drew a blank in the regional voting, suggesting that the party is losing its national profile and heading back to being a regional Catalan party.

 

Hanging over this is the puzzle of what went wrong for the left in the June election, particularly given that the polls indicated a generally favorable outcome for them? It is an important question because while Rajoy may get his government, there are few willing to bet it will last very long.

 

Part of the outcome was its dreadful timing: two days after the English and the Welsh voted to pull the United Kingdom out of the European Union. The “Brexit” was a shock to all of Europe and hit Spain particularly hard. The country’ stock market lost some $70 billion, losses that fed the scare campaign the PP and the PSOE were running against Podemos.

 

Even though Podemos supports EU membership, the right and the center warned that, if the leftwing party won the election, it would accelerate the breakup of Europe and encourage the Catalans to push for independence. The Brexit pushed fear to the top of the agenda, and when people are afraid they tend to vote for stability.

 

But some of the lost votes came because Podemos confused some of its own supporters by moderating its platform. At one point Iglesias even said that Podemos was “neither right nor left.” The Party abandoned its call for a universal basic income, replacing it with a plan for a minimum wage, no different than the Socialist Party’s program. And dropping the universal basic income demand alienated some of the anti-austerity forces that still make up the shock troops in ongoing fights over poverty and housing in cities like Madrid and Barcelona.

 

Podemos was also hurt by Spain’s undemocratic electoral geography, where rural votes count more than urban ones. It takes 125,000 votes to elect a representative in Madrid, 38,000 in some rural areas. The PP and the PSOE are strong in the countyside, while Podemos is strong in the cities.

 

Podemos had formed a pre-election alliance—“United We Can”—with Spain’s Unite Left (UL), an established party of left groups that includes the Communist Party, but made little effort to mobilize it. Indeed, Iglesias disparaged IU members as “sad, boring and bitter” and “defeatists whose pessimism is infectious,” language that did not endear IU’s rank and file to Podemos. Figures show that Podemos did poorly in areas where the IU was strong.

The Galicia and Basque elections indicate that Podemos is still a national force. The Party will likely pick up PSOE’s members who cannot tolerate the idea that their party would allow the likes of Rajoy to form a government. Podemos will also need to shore up its alliance with the IU and curb its language about old leftists (which young leftists tend to eventually become).

 

The path for the Socialists is less certain.

 

If the PSOE is not to become a footnote in Spain’s history, it will have to suppress its hostility to Podemos and recognize that two party domination of the country is in the past. The Socialists will also have to swallow their resistance to a Catalan referendum, if for no other reason than it will be impossible to block it in the long run. Catalan leader Carles Puigdemont recently announced an independence plebiscite would be held no later than September 2017 regardless of what Madrid wants.

 

The right in Spain may have a government, but it is not one supported by the majority of the country’s people. Nor will its programs address Spain’s unemployment rate—at 20 percent the second highest in Europe behind Greece—or the country’s crisis in health care, education and housing.

 

For the left, unity would seem to be the central goal, similar to Portugal, where the Portuguese Socialist Workers Party formed a united front with the Left Bloc and the Communist/Green Alliance. While the united front has its divisions, the parties put them aside in the interests of rolling back some of the austerity policies that have made Portugal the home of Europe’s greatest level of economic inequality.

 

The importance of the European left finding common ground is underscored by the rising power of the extreme right in countries like France, Austria, England, Poland, Greece, Hungry, Denmark, Sweden, Finland and Germany. The economic and social crises generated by almost a decade of austerity and growing inequality needs programmatic solutions that only the left has the imagination to construct.

 

One immediate initiative would be to join Syriza’s and Podemos’ call for a European debt conference modeled on the 1953 London Conference that canceled much of Germany’s wartime debt and ignited the German economy.

 

But the left needs to hurry lest xenophobia, racism, hate and repression, the four horsemen of the right’s apocalypse, engulf Europe.

 

—30—

 

Conn Hallinan can be read at dispatchesfromtheedgeblog.wordpress.com and middleempireseries.wordpress.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Brexit and Spain: Europe On The Edge

The Brexit & Spain: Europe On The Edge?

Dispatches From The Edge

July 5, 2016

 

On the surface, the June 23 Brexit and the June 26 Spanish elections don’t look comparable. After a nasty campaign filled with racism and Islamophobia, the British—or rather, the English and the Welsh—took a leap into darkness and voted to leave the European Union (EU). Spanish voters, on the other hand, rejected change and backed a rightwing party that embodies the policies of the Brussels-based trade organization.

 

But deep down the fault lines in both countries converge.

 

For the first time since Margaret Thatcher and Ronald Reagan rolled out a variety of free market capitalism and globalization that captured much of the world in the 1980s, that model is under siege. The economic strategy of regressive taxes, widespread privatization and deregulation has generated enormous wealth for the few, but growing impoverishment for the many. The top 1 percent now owns more than 50 percent of the world’s wealth.

 

The British election may have focused on immigration and the fear of “the other”—Turks, Syrians, Greeks, Poles, etc—but this xenophobia stems from the anger and despair of people who have been marginalized or left behind by the globalization of the labor force that has systematically hollowed out small communities and destroyed decent paying jobs and benefits.

 

“Great Britain’s citizens haven’t been losing control of their fate to the EU,” wrote Richard Eskow of the Campaign for America’s Future, “They’ve have been losing it because their own country’s leaders—as well as those of most Western democracies—are increasingly in thrall to corporate and financial interests.”

 

While most of the mainstream media reported the Spanish election as a “victory” for acting Prime Minister Mariano Rajoy’s Popular Party (PP) and defeat for the left, it was more a reshuffle than a major turn to the right, and, if Rajoy manages to cobble together a government, it is likely to be fragile and short lived.

 

It was a dark night for pollsters in both countries. British polls predicted a narrow defeat for the Brexit, and Spanish polls projected a major breakthrough for Spain’s left, in particular Unidos Podemos (UP), a new alliance between Podemos and the Communist/Green party, Izquierda Unida.

 

Instead, the Brexit passed easily and the UP lost 1 million votes from the last election, ending up with the same number of seats they had in the old parliament. In contrast, the Popular Party added 14 seats, although it fell well short of a majority.

 

A major reason for the Spanish outcome was the Brexit, which roiled markets all over the world, but had a particularly dramatic effect on Spain. The Ibex share index plunged more than 12 percent and blue-chip stocks took a pounding, losing about $70 billion dollars. It was, according to Spain’s largest business newspaper, “The worst session ever.” Rajoy—as well as the Socialist Party (SP)—flooded the media with scare talk about stability, and it partly worked.

 

The Popular Party poached eight of its 14 new seats from the center-right Ciudadanos Party and probably convinced some UP voters to shift to the mainstream SP.

 

But Rajoy’s claim that “We won the election. We demand the right to govern” is a reach. The PP has 137 seats, and it needs 176 seats to reach a majority in the 350-seat parliament. The Prime Minister says he plans to join with Ciudadanos, but because the latter lost seats in the election such an alliance would put the PP seven votes short. An offer for a “grand alliance” with the SP doesn’t seem to be going anywhere. “We are not going to support Rajoy’s investiture or abstain,” said Socialist Party spokesman Antonio Hernando. An abstention would allow the PP to form a government.

 

Which doesn’t mean Rajoy can’t form a government. There are some independent deputies from the Basque country and the Canary Islands who might put Rajoy over the top, but it would be the first coalition government in Spain and a fragile one at that.

 

Part of that fragility is a scandal over an email between Rajoy and Jean-Claude Juncker, head of the European Commission, that was leaked to the media. The Commission is part of the “troika” with the International Monetary Fund and the European Central Bank that largely decides economic policy in the EU.

 

During the election Rajoy promised to cut taxes and moderate the troika-imposed austerity measures that have driven Spain’s national unemployment rate to 22 percent, and a catastrophic 45 percent among young people. But in a confidential email to Juncker, the Prime Minister pledged that, “In the second half of 2016, once there is a new government, we will be ready to take further measures to meet deficit goals.”

 

In short, Rajoy lied to the voters. If the PP had won an absolute majority that might not be a problem, but a coalition government is another matter. Would Ciudadanos and the independents be willing to associate themselves with such deceit and take the risk that the electorate would not punish them, given that such a government is not likely to last four years?

 

Unidos Podemos supporters were deeply disappointed in the outcome, although the UP took the bulk of the youth vote and triumphed in Catalonia, Spain’s wealthiest province, and the Basque country. What impact UP’s poor showing will have on divisions within the alliance is not clear, but predictions of the organization’s demise are premature. “We represent the future,” party leader Pablo Iglesia said after the vote.

 

There is a possible path to power for the left, although it leads through the Socialist Party. The SP dropped from 90 seats to 85 for its worst showing in history, but if it joins with the UP it would control 156 seats. If such a coalition includes the Catalans that would bring it to 173 seats, and the alliance could probably pick up some independents to make a majority. This is exactly what the left, agreeing to shelve their differences for the time being, did in Portugal after the last election.

 

The problem is that the SP refuses to break bread with the Catalans because separatists dominate the province’s delegation and the Socialist Party opposes letting Catalonia hold a referendum on independence. Podemos also opposes Catalan separatism, but it supports the right of the Catalans to vote on the issue.

 

Rajoy may construct a government, but it will be one that supports the dead-end austerity policies that have encumbered most of the EU’s members with low or flat growth rates, high unemployment and widening economic inequality. Support for the EU is at an all time low, even in the organization’s core members, France and Germany.

 

The crisis generated by the free market model is hardly restricted to Europe. Much of Donald Trump’s support comes from the same disaffected cohort that drove the Brexit, and, while “The Donald” is down in the polls, so were the Brexit and the Spanish Popular Party.

 

The next few years will be filled with opportunity, as well as danger. Anti-austerity forces in Spain, Italy, Greece, Portugal and Ireland are organizing and beginning to coordinate resistance to the “troika”. But so, too, are parties on the right: France’s National Front, Hungary’s Jobbik, Greece’s Golden Dawn, Britain’s United Kingdom Independence Party, Austria’s Freedom Party, Denmark’s People’s Party and Sweden’s Democratic Party.

 

Instead of reconsidering the policies that have spread so much misery through the continent, European elites were quick to blame “stupid” and “racist” voters for the Brexit. “We are witnessing the implosion of the postwar cultural and economic order that has dominated the Euro-American zone for more than six decades,” writes Andrew O’Helir of Salon. “Closing our eyes and hoping that it will go away is not likely to be successful.”

 

A majority of Britain said “enough,” and while the Spanish right scared voters into backing away from a major course change, those voters will soon discover that what is in store for them is yet more austerity.

 

“We need to end austerity to end this disaffection and this existential crisis of the European project,” said a UP statement following the election. “We need to democratize decision making, guarantee social rights and respect human rights.”

 

The European Union is now officially a house divided. It is not clear how long it can endure.”

 

—30

 

 

 

 

 

 

 

 

 

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The Brexit: A Very British Affair

Brexit Vote: A Very British Affair

Dispatches From The edge

June 24, 2016

 

In the end, the Brexit—the vote on whether the United Kingdom should remain in the European Union (EU) or be the first in the 29-member trade group to bail out—was a close fought matter, but for all the sturm und drang about a pivotal moment for the EU, the June 23 referendum that saw the Brexit pass was a very British affair.

 

While the European Union is clearly in a crisis—countries weighed down with unpayable debt, economies virtually dead in the water, double digit unemployment, and a rising chorus of opposition to the austerity policies of the EU authorities in Brussels—those were not the issues that brought the British people to the polls.

 

Indeed, the whole affair started as an entirely homegrown matter, an internal split in the ruling Conservative Party. Back in 2013, Conservative Prime Minister David Cameron cut a deal with the euro skeptic part of his party that if they would close ranks until after the 2015 general election, he would hold a referendum on the EU.

 

At the time, Cameron was also looking over his shoulder at the rise of the extreme right wing, racist United Kingdom Independence Party (UKIP), which had begun using anti-immigrant issues to poach Conservatives. It is likely that Cameron never really intended to follow through on the 2013 pledge, but once he let slip the dogs of war he had little control over the havoc that followed.

 

When the Conservatives defeated the Labour Party last year, the “out” faction demanded their due, and what emerged was a deeply disturbing campaign that focused on race, religion and “sovereignty,” the latter a code-word for a particularly nasty brand of nationalism that is on the rise all over Europe.

 

Brexiters conjured up hordes of Turks pouring into Britain, even though Turkey is not a EU member—or likely to become one. In any case, the UK is not part of the Schengen countries, those members of the EU that allow visa less travel.

 

“Vote Leave” ran posters depicting crowds of Syrians and endless ads on Turkish birthrates. “None of this needs decoding,” wrote Philip Stephens of the Financial Times, “The dog whistle has made way for the Klaxon. EU membership talks with Turkey, we are to understand, will soon see Britain overrun by millions of (Muslim) Turks—most of them thugs or welfare scroungers.”

 

Last year Britain did process some 330,000 immigrants, but the overwhelming majority of them hailed from Spain, Poland, the Baltic countries, and Greece. The UK has accepted very few Syrian refugees and Turks, certainly not enough to “overrun” the place.

 

The openly racist and xenophobic character of the “Leave” campaign put the UK left in a difficult spot. While the left, including the Labour Party, has profound differences with current policies and structures of the EU, these are not over immigration and religion. How to express those critiques without bedding down with the likes of UKIP or the euro skeptic Conservatives was a tricky business.

 

Labour Party head Jeremy Corbyn chose to endorse the “remain” campaign, but also to point out that the EU is an undemocratic organization whose financial policies have spread poverty and unemployment throughout the continent. However, because the trade groups have a progressive stance on climate change, equal pay, work hours, vacations, and maternity leave, Corbyn argued—if somewhat tepidly—that all in all, it was best to stay in and try to reform the organization.

 

Part of the “leave” vote sprang from one of Britain’s most pernicious ideologies—nostalgia. Run through a few verses of “Rule Britannia” and a considerable portion of older Britains go misty eyed with the mythology of Trafalgar, Waterloo, and Omdurman. Polls indicate that support for the EU among people over 60 was just 33 percent. It was only 10 percent more among Conservative Party members of all ages.

 

In contrast, young Britains, Labour Party members, the Scots and Northern Irish supported remaining, though in the end they were not enough. The fallout? There will almost certainly be another referendum for Scottish independence. Will Northern Ireland do the same?

 

Is this the beginning of end for the EU? It is hard to imagine how the organization can continue as it is since the second largest economy in the trade group has debarked. But the European Union’s troubles have only just begun, and a far more important measure of the future of the organization will come when Spanish voters go to the polls June 26.

 

In that election the austerity policies of the “troika”—the European Central Bank, the International Monetary Fund, and the European Commission—will be directly confronted by a spanking new left formation, Unidos Podemos (United We Can). UP comes out of an alliance of Izquierda Unida (United Left) and Podemos. It is currently running number #2 in the polls and nipping at the heels of the ruling rightwing Popular Party.

 

The UP calls for rolling back the austerity policies of the troika, a public works program to create 300,000 jobs, and economic stimulation to tackle Spain’s horrendous unemployment problem. Joblessness is over 22 percent nationwide and 48.5 percent among young Spaniards.

 

A recent manifesto by more than 200 leading Spanish economists charges that the austerity policies of the EU have created an “economic crisis” that “has had devastating consequences for our country, as well as the euro zone as a whole” and “unnecessarily prolonged the recession across the continent and generated deep social fractures by increasing economic and social inequalities.”

 

The euro zone is the 19 members of the EU that use the common currency, the euro.

 

UP plans to link up with similar minded forces in Greece, Portugal, Italy and Ireland to demand that Brussels adopt fiscal stimulation as a strategy against the economic malaise plaguing most of the EU.

 

United Left leader and Communist Alberto Garzon, probably the most popular politician in the country, says “Brussels has to understand that if they continue to apply austerity politics in Spain our social emergency will get worse, which only helps the rise of fascism—as we have already seen in Austria and other EU countries.”

 

The Brexit vote was a British affair (and promises to be a messy one). The Spanish election is a continental affair that will have reverberations worldwide.

 

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The EU: A House Divided

European Union: A House Divided

Dispatches From The Edge

May 16, 2016

 

“Larger now than the Roman Empire of two thousand years ago, more opaque than the Byzantine, the European Union continues to baffle observers and participants alike.”

Perry Anderson

British historian

 

The European Union is one of the premier trade organizations on the planet, with a collective GDP that matches the world’s largest economies. But it is far more than a trade group. It is also a banker, a judicial system, a watchdog, a military alliance, and, increasingly, an enforcer of economic rules among its 28 members.

 

On the one hand it functions like a super state, on the other, a collection of squabbling competitors, with deep divisions between north and south. On June 23, the two-decade-old organization will be put to the test when Great Britain—its second largest economy—votes to stay in the EU or bail out.

 

The awkwardly named “Brexit” has stirred up a witches’ brew of xenophobia, racism and nationalism, but it has also served to sharpen a long standing debate among the European left over the nature of the organization, and whether it serves to unite a continent shattered by two world wars or functions as little more than a vehicle to spread a particular species of capitalism that has impoverished more people than it has lifted up.

 

The EU was originally sold as an effective way to compete with U.S. and Japanese commercial power (and later China) by integrating the economies of Western Europe into a common market. The 1957 Treaty of Rome established the European Economic Community (EEC), but that organization was plagued by currency instability.

 

Currency manipulation is a standard economic strategy, one the U.S. Treasury follows to this day. The idea is to boost exports by deflating one’s currency, thus making one’s products cheaper. In an organization like the EEC, however, where currencies were traded back and forth, that strategy caused chaos, particularly after the Americans decoupled the dollar from gold in 1971. The U.S. immediately began aggressively devaluing its currency and undercutting Germany.

 

To make a long history brief, Germany and France began pushing for a common currency, though for different reasons.

 

For Germany, fluctuating currency rates cut into that country’s export engine. For France, a common currency would give Paris some say over the EEC’s economic policies through the creation of a European Central Bank, policies that at the time were largely determined by Germany’s powerful economy.

 

Although Britain opted out of adopting the Euro, London rapidly became the financial center of the continent. In the end, 19 countries would adopt the Euro, creating the Eurozone. Eight others, including Denmark, Sweden and Poland kept their own currencies.

 

The common currency—established by the 1991 Maastricht Treaty and launched in 1999—effectively put the German Bundesbank in charge. Bonn agreed to the common currency, but only on the condition that everyone kept their budget deficits to 3 percent of national income and held their government debt level at 60 percent of GDP. Those figures matched Germany’s economy, but very few of the other states in the EU.

 

The Maastricht Treaty also transformed the EEC into the EU in 1993.

 

Deflating one’s currency as a tactic to increase exports and stimulate growth during a downturn was no longer an option, and the debt ratio was set so low that few economies could keep to its strictures. When the bottom fell out during the 2008 economic meltdown, EU states found out just what they had signed on for: draconian austerity measures, the widespread privatization of state owned enterprises—from water and electrical systems, to airports and harbors—and emigration. Millions of mainly young Portuguese, Irish, Greeks and Spaniards fled abroad.

 

The European Central Bank—with its cohorts, the International Monetary Fund and the European Commission, the so-called Troika—straitjacketed economies throughout the continent, turning countries like Greece, Spain, Portugal, and Ireland into basket cases, forcing them to borrow money to keep their banks afloat while instituting austerity regimes that led to massive unemployment, huge service cutbacks, and rising poverty rates.

 

The Troika had a neat trick: it shifted the debts incurred by private speculators on to the public, while the Germans spun up a fairy tale to explain the counter-example: the frugal frau.

 

“The Swabian housewife,” lectured German Chancellor Angela Merkel, “would have told us her worldly wisdom: In the long run you cannot live beyond your means.”

 

Except that the debts were not due to the Greeks, Irish, Spaniards, and Portuguese “living beyond their means.” They were just picking up the tab run up by the speculators. The vast majority of “bailouts” that followed the crash went directly into the vaults of French, British, German, and Austrian banks. On the day the Greek “bailout” was announced, French bank shares rose 24 percent.

 

In many ways, the EU resembles a military alliance on the march. Jan Zielonka, a professor of European politics at Oxford, calls the EU a “postmodern empire,” filling the vacuum created by the fall of the Soviet Union, using “checkbooks rather than swords as leverage.” During the Clinton administration, the EU—along with NATO—pushed eastward, creating what Zbigniew Brzezinski called “the Eurasian bridgehead for American power and the potential springboard for the democratic system’s expansion into Eurasia.”

 

The Obama administration strongly supports the UK remaining in the EU.

 

But the EU has very little to do with “democracy,” as the recent Greek crisis demonstrated. In a confrontation between the then newly elected Greek Finance Minister Yanis Varoufakis and German Finance Minister Wolfgang Schauble, the latter refused to negotiate over the austerity program that had cratered Greece’s economy. “I’m not discussing the program,” said Schauble, “This was accepted by the previous [Greek] government and we can’t possibly let an election change anything.”

 

In short, the Troika—an unelected body—makes all economic decisions and is unwilling to consider any other approach but that of the mythical Swabian housewife. It isn’t democracy moving east, but the Bundesbank, and a species of capitalism that is unmoved by unemployment, poverty and widespread misery

 

So is the Brexit a challenge to the growing might of capital and an implicit critique of the EU’s dearth of democracy? Nothing’s that simple.

 

First, the loudest critics of the EU are people one needs a very long spoon to sup with: Marine Le Pen’s racist National Front, Britain’s xenophobic United Kingdom Independence Party, Hungary’s thuggish Jobbik, Greece’s openly Nazi Golden Dawn, and Italy’s odious Northern League. Hatred of immigrants and Islamophobia are the glue that binds these parties, which are active and growing throughout the EU.

 

Indeed, some on the British left have suggested voting against a Brexit precisely because the most vocal opposition to the EU comes from the most reactionary elements in the UK. The British Conservative Party is deeply split on the issue, with its most rightwing and anti-immigrant members favoring getting out.

 

The left is also filled with crosscurrents. While some argue for getting out because they see the EU as an undemocratic vehicle for the expansion of international capital, others are critical, but advocate staying in. British Labour Party leader Jeremy Corbyn—hardly a friend to international capital— opposes the Brexit.

 

While Corbyn is deeply critical of the EU’s lack of “democratic accountability, “ and its push to “privatize public services,” he argues that there is a “strong socialist case” for staying in. Corbyn says the EU plays a positive role on climate change, and that exiting the EU would initiate a race to the bottom on issues like equal pay, work hours, vacations and maternity leave. The Scottish National Party, which is to the left of the Labour Party, also opposes a Brexit, and threatens to call for another independence referendum if it passes.

 

Left parties in Greece, Italy, Spain, Portugal, and Ireland are critical of the EU, but most do not advocate withdrawing. What they are demanding is a say over their economic decisions and relief from the rigid rules that favor economies like Germany, and bar many others from ever becoming debt free.

 

It is ironic that Germany—the country that refuses to even consider retiring some of the overwhelming debts that enchain countries like Greece—owes its current wealth to the 1951 London Conference that cut post-war Germany’s debt in half, lowered interest rates, and stretched out debt payments. The result was the “Wirtschaftwunder” [economic miracle] and the creation of an industrial juggernaut. Greece’s Syriza Party has long called for such a conference to deal with the EU countries mired in debt.

 

There is no secret why Germany, France and the European Banks oppose debt reduction, or “haircuts”: Between the three of them they hold almost $84 billion of Greece’s debt

 

The polls show the British electorate could go either way on a Brexit. What happens if they do leave is hardly clear, because it would be a first. The predictions range from doom and gloom to sunny days, and everything in between, although it is doubtful the EU would severely punish Europe’s second largest economy.

 

One model the left needs to look at in this battle is Portugal, where three left parties, who have long fought with each other, found common ground around reversing the austerity policies that have racked the country’s economy for four years. Portugal just recently received a barely favorable bond rating that gives the coalition government some breathing room. The economy is growing and unemployment down, but at 129 percent of GDP, Portugal’s debt burden is still the third highest in Europe.

 

Alone, Portugal is no match for power of the Troika, but Lisbon has allies in Spain, Greece, Ireland and increasingly, Italy. Support for the EU in Italy has gone from 73 percent in 2010 to 40 percent today. “Europe has taken the wrong road,” says Italian Prime Minister Matteo Renzi. “Austerity alone is not enough.”

 

Given the absence of a strong, continent-wide left, however, reversing the current economic rules of the EU may be a country-by-country battle.

 

It is already underway, and for all of the economic power of the EU, the organization is vulnerable to charges that Brussels has sidelined democracy.

 

If Brussels—read Germany—can be persuaded or forced to agree to debt reductions, to loosen the spending restrictions and start pump priming, Europe can do something about its horrendous unemployment rate and underperforming economies. If not, whether the British leave or not may be irrelevant: a house divided cannot stand for long.

 

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