Can Europe Make It?

If we abandon the ideal of European unity, the only winner will be neoliberalism

The Eurozone is witnessing the playing out of the contradictions inherent in its structure. This leaves the left with the question: is it time to walk away?

Luke Cooper
22 July 2015
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Demonstrators in Germany for solidarity with Greece. Uwe Hiksch/Flickr. Some rights reserved.Has the British left suddenly discovered that the EU supports neoliberalism? You would think so given the reaction of many to recent Greek events. Owen Jones is only the most high profile of several leftist commentators to have jumped to the conclusion that the Troika’s treatment of Greece necessitates the formation of a ‘left campaign’ for a British exit in the forthcoming referendum. True enough, the Troika’s shameful imposition of the latest austerity programme on the Greek people marks a new situation in Europe in several important respects. Unlike the governments that oversaw the previous bailouts in 2010 and 2012, Syriza genuinely did not want to accept the proposal, even recognising its own agreement as a ‘bad day for Europe’.

That’s why, if it is pushed through, the latest bailout represents an especially steep defeat for the radical left in Europe. As much as it is a victory for the EU elite, it is only an extreme version of a neoliberal policy that has been long adhered to by the EU and other global institutions. Austerity was written into the very architecture of the Eurozone via its Growth and Stability Pact. This, coupled with a refusal to put in place mechanisms to redistribute tax receipts from more to less competitive states, has created a scenario of permanent, debt-induced austerity for the peripheral economies.

The Eurozone is witnessing the playing out of the contradictions inherent in this flawed structure and this poses strategic questions for the left. With even the most ardent supporters of the ‘European project’ now fearing for the EU’s future, should the left argue that it is, perhaps, time to walk away?  

Age old problems of Europe

Those who think we should abandon Europe are misdiagnosing the root causes of its current plight. It might be tempting to put austerity down to the EU being a supranational structure and assume an alternative economic model is only possible once states break free of this international association. What this ignores, however, is how the current structure of the EU and its brutal imposition of austerity on the less competitive states of its periphery, reflects its failure to go beyond nation-states, not its success in doing so.

Many have rightly pointed out that both the Eurozone and the EU are run entirely undemocratically. Yanis Varoufakis, in his fascinating insiders’ account of the Eurogroup meetings, argues that meetings resemble a ‘well tuned orchestra’ with the German finance minister its ‘director’. This political dominance, in part, reflects Germany’s position as an economic powerhouse. Eurozone membership represented a huge boon for the continent’s most competitive export-orientated economy, devaluing its exports globally while the largesse of its banks’ lending boosted demand for them in the EU.

As a result, the Eurozone has resembled a zero-sum game: when one side wins the other has to lose. Its structure has systematically given the advantage to the more competitive northern European economies at the expense of the rest who, lacking their own currencies, cannot devalue in order to boost their competitiveness. A single currency area can be successful only if political institutions are put in place to overcome these problems of economic unevenness typical of capitalist development.

The stark differences in wealth between Washington D.C. and the Mississippi are managed by the American state due to the existence of fiscal mechanisms capable of recycling tax receipts. No such structures exist in Europe, however, precisely because the continent’s international relations remain ‘anarchic’, i.e. riven with national rivalries. Whereas Americans elect the different levels of government in its federal system, Greeks are at the mercy of decisions made in Berlin that they have no control over. In other words, the terrible imposition of austerity on the people of Greece has not occurred due to the post-national actions of an overarching super-state, but resembles the troublingly familiar features of nationalism and imperialism present in the modern history of Europe.  

Blaming the EU for the continent’s ills is attractive because it shifts attention away from national politics, focusing anger on a seemingly far away and ‘alien’ set of institutions. In truth, however, the problems lie much closer to home. Northern European electorates have been duped into believing that the peripheral economies of the Eurozone are the beneficiaries of taxpayer funded bailouts, and not the private sector creditors whose irresponsible lending fuelled the crisis.

In most European countries, the political right has been the main beneficiary of the post-2008 crisis. The result is a breakdown of solidarity and the growth of nationalist resentment. In Germany, one recent poll showed only 13 per cent of people believed the conditions attached to the latest Greek bailout were too harsh, and 44 per cent opposed providing any support.  

The bottom line is that nationalism – expressed in only its most extreme form by the rise of the far right – is on the ascent in Europe and the left must stand against it.

European New Deal

As the world became more economically integrated at the end of the twentieth century many commentators and academics mistakenly concluded that nation-states and nationalism were becoming a thing of the past. Even those who resisted this argument often accepted the underlying assumption that where nation-states were stronger markets were weaker – and vice versa. This great illusion continues to cloud left wing judgements on the causes and solutions to the world’s problems. Far from representing a challenge to neoliberal capitalism, nationalism remains the unstated assumption of all governments’ economic thinking: ‘how do we make “our” economy more successful, how do we maximise “our” returns at the expense of competitors?’

It is a collectively held set of convictions that has plagued the Eurozone and puts the entire future of the EU as a project of ‘ever closer union’ in doubt. For the radical left, whose development and popularity is inevitably unevenly spread across Europe, there are no easy catchall solutions in this context. As the Eurozone has failed to reform, Syriza has been left with no choice but to leave or become a de facto debt colony of Germany – with the former, however hazardous, clearly preferable to the latter.

Nonetheless, both Syriza and Podemos have been right to reject the idea that neoliberalism could be fully overcome by retreating into national borders and to adopt the more radical stance of fighting for the social and democratic transformation of Europe. In Britain, the campaign for an exit from the EU will be dominated by anti-immigrant, nationalist sentiment, and this will also be reflected in the inevitable outcome of a no vote: a country even more hostile to migrants, but just as open to capital as before. Indeed, with nationalism and neoliberalism so closely bound together it is no surprise that British supporters of exit are nearly all hard line Thatcherites who see it as a route to even greater free market liberalisation.

If the EU has any hope of being transformed and the collapse into petty nationalism averted, then it will not only have to radically democratise its functioning, but also be seen as a vehicle for prosperity and opportunity for the working classes of Europe. Not just a source of their pauperisation.

A European New Deal, with a jobs and basic income guarantee, would be a good start on the road to recovery. This would be fiercely resisted by the European right – just as many of the policies we advance in our own countries are. But as anti-austerity movements grow across Europe we have to think of demands we can unite around and forms of organisation that strengthen the international cohesion of the radical left, while countering the drift into nationalism.   

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