On 6 January, the elected but obscure European Parliament intervened into the discussions on the new treaty under discussion after the 9 December euro-summit to ask that it include a “roadmap” towards introducing the Parliament's favoured policy of eurobonds.
Eurobonds would be a mechanism for eurozone states to borrow, in euros, with a guarantee of creditworthiness based on the whole EU's resources.
The Parliament’s initiative was a proof that if there were even a quarter-democratic political system uniting the whole of Europe, the current course of trying to work through the economic crisis by imposing harsher and harsher cuts on the continent's poorer people could not happen.
Many years back, the Indian economist Amartya Sen wrote: “Famines are easy to prevent if there is a serious effort to do so, and a democratic government, facing elections and criticisms from opposition parties and independent newspapers, cannot help but make such an effort. Not surprisingly, while India continued to have famines under British rule right up to independence... they disappeared suddenly with the establishment of a multiparty democracy...”
Europe's cuts today are not at famine levels. But the same principle holds.
A democratic government of a federal united Europe, facing an informed Europe-wide public opinion, could not get away with the idea that the answer to the credit crisis is to squeeze the poorer people of Greece, Portugal, Spain, Ireland, and Italy harder and harder.
The European Parliament has no say in this crisis. The dominant powers of the EU will not agree to eurobonds.
Eurobonds would allow countries to escape the vicious circle which they currently face in the financial markets, where they have to pay high interest rates, and run some risk of eventually not being able to borrow at any price, because financiers fear that they may not repay; and they run a risk of not being able to repay because it is difficult and expensive for them to borrow fresh funds. They are not a cure-all, if only because if by some shift the dominant powers do come to agree to them, that will be only if linked to harsher cuts; but the Parliament’s proposal is an indication that even a quarter-democratic discussion of the crisis is compelled to come up with answers different from those being imposed now.
The dominant powers of the EU are going for years of 1930s-style depression for the worst-off countries, and maybe for the better-off ones too, and the blighting of millions of lives, on the assumption that eventually all the cuts in social overhead costs will persuade profiteers to launch into large productive investments again and revive economic life.
The priority, as Angela Merkel put it in December, is to “show [footloose global capital] that Europe is a safe place to invest”.
Both troubled European governments and European banks need to borrow vast amounts of money in 2012 to cover repayments due on previous borrowing.
There is a serious risk that one or another eurozone state will become unable to borrow enough at any price, and thus unable to meet its promised repayments. That could crash the eurozone and bring down major banks.
Economically, it will be like the Lehman Brothers collapse of 2008, only on a bigger scale. Politically, it is unlikely to destroy the European Union, but it will set back and obstruct the whole process of reducing the barriers between countries in Europe, a process which the labour movement should value and defend even while we oppose the current policies, structures, and methods of the EU.
Socialists should work for unity of the labour movement across Europe, around a common programme of making the bankers and bosses pay for their crisis and of a united democratic Europe.