International

The Eurozone is coming apart at the seams. Government leaders declare their solidarity with Greece, at the same time paying up once again for the risks banks took, with all the instability this brings. And the bill ? You’ll be getting that this autumn with the new government’s budget review – because it won’t be the banks but ordinary people who will once again be stuck with the costs. Instead of going further down the already failed route of pumping ever more money into the uncompetitive economies of the southern European states, government leaders would have done better to admit that the existing composition of the eurozone isn’t working and that the southern member states must be given the space to consider whether the creation of a second eurozone with a less exacting euro would not be better than an infusion of financial support from Brussels and the neoliberal conditions on which such support will depend.

In Brussels there are federalists and realists. The first group is happy with the idea of a ‘United States of Europe’ with a central government in Brussels. The second group, to which the SP belongs, is in favour of European cooperation where this can bring better, more social results than can be achieved through purely national policy.

The federalists work always by means of a sort of salami tactic : first you abolish border controls between the member states, then you see that criminals have more opportunities in Europe and that justice can no longer be regulated on the national level. With the euro it’s no different : the SP warned what would happen but we weren’t heeded. With the SP as travel guide, we’re in Iceland, and with the others, Eurotopia. While the Icelandic population once again enjoys the gains of strong economic growth as a result of the devaluation of the Kroner, the eurozone’s Finance Ministers pass round the hat for one more rescue operation. This wasn’t recalled when the trip was booked, but anyone could have seen it coming : the southern European economies are simply not strong enough to be able to endure a strong euro.

The advantage of a southern European euro would be that the region’s economies would with one fell blow become more competitive. Of course people in those countries would have to pay more for imported products, but if, just like the Icelanders, they could content themselves with holidays in their own countries and with buying their own local products, this would not only be good for the environment, it would give their economies a powerful boost. The rest can then come from exports and eventually they can try once again to establish a connection with the rest of Europe.

The losers would then be the banks which are holding large amounts of these countries’ bonds. These would be worth a great deal less, inflicting losses. The danger of this would be that it would put a new damper on the economies of the stronger member states. This would, however, be a one-off effect preferable to remaining imprisoned by the bank lobby which will draw the conclusion that the taxpayer continues to be prepared to pick up the bill for their speculative behaviour.

Any such development will be resisted with fire and sword by the federalists. They are using the financial crisis precisely in order to transfer more powers from the member states to Brussels, That’s their right, but they should at least be honest : this is one political choice, and there are other possibilities. Instead of galloping towards a European economic government, the range of possibilities should be properly explained and put before the European peoples. In this sense the coming elections in the Netherlands are once again a sort of referendum : do we want a European economic government, or should we if needs be take a step back and give southern Europe the space to take its own development into its own hands? We in the SP are of course in favour of the latter.