French far right on the rise in local elections

France's anti-immigrant National Front (FN) has surged to power in a former Socialist town-hall bastion and sees more victories in local elections where voters punished President Francois Hollande for failing to tackle unemployment. In what leader Marine Le Pen called a breakthrough for her protectionist anti-EU party, the FN won power in the northern former coal-mining town Henin-Beaumont in a first-round vote on Sunday, and leads in at least six other towns before run-offs scheduled for next week. With turnout levels at a record low of 65 percent after a series of political scandals that have hit mainstream French politicians of both left and right, Hollande's Socialists and their allies won just 38 percent of the national vote, behind 47 percent for opposition conservatives, initial tallies showed. The FN won about five percent of the national vote - a proportionately high amount, given that it only fielded candidates in about 600 of the some 36,000 constituencies across France. Prime Minister Jean-Marc Ayrault urged voters across the spectrum to back whatever candidate was best placed to beat FN rivals in Sunday's second round. A triumphant Le Pen said she was not interested in voter pacts with the mainstream right even if that could win her a greater presence on town hall councils. "The National Front is taking root just as it wanted to do - and the crop is pretty exceptional," she told TF1 television. Results released during the night put the National Front ahead in the eastern town of Forbach, in France's former industrial heartland. In the south, the anti-EU party was in the lead in Avignon, Perpignan, Beziers and Frejus, and in second place in Marseille behind the conservative incumbent. 'Exceptional vintage' The party's leader, Marine Le Pen, said the polls marked the "end of the bipolarisation of the political scene" and were "an exceptional vintage" for her party. "The National Front has arrived as a major independent force - a political force both at the national and local level," Le Pen, who won 18 percent of votes in the 2012 presidential election, told TF1 television. The party's Steeve Briois was declared outright winner to run the former northern coal-mining town of Henin-Beaumont, which has long been in Socialist hands. Exit polls also put the National Front ahead in the eastern town of Forbach, in France's former industrial heartland. In the south, it was in the lead in Avignon, Perpignan, Beziers and Frejus and vying for second place in Marseille behind the conservative incumbent. There was some solace for the Socialists as a TNS Sofres exit poll showed their candidate for Paris mayor, Anne Hidalgo, was ahead of her conservative rival Nathalie Kosciusko-Morizet. The strong showing by the National Front will alarm Europe's liberal progressives, with the party long associated with racism and anti-Semitic statements. Le Pen's father, Jean-Marie, was prosecuted several times while party leader for Holocaust denial, once referring to the deaths of millions of Jews as a "detail in the history of World War Two". He has also been prosecuted for incitement to discriminate against Muslims. Since becoming leader in 2011, Marine Le Pen has sanctioned or ejected party members found to have made racist comments in an attempt to make the party more palatable to French voters. Her policies focus on reduced immigration and take a stance against EU enlargement. Does this sound all very familiar to you ? well it should as UKIP are looking to follow the FN's example and route to power. Reason for concern ? very much so i'd suggest. Source: http://www.aljazeera.com/news/europe/2014/03/french-far-right-party-soars-elections-201432321344496407.html

Fighting fascism wherever it tries to rear its ugly head

Just last week there was a horrific killing of a French anti fascist. An 18-year-old student activist Clement Meric was murdered in Paris in broad daylight, on 5 June, by neo-fascist skinheads. This must be answered by mass mobilisation to halt attempts by the far right to raise its head. Comments from BlockBuster (Anti-racist youth organisation in Belgium) In recent months there have been big parades and demonstrations in France against gay marriage. The reactionary right has made it clear that it is still a mobilising force. Le Pen’s National Front, trying to exploit the growing discontent at the disastrous policies of President François Hollande in the past year, has made more gains at a time when all economic prospects are very gloomy. More violent far-right groups feel encouraged by these developments and some fascist activists dare to go a step further. The young anti-fascist, Clement Meric, has become one of their victims. On June 5, in central Paris, Clement was brutally assaulted by a group of skinheads and left for dead. The main person accused of the deadly assault was known as a member of the ‘Jeunesses Nationalistes Revolutionaires’ (JNR), an organisation led by Serge Ayoub. He is a notorious French fascist who has also repeatedly come to Belgium to assist the activities of far-right groups like ‘Nation’. Ayoub first tried to deny that the killers were activists from the JNR, but then adopted a different tone: the young leftists had supposedly begun the fight. However, Serge Ayoub’s JNR is no innocent association. Ayoub himself is nicknamed ‘Batskin’ because he likes to use a baseball bat in confrontations with political opponents. The group tries to combine violent right-wing extremism with attempts at expressing some ‘social’ arguments. As with other similar groups, their social aspect remains pure rhetoric, while the racism and acts of violence prevail. The Greek ‘Golden Dawn’ is no different; their activities are not directed against those responsible for the crisis, the major shareholders, bankers and other Greek capitalists, but against the victims of this crisis who have another colour of skin or political opinion. The death of the young French anti-fascist has led to protests and demonstrations in several cities and towns in France and internationally. On Thursday there was a large demonstration of “mourning and anger” in Paris. The Establishment politicians have argued that they are in favour of a ban on neo-Nazi groups that “damage the Republic”. Obviously we are not in favour of providing neo-Nazis with a clear field to practise their activities, but in order to stop them, simple bans will not be sufficient. An active response from the labour movement is needed. To stop violent neo-fascist groups gaining confidence, mass mobilisation and anti-fascist resistance are needed. The violence of these groups is not supported by broader layers of the population. Answering their meetings and protests through much larger mobilisations would make neo-fascist activities difficult to organise and would stymie their violent political offensive. We need to oppose, in a systematic way, mobilisations that reinforce divisions in our class, such as homophobic and racist protests. We need to accompany opposing the far right by building a political response that takes up the common interests of working people and poor families. The crisis of capitalism and the pro-establishment parties, with their austerity policies, are creating a greater breeding ground for racism and division in society, and violent groups are stepping in to whip up reaction. A real answer to racism and fascism and the extreme right is not possible if it remains within the framework of the capitalist system which breeds these forces. We can only rely on our own strength! We must build on a trade union and political level a united struggle against racism and fascism, and lay the foundations for a mass force that fights for an end to the rotten system of capitalism. That is the challenge for the anti-fascists and the labour movement as a whole.

world in crisis, central banks not providing the anser

Increasing concerns and contradictions Per-Åke Westerlund, from Offensiv, newspaper of Rättvisepartiet Socialisterna (CWI Sweden) The severe downturn in 2008-09 made the world economy into an experimental workshop. But neither extreme austerity or trillions to the banks has led to a solid recovery. Now there is growing concern among politicians and economists. At the center of concern is the crisis in Europe. In early 2012, both Italy and Spain were close to sovereign defaults, which in turn would have made the whole euro project collapsing. EU’s leading politicians and institutions were scared into taking extreme measures. The European Central Bank, ECB, promised "unlimited access" to capital for both states and banks. Since then, the ECB lent 360 billion euros to Spanish banks and 260 billion into Italian. A large part have been used to buy their respective state bonds. The interest rate gap - how much more it costs for Spain or Italy to borrow than Germany - have fallen from 6-7 percentage to 2-3 percent. The ECB’s generosity is matched by other central banks. The U.S. Federal Reserve is in its fourth round of Quantitative Easing which means that the Fed buys government debt notes for $ 85 billion each month. Japan’s new right-wing government has now embarked on a "quantitative and qualitative" monetary policy in double pace compared to Fed. In two years, the central bank (Bank of Japan, BOJ) will use equivalent to a quarter of Japan’s GDP - the third largest economy - to purchase government bonds, equities and real estate. Central Banks But now there is increasing concern that central banks’ intervention is not the solution, but rather deepens the crisis. "Some of the leading figures in central banking concede they were flying blind when steering their economies," reported the Financial Times (18 April), from the International Monetary Fund’s (IMF) spring meeting. Lorenzo Samgh of the the ECB’s executive board: "We do’nt fully understand what is happening in advanced economies." The head of the Bank of England, Mervyn King, said that no one can be sure that the expansionary monetary policy is correct and wondered if they are “running the risk of reigniting the problems that led to the financial crisis in the first palce?”. Central bank intervention has eased the immediate crisis for the most vulnerable banks and states. But they do not kick start economies - investments in the advanced capitalist countries is still at a record low. However, the new policy opened for sharper conflicts between nation states. The Japanese currency, the yen, has fallen by 25 percent since last year. It has benefited the Japanese export industry, at the expense of for example German and South Korean industry. The IMF’s semi-annual reports from April (Global Financial Stability Report and World Economic Outlook) notes that central banks’ actions have achieved “a broad market rally” but also created new risks. Capital now flows back from the richer countries to developing countries, creating potential instability. The Fed boss Ben Bernanke recently warned that banks’ speculation may increase. IMF But especially worried is the IMF for what happens when easing ends. There is no equivalent in history to learn from. "Continued improvements will require further balance sheet repair in the financial sector and a smooth unwinding of public and private debt overhangs. If progress in addressing these medium-term challenges falters, risks could reappear. The global financial crisis could morph into a more chronic phase marked by a deterioration of financial conditions and recurring bouts of financial instability", writes the IMF. The conditions raised here - balance sheet repair and unwindling of debts - have so far failed, which points towards a more chronic crisis. The second leg of the crisis policy - the extreme austerity measures - have had worse immediate effects. 19.2 million are now unemployed in the euro zone, of which six million in Spain alone. In Greece, youth unemployment is 59.1 percent. The New York Times reported in an article on Greek school children who faint and are searching for food in the bins. The Portuguese Prime Minister Pedro Passos Caolho - a strong proponent of the infamous Troika (IMF, EU and ECB) austerity - promised in 2011 that "two terrible years" would be followed by recovery. But as a result of the extreme austerity, in 2013 Portugal "faces a much deeper and longer recession than the government or international lenders had foreseen" (Financial Times). The IMF estimated in April that the risk of recession (the economy contracts) in the euro zone was 50 percent. Since then, the ECB president Draghi warned that even France is dragged deeper into the crisis. The EU has given Spain and France two additional years to meet the rule that budget deficits should not exceed three percent of GDP. Under new rules they would otherwise been fined. In a large survey among capitalists and finance investors in Europe, made by the credit rating company Fitch, a large majority believe this year’s calm in Europe is transient. "Fitch warns in a statement that it [2013] can once again become a summer marked by the euro crisis, just as in 2011 and 2012, since there is a strong contradiction between the recent stock market rally and euro zone recession and rising unemployment." (From Swedish daily, Dagens Industri). No capitalist solution None of the capitalist institutions have a solution. Many warn that austerity has gone too far, but stil emphasise the need for a balanced budget for the "medium term". How quickly the Cyprus crisis threatened to spread shows that EU countries need a banking union, writes the IMF in its report. And before the ECB’s "limitless" capital flow eased the crisis, leading EU politicians like Germany’s Angela Merkel and European Commission President Barrosso put forward the EU needed a much tighter budget policy and synchronisation. But national interests and conflicts makes especielly German politicians hesitating. The risk, in their view, is that Germany then definitely become the guarantor of banks across Europe. In parallel with the growing contradictions within the EU member states there is a sharp increase of distrust against the EU itself. In Spain today 72 percent are critical of the EU, against 23 per cent before the crisis. Germany the increase is from 36 to 59 percent. The crisis has been exploited to push through many of the counter-reforms the capitalists dreamed of. Worse pensions in Italy, easier to fire workers in Spain, pay cuts of 50 per cent in Greece and so on. Now the capitalists increase their pressure on French President Hollande go the same way. He has already abolished the capital gains tax and promised to reduce the cost of unemployment insurance, pensions and municipalities. At the same time, the political pressure from below is increasing. In a French opinion poll, 70 percent believes a "social explosion" is possible in the coming months. The IMF in April again lowered its forecast for world economic growth this year to 3.3 percent (though 3.5 in October). World trade is expected to only increase by 3.6 percent this year after 2.5 percent last year. The index of large corporate purchasing managers in both the EU and Japan is still below 50, indicating that the economy is not growing. But even the index for China is just over 50. China China’s economy - the world’s second-largest, estimated to overtake the U.S. before 2020 - is now slowing sharply. The large stimulus package in 2009, which held up growth through massive investment, is now hitting back with full force. Debts of municipalities and provinces is estimated at between 20 and 40 percent of the country’s GDP. In the first quarter of this year these debts increased twice as fast as in the same period in 2012. The IMF and politicians in the West are talking about how consumption in China must increase and investment must go down. But lowering the investment share of GDP from the current 50 percent to 30 percent in a position when economic growth will be 6 percent instead of the previous 10 percent "would cause a depression, all on its own", concludes economics columnist Martin Wolf of the Financial Times. Demand would collapse, with considerable effects on the world economy. Governments and capitalist classes now places greater pressure on other states. The U.S. wants to see greater demand in Germany and Europe, while European politicians requires that the deficits in the U.S. and Japan are reduced. The budget deficit in Japan this year is near 10 percent of GDP for the fifth consecutive year. Public debt is expected to be 255 percent of GDP in 2018. The U.S. deficit is five per cent of GDP and the debt is 110 percent. Growth in the US is expected this year to be the highest of the developed capitalist countries, 1.2 percent. But the forecast is uncertain since the automatic cuts, the sequester, will have effect in the latter half of the year. With the failures of "unorthodox methods" more and more people will realise that there is no solution within the framework of the capitalist system. The resistance from workers and poor will grow, like for example the general strike in Portugal in early March, which was the largest since the revolution in 1974. The task for socialists is to build new workers’ parties with a clear socialist answer to the crisis.

The decline of social democratic parties

I was listening to Novara the other die and the guys were focusing on the decline of social democracy parties who has now moved over to becoming fully fledged capitalist parties as I’ve outlined before. This is a very interesting development which was an ideological shift since the fall of the Stalinist Soviet Union in 89 onwards. We see today that Pasoc in Greece formally a mass workers party now sitting on as low as 6 % washed up and seemingly finished in Greece. Also looking at Spain the Socialist party there is mired in scandal for many years now and has lost that base in fact you can look right across western Europe including Italy now with the coming to power of the grand coalition of left and right now with the PD who have been tarnished now for many years will now loose further support for joining this crisis coalition almost a national government if you like. Interestingly a piece I read in the Guardian the other day from an Italian commentator it is similar to the dictatorship of the bourgeoisie now looking to hold itself up and appear a credible government to protect the ruling class’s interests which of course they will hope to do. All this add’s to the question of what happens here back in Britain with the Labour party now a openly capitalist party of course no doubt will try and raise its dwindling support in hope and ride to power in 2015 if indeed it can manage it as I still do believe it is not being backed passionately rather it’s a reaction against the Tories they are the nearest lot to go for who can hurt the Tories not that this shows any great enthusiasm for the labour party. Much like in France with Francois Holland who last year rode to power on a wave of anti austerity to now fin himself as one of the most unpopular presidents France has ever had. Why is this? Well for a start France’s unemployment figures are shocking and continue to rise. Holland’s hope and optimism of tackling austerity has faded as he’s come up against the markets and has had to row back in his rhetoric and play ball with the rest of the EU and the IMF. This could be a glimpse into the future for the labour party who if they gain power in 2015 will almost be despite of themselves will soon end up disappointing many who have backed it there is no doubt about that. Labour is likely to carry out the cuts and be seen as a safe pair of hands for British capitalism. Ed Miliband is making al sorts of odd noises he wants to do this he wants to do that. But ultimately labour is wedded to the market system and the capitalist mode of production and has no ambition to change this. This will lead them to being dictated to by the markets any borrowing he tries will be hit heavy by the levels of our bond markets and this will spook young Ed to behaving and staying in line with austerity all be it at a slower pace perhaps . But what is clear from the mass numbers involved in these mass parties take the labour party in the 50’s had over a million members today you’ll be lucky if its 150 thousand who are actively members of a party in Britain this goes for the right to by the way there hasn’t been a surge of membership in right wing parties either this is a political party crisis as much as a crisis of social democracy. How this will develop its hard to tell clearly working class people and even middle class people are disenfranchised and have little option of who to vote for let alone to join so it leaves a big anti establishment feeling out there in the wider public it will be interesting to see how these parties react to this or will they like the others before like Pasoc end up beached smashed against the rocks finished for good replaced with another alternative party system or different structures entirely. We certainly live in interesting times.

Why do we no longer talk about a shorter working week?

It’s been something which has been on my mind for a while a demand that has really gone completely off the radar. As socialists we talk about creating more work and decently paid jobs and so on but should we not also be looking to demand a shorter working week to say 20 hours or even the old 35 hours which is still very common in France still despite being under threat. All this would of course be for no loss of pay. Solving a jobs crisis and how much leisure time or time spent on politics learning and developing ourselves as a society too. It seems a clear demand we could and possibly should be raising more. The idea that work is the only way to run society and if your not working your somehow at a disadvantage is a interesting point of view. As we know many capitalists do not work and sit and live off the profits of their factories and industries. But a social wage is a concept which interests me a lot in a future socialist society pushing these demands when work is gradually being more and more automised under capitalism and we see our labour power fetching less and less value. While all nation states compete to drive labour power down to a low enough level to increase profits we as workers need to see that work isn’t the only way society can be ordered and that a reordering of society should involve a reduction in the working week. It just seems obvious that the likes of the TUC should be pushing this idea it’s something that could be extremely popular and gain a lot of support. By tackling several issues not least a job’s crisis by the idea of job sharing with the same rate of pay for all for similar tasks performed by the worker. I know I certainly do not want to be working all my life and I don’t imagine many others do too and why should we? At present the age of retirement is estimated to about 70 for me and my generation and it only looks like it will increase as austerity which is the norm now for as far as the eye can see. Capitalists who are in affect on an investment strike to take a Keynesian phrase for a moment will look to drive down any of their costs any way they can right now that includes deflating wages and the like. So a shorter working week will not be popular with the boss’s of course but much like gaining support from the media this is not and should be the deciding factor to whether a demand is correct or not. Allowing for a shorter working week would provide workers with a lot more free time to begin to organise society along socialised lines and starting to put in the building blocks for building a much fairer society that can start to me the needs of the many.

France: difficulties bubbling under surface for Holland

France’s president Francois Holland who swept to power on the back of a growing turn against austerity is already starting to let his voters down. The CWI has always said if you do not break with capitalism you will be forced to meet its calls which call for austerity. France’s economy is not performing well and trouble may be ahead for Holland and the French economy very soon indeed. Hollande, who returned from a 15-day summer break last week, faces an economy that hasn’t grown in three quarters, rising joblessness, a ballooning trade deficit and the task of coming up with a plan in the next few weeks to plug a budget hole of more than 30 billion euros ($37 billion) for next year. The challenges ahead may undermine the rally in French bonds that has allowed the country to sell bills at negative yields for the first time. During Hollande’s first 100 days in office, the premium demanded to hold French 10-year debt rather than comparable German securities fell to the lowest in more than a year. That trend may be reversing. “France’s fundamentals -- rising unemployment, widening current account deficit and budget deficit -- would not support its bonds,” said Jamie Stuttard, head of international bond investments at Fidelity Investments in London, Sovereign debt from France, which was stripped of its AAA rating by Standard & Poor’s in January, got more expensive throughout 2012 -- notably since Hollande’s victory. The rally came as the European Central Bank cut its main interest rate to a record low and reduced its deposit rate to zero as the euro area teetered on the verge of recession and Spanish and Italian 10-year bond yields climbed above 6 percent. Whether or not European leaders manage to reassure investors, Hollande also knows he has an uphill task ahead at home. According to the national auditor, he will have to find about 33 billion euros in new tax revenue or savings by the time his government sets out its 2013 budget on Sept. 24. The budget hole will be larger if the finance ministry is forced to lower its 2013 growth forecast of 1.2 percent. That’s looking likely after France posted a third consecutive quarter without expansion in the three months through June. French jobless claims rose to the highest in 13 years in July as stalling growth prompted companies to trim payrolls, a Labor Ministry report yesterday showed. Prime Minister Jean-Marc Ayrault declined to repeat next year’s growth forecast in a radio interview on Aug. 22. For the first time since Hollande took office on May 15, a majority of French voters lack confidence in his ability to run France, pollster CSA said Aug. 23. Only 49 percent of the French said Hollande has the capabilities to steer the country, down from 58 percent in May, according to the CSA poll for Les Echoes newspaper carried out Aug. 21 and 22. His predecessor Nicolas Sarkozy had a rating of 55 percent at the three-month mark in 2007. Clearly a lot of the optimism Holland swept to power with from many sections of the left and the liberal left is starting to wain. Holland will be forced to make huge cuts to jobs and services which will bring him into conflict with the mighty French working class who have been somewhat quiet of late compared to their usual militancy they are so well known for. What is clear though is that France will not be immune to outside risks and the chickens of Hollands failure to break with the market and capitalism may come back to haunt him. What is needed though is a mass party of the French working class. The left front in France if it keeps up its upward curve of support and highlight Hollands misgivings I am sure we will start to see the left gain ground in France and hopefully move into action. Let’s hope the French working class remember their famous revolutionary traditions and show Europe how to struggle later this year. I look forward to sharing solidarity with the French workers who certainly know how to strike leading to a near revolution in 1968. Workers must learn the lessons from 1968 and lay the ground for bigger and more explosive struggles on the horizon. With extracts taken from Bloomberg

Lost in Euroland

This latest article posted on www.socialistworld.net is anotehr in the line of top in depth analysis of what is going on inside the Eurozone and the organisation of a deepening economic crisis by the week.

Robert Bechert, CWI

As the eurozone crisis develops, its political and institutional leaders are becoming increasingly desperate as they look for a way out. The latest postponement, amid increasing friction between the French and German governments, of a decision on the eurozone’s next steps is an indication of the crisis’s seriousness. Here, in an analysis written for Socialism Today (November 2011 issue), monthly magazine of the Socialist Party (CWI England and Wales), Robert Bechert examines both the crisis and the test it poses for the left.

"The Euro should not exist (like this)"
"Under the current structure and with the current membership, the euro does not work. Either the current structure will have to change, or the current membership will have to change." (UBS Investment Research, 6 September, 2011)

This blunt statement, at the start of a widely circulated report by a leading Swiss bank, brutally summed up the fundamental character of the ongoing crisis in the eurozone. Despite a series of emergency meetings and agreement of rescue plans this crisis continued to deepen, threatening not only the European economy but also to dramatically worsen the already deteriorating world economic situation, and help trigger a dreaded “double-dip” recession. That was the reason US Treasury Secretary Geithner attended an EU finance ministers meeting in mid-September. European governments faced a potentially massive crisis with no easy way out, as long as capitalism remains.

Desperate attempts are being made to patch up a “solution”, although how long any deal will last is a different question. Within 24 hours of a plan surfacing at the mid-October G20 finance ministers meeting Angela Merkel’s spokesperson was warning against “dreams currently doing the rounds” that everything will be solved at the following week’s EU summit, and then a decision was formally postponed to October 26 at the earliest. At the G20 meeting one minister warned of a “world of pain” if no solution was found, something which millions are already starting to suffer as the crisis hits them.


Angela Merkel, German Chancellor

The widely perceived helplessness of the governments and EU institutions, the fact that repeatedly they are seen to be lagging behind events and incapable of putting forward a solution has only added to the spreading popular fears of what lies ahead.

This is not an abstract crisis. The eurozone disarray is adding to the misery facing many workers and youth across Europe. Living standards are falling as inflation is rising, alongside increasing unemployment in many countries. Cuts in services and wages are widespread. In Greece, currently the worse hit country, the vast bulk of the population is plunging downward into a deep economic and social crisis and facing a huge drop in living standards. The London Financial Times estimated that “planned tax increases and spending cuts for 2011 are equivalent to about 14 per cent of average Greek take-home income – or 5,600 euro for every household ... (measured on) a per-head basis, the total 2011 austerity package is worth 2,200 euro” (18 October, 2011).

Europe is on the edge, facing the possibility of a sudden crisis, especially a banking and financial meltdown that could paralyse much of the ‘real’ economy.

A wake-up call
As popular fears grew, governments in and outside of the eurozone rapidly became aware of potentially devastating impact that an event, like a sudden Greek default, could have. ‘Contagion’ would spread throughout the international financial system. After looking over the abyss of what a new banking crisis and/or a country leaving the euro would mean, the main eurozone countries drew back and agreed to make another attempt to defuse the situation.

In recent weeks warning signs were flashing. Rumours flew around about the condition of the banks. Many are facing a critical situation which is why the European Central Bank (ECB) has again taken steps to prop some up. While the early October collapse and subsequent nationalisation of the Belgian-French Dexia bank took the headlines for a few days, it was hardly mentioned that simultaneously two smaller banks, Max in Denmark and Proton in Greece, were also nationalised.

At the same time as UBS published its views on the Euro, the chief executive of Bosch, the world’s largest auto parts supplier, warned that the eurozone has entered “an extremely critical situation”. While the German owned Bosch had full order books now “in 2008-09 we experienced how fast these orders can melt away” (Financial Times, London, website 7 September, 2011).

The worsening world economic prospects are deepening the European crisis, not just in the eurozone but also in Britain. As Wolfgang Münchau wrote “The most disturbing aspect of the eurozone right now is that every crisis resolution strategy depends upon a moderately strong economy recovery” (Financial Times, London, 5 September 2011)



Wolfgang Münchau

The CWI had warned before the euro’s launch that it would not lead to unity, but would breakdown as result of clashes between the rival national capitalisms and, in the absence of a workers’ alternative, strengthen nationalism. (See box)

In fact, the euro has created a Frankenstein monster. The Greek crisis has brutally revealed this truth. At one time markets expected a Greek “managed default” and there were voices inside the stronger eurozone countries that Greece should be thrown out. The German transport minister Peter Ramsauer told Die Zeit in mid-September it would “not be the end of the world” if Greece were kicked out of the single currency. But the growing realisation that this meant the prospect of massive collateral damage across the international banking system has forced other governments to act.

For now discussion of forcing weaker countries, like Greece, to leave or the possibility of stronger countries, like Germany, deciding to quit the euro has stopped, although this can reappear in the future. The failure of Belgian-French owned Dexia was a wake-up call. One reason for Dexia’s collapse was its exposure to Greek government debt estimated at 39% of its equity capital. But this was not unique amongst banks, this summer the comparable figure at Germany’s second biggest bank, Commerzbank, was 27% (Wall Street Journal, 31 August, 2011). Dexia’s collapse was a warning that it would be extremely expensive to maintain a financial firewall around Greece should it suddenly default.

A more drastic haircut?
With spreading fears of both the “health” of banks and impact of a Greek collapse, banks once again turned to the ECB as a “safe” place to invest, rather than lend to other banks, and for short-term funding. But it is not just a question of Greece triggering a crisis, unexploded financial bombs litter the European landscape. The European Bank for Reconstruction and Development has just cut back the forecasts it made in July for 2012 economic growth in central and eastern Europe - in Hungary from 2.8% to 0.5%. Not only does this bode ill for Hungarians but also it threatens Austria’s banks, which are heavily exposed to Hungary.

The new drive to attempt to stem the crisis was behind the pressure in October to force Greece’s creditors to accept more of a “haircut”, a reduction in the amount of their loans they will actually get back. In July’s rescue deal an average 21% was agreed in July. At that time the French government, fearing the impact on its own banks, rejected a 40% cut, however by mid-October figures of 40% to 60% were being discussed such was the seriousness of the situation. This, governments hope, would avoid a formal default and allowed a managed restructuring that would prevent a sudden crisis. But even with this figure it would not be the rich who really paid, the banks would attempt to offload the cost onto taxpayers and customers.

Nevertheless banks resisted any increased losses. German banks, in particular, were bitterly complaining. Andreas Schmitz, head of BdB (German banking federation) warned that politicians should not declare “war” against banks (Bild.de website, October 15, 2011). The next day Schmitz accurately summed up the current reality of the crisis when he said that the October 15 anti-bank protests were “a diversion from the fundamental problem: that we can no longer finance our welfare states”. (Financial Times, London, website, October 16, 2011). Of course when Schmitz spoke of “we” he meant the capitalist system and its ruling classes.



Andreas Schmitz

Really, a poker game is going on as the different countries and financial institutions struggle over the size of the “haircut”, the roles of the ECB and EFSF (European financial stability facility), how the EFSF will be funded, the role of funding from outside the EU and other issues. Relations between the French and German governments have become strained. While there is enormous pressure to reach an agreement, even if there are doubts as to how long it will last, the risk of “accident” causing a disaster is ever present.

Dangerous to leave
Fearing the consequences of a break-up of the current eurozone or an abrupt Greek default the stronger EU powers are debating possible new structures to tighten controls over economically weaker countries as a price to provide financial support.

While “Eurobonds” would appear to be a logical capitalist solution for the ruling classes to attempt, they would run up against the growing popular opposition in all countries to the idea of underwriting other countries’ banking debts. This is not simply as a result of nationalist campaigns against, for example, Greece. Falling living standards in most countries and the bitter understanding since 2007/8 that much of the bailouts will actually end up in the hands of the banks and finance markets also fuel the opposition.

In answer to this opposition to financing other countries’ debts there are proposals to set up new structures to impose controls on eurozone countries. How effect they would be is another question. In 2003 the euro’s original Stability and Growth Pact (SGP) was ignored because the two largest powers, France and Germany, broke its conditions. In an attempt to escape political pressures for flexibility, the Dutch Finance Minister Jager, while supporting the German economics minister Rösler’s idea of a European Stability Council that could impose sanctions, said that its decisions should be made by “academics and experts – but no politicians” (Spiegel Online, 22 August 2011).



Jan Kees de Jager, Dutch Finance Minister

However such measures will only back fire, already in Germany there is resentment at what is referred to as the EU moving towards a “transfer union”, meaning a permanent movement of funds from the richer to the poor EU countries, although in reality much of these payments end up back in the banks of the richer countries.

The tensions inherent within the eurozone will increase, especially in this period when there is no immediate prospect of sustained economic growth.

Events this year have posed the question about the eurozone’s future, whether all the present members will remain? As the UBS report (see box) shows there would be substantial economic and political costs and dangers involved in leaving the zone. This is the Frankenstein factor, the eurozone countries have created a system which is imposing huge costs on some economies and strangling others, but which is very dangerous to leave.

However, while these costs can delay such a break, tensions could mount that will force a brutal shakeup. This is why, despite the massive overheads, there are discussions both about the possibility and methods of break-up of the current eurozone, both “weaker” countries leaving or of Germany pulling out. In Germany there is a kind of undercover debate within the ruling class because, while leaving the euro would remove the need for it paying towards the weaker eurozone countries, this would, at a stroke, cut its “home” market from 332 million to just under 82 million. At the same time German exports would be undermined by a new currency that would probably initially soar in value.

A living struggle
Alongside the mounting euro crisis and national difficulties, there is rising anger amongst workers, youth and the middle class as the effects of the crisis bite deeper. This is the reason for the unpopularity of most European governments, the mass demonstrations and strikes in a series of countries.

A new stormy period has begun and sharper struggles will develop. While determined struggle, the threat of resistance or a very serious economic or social situation crisis can force governments to make temporary concessions, generally the ruling classes will be forced by the crisis of their system to, at best, hold down living standards. That is the meaning of Andreas Schmitz’s statement and the reason why ruling classes will be forced to attempt to push attacks through.

Faced with serious opposition, governments will tend to move to use more authoritarian methods. These will vary according to the situation in each country, but in the worse case scenario the ruling classes will even look to dictatorial measures.



Today, Greece is facing a social and economic disaster and its ruling class is not confident of what will happen. This is the background to the report last May in the German mass-circulation newspaper Bild, that the CIA were speaking of a possible coup in Greece in the event of severe unrest developing. This is unlikely in the near future, but in a situation of continuing turmoil such an attempt cannot be ruled out. The Greek military have done this before, the last time they staged a coup was in 1967 and they ruled for 7 years. But a new coup, in a time of deep crisis, would not automatically be a repeat of the last colonels’ regime.

Such a development is not inevitable, but depends on the character and policy of the opposition movements, particularly what the workers’ movement does.

In some sense it is a race between the left and the right as to who will lead the opposition to the eurozone’s polices. Already in a number of countries, it has been right populists who have, in the absence or weakness of the left parties, made electoral gains by combining taking up some social issues with nationalist based anti-EU and anti-migrant slogans. In Greece overwhelming opposition to the cuts and the country’s downward spiral has created a potentially revolutionary situation but, so far, there is no mass based genuinely socialist force that can give concrete direction to the movement.

Unfortunately the response of the official leadership workers’ movement has been limited, with most of the pro-capitalist trade union leaders only organising any action when they have been pushed from below. Even when actions are organised the trade union leaders try to restrict them to symbolic actions and strive to avoid them becoming a step in a serious struggle.

European left
There is a reluctance within the trade unions and in many left parties to challenging the EU or euro itself, something sometimes justified by pointing to the EU’s right wing nationalist opponents. Rather than explaining that the EU is not a step towards socialist internationalism but a club of capitalist nations run in the interests of big business and the big powers, the largest grouping of European left parties, the European Left Party (ELP), talks of a “refoundation” of the EU without mentioning any break with capitalism and, by implication, supports the continuation of the euro.

The UBS report warns of the wider possible consequences of a massive crisis and eurozone breakup. There would not only be huge disruption but the growth of national tensions and conflicts. UBS is not alone in warning of the “some form of authoritarian or military government, or civil war”. In mid-September the Polish Finance Minister warned the European Parliament, in a “personal” comment, of the dangers of new wars in Europe. Later he was asked to explain this and he said that while war is not likely “within a four-year legislative time frame ... Not in the months ahead, but maybe over a 10-year time frame, this could place us in a context that is almost unimaginable at the moment.”

While not immediately posed, future conflicts between states cannot be ruled out if the working class is not able to impose its own socialist solution to the crisis. But the EU, a complete capitalist institution that is effectively run by the major powers, is not a vehicle for either socialist change or democratic socialist planning.

The ELP, whose strongest parties are DIE LINKE (Left party) in Germany, the Parti Communiste (PCF) in France, Left Bloc in Portugal and Izquierda Unida (United Left) in Spain, puts forward a number of individual policies that socialists support, although often these are vague, loose formulations. However it does not link these together into an overall anti-capitalist, socialist programme.

This approach was seen in DIE LINKE’s three demands on what the German government to argue at the October 15/16 G20 finance ministers’ meeting. They were worldwide strict regulation of “Finance Casinos”, a tax on financial transactions and a coordinated conjunctural programme. However, these proposals cannot be fully implemented under capitalism and, while DIE LINKE also mentioned its call for public ownership of the banks, its approach was one of simply demanding measures that could be taken within capitalism.

Naturally Socialists argue for individual demands that can immediately improve the conditions of working people and the poor. But such campaigns have to be accompanied by an explanation that such demands can only provide temporary improvement and that, especially in this time of crisis, a socialist transformation of society is required. Without this explanation they are attempts to run this system in a ‘better’, ‘fairer’ way, efforts that will ultimately fail.

The speculators’ grip
A key factor in the development of this crisis has been the massive pressure from the financial markets. Since the break-up of the post Second World War Bretton Woods currency system and the deregulation of finance there has been a huge explosion of the finance markets, alongside a similar growth of all forms of speculation in commodities, property and spread betting on anything that moved, or didn’t. The figures are simply mind-blowing and are hard to grasp. In the EU finance transactions were, in 2010, 115 times the EU’s 12,300bn euro GDP (Austrian Institute of Economic Research, Financial Times, London, 18 August, 2011). All the political leaders bow to these markets, often their official statements are directed simply to the markets.



Naturally the question of how to break the grip of this speculative market’s grip over nearly all aspects of life is a burning issue. It cannot be ruled out that different capitalist nations, or groups of nations, may attempt to isolate themselves or place some controls on these markets, in effect states clipping the speculators’ wings in the wider interests of the capitalism as a whole. But this would be no long term solution. For example an attempt to go back to a system of fixed exchange rates would not, in the medium or longer term, prevent currency crises or forced devaluations.

There is now growing support for a tax on financial transactions (a ‘Robin Hood’ or ‘Tobin’ tax). This is now the official policy of the EU’s Commission, seen by them as a useful political gesture and a way of raising funds. But while socialists would not oppose such a tax it would leave untouched the basic power of the huge financial and trading institutions that runs these markets.

Similarly simply leaving the euro would not solve the problems of Greece or other countries. Socialists opposed the introduction of the euro and today support breaking its grip and that of “Troika” of the EU, ECB and IMF that are effectively dictating what the Greek government should do. The key question in Greece is breaking with the capitalist system, without this living standards will fall for some time whether or not it stays with the euro.

A socialist task
Socialists would not oppose leaving the euro but would firm link it to a socialist, not state capitalist, policy of bank nationalisation. In a single country breaking from capitalism a state monopoly of foreign trade and exchange controls would be necessary as a defence from the international markets until similar movements spread to other countries. These steps, as part of a policy to bring the commanding heights of the economy into democratically run public control and ownership, would allow a start to be made in planning the use of economic resources for the benefit of all. Without such a socialist policy the results of leaving the euro would be along the lines spelled out in the UBS report, namely a cut in living standards.

Much of the population opposition to the EU is based upon the way it is run, the privileges of its bureaucratic elite and the way it is run it the interests of the big countries and companies. Socialists however, while fighting nationalist oppression and EU diktats, do not oppose the EU or the euro from a narrow, nationalist standpoint. The unification of the whole of Europe would be an enormous step forward. But this cannot be achieved on a capitalist basis. The existing EU institutions, like the EC, the ECB and so on, are clearly agencies of the capitalist ruling class, incapable of surmounting capitalist limitations.

The task facing socialists is to argue for a socialist internationalist alternative, a voluntary socialist confederation of European states, to the pro-business EU. Without this there is the danger that opposition will take a nationalist direction.

This divisive turning point in EU has opened up new period of sharper struggles, will provide an opportunity to rebuild the workers’ and socialist movement, but not as an end in itself but in order to build the forces that can fundamentally change society, end the chaos and instability of capitalism and really make poverty, fear a thing of the past.

Europe in turmoil – A socialist analysis
June 18, 2005
The current crisis is a vindication of the analysis of the Committee for a Workers’ International (CWI) that the European capitalist classes are unable to unify Europe to construct a capitalist ‘United States of Europe’, as even some Marxists outside the ranks of the CWI believed.


The EU ‘project’ for greater economic and political integration was rooted in the pressure on the European capitalists from competition from US imperialism and, more recently, from China. This drove them towards increased collaboration and led to illusions that this would result in a politically unified Europe. This trend, along with the process of globalisation of the economy and growth of multi-national and trans-national corporations, illustrated how the productive forces have outgrown the limitations of the national state and to a certain extent have even outgrown continents. The big companies increasingly look towards the world market rather than simply their national or regional base.


Yet, at the same time, this process has its limits and comes up against the insurmountable barriers of the separate nation states and the national interests of the capitalists. In the aftermath of the referendum these factors have reasserted themselves, exposing clearly a clash of interests. Some thought that the process of EU integration and EMU represented the point of “take off” for a unified capitalist Europe.


The CWI consistently argued that this was not the case. Our analysis explained that although the process of integration of the EU went a long way, further than even we originally anticipated, at a certain stage a recoil would take place. This would result in renewed national antagonisms and conflicts between the various national states. This process of unravelling would worsen in the event of a serious economic crisis, recession or slump.


The end of the euro?


The introduction of EMU and the euro was a political and economic gamble by the capitalists, pushed through in the teeth of some opposition from their own side, during the triumphalist wave which followed collapse of the Berlin Wall. Initially the Bundesbank opposed the introduction of the euro but was compelled to accept it in the light of the political pressure of the capitalist politicians who supported its introduction. The stability pact was introduced as a ‘safety net’, which was intended to prevent governments resorting to “profligate spending”.


Yet, the whole idea of the euro was tailored to a situation of continued growth of the European economies, with no real account taken of what would happen in the event of a slowdown, stagnation or recession. The mood expressed in the referendums and recent workers’ struggles also reflects dissatisfaction that the economic growth, jobs or higher living standards promised with the introduction of the euro have materialised.


The ruling classes attempted to impose an economic union in the absence of an existing political union. As we explained at the time, this has never succeeded in the past. Without a political union, moving towards the establishment of a unified nation state, an economic union or currency could not survive indefinitely.


When the “project” was on track the capitalists ignored the lessons of history. Now faced with today’s crisis, newspapers like the London Financial Times belatedly can warn that such contradictions cannot be reconciled indefinitely.


In an article which seriously questions the sustainability of the euro, Wolfgang Münchau pointed out: “All large-country monetary unions that did not turn into political unions eventually collapsed. The Latin Monetary Union of 1861-1920 collapsed partly because of a lack of fiscal discipline among its members – Italy, France, Belgium, Switzerland and Greece. A monetary union set up in 1873 between Sweden – which included Norway at the time – and Denmark failed as political circumstances changed. By contrast, Germany’s Zollverein, the 19th century customs union that developed into a monetary union, succeeded precisely because of the country’s political unification in 1871.” (Financial Times, London, 8 June 2005).


There is a vast difference between a federal state, such as the US, which can distribute funds to local state governments in a relatively easy fashion on the basis of an agreement and the EU. The distribution of resources or funds cannot be done in the same way, in a Europe composed of different nation states, as the current struggle over the EU budget shows.


The current EU crisis has revealed that the monetary union, rather than leading to a political union, has resulted in a political fracture between the national states. Partly, this is what lies behind the current spat over the EU budget, which was triggered by Chirac’s challenge to Britain’s rebate. This is a dangerous ploy, from the point of view of the French ruling class, because it has allowed Blair to raise the whole issue of the Common Agricultural Policy (CAP) in retaliation. France currently receives over 20% of farm subsidies from the CAP, which is a purely political decision to maintain support for the French bourgeoisie and Chirac amongst French farmers.


Chirac is attempting to use these issues to turn the underlying class vote of the referendum into a nationalistic conflict over the EU budget. Blair, dressed in the political gown of Thatcher, is also attempting to present himself as the nationalistic defender of Britain over the EU rebate. The German Chancellor, Gerhard Schröder, is aligning with Chirac, while his opponent in the forthcoming elections, Angela Merkel, from Christian Democratic Union (CDU), tends to support Blair. While some compromise on the budget is eventually likely this conflict illustrates the new increased national tensions and contradictions which are set to emerge in the coming months and years.


While an immediate collapse of the euro or the EU is not the most likely short term perspective, the sharp increase in political and economic tensions between the representatives of the various ruling classes will intensify. The conflict of interests is now driving the capitalists of Europe towards the establishment of a looser federation of national states which is contrary to the dominant tendency of the recent period.


However, the onset of a deep economic recession or slump or world financial crisis will sharpen these conflicts further and could provoke a relatively rapid collapse of the euro. The withdrawal of Britain from the ERM in 1992, on ‘Black Wednesday’ shows how diverging national economic conditions can drive the capitalist class of a country to break from a currency or monetary agreement. Although there are differences, and it will not be repeated in exactly the same way, the euro can break up, with one or more country withdrawing or even being expelled from it.


Even before the French and Dutch referendums, the question of the sustainability of the euro in the face of diverse growth and inflation rates was beginning to be discussed amongst capitalist’s strategists. At one private meeting, on May 25, involving the German Finance Minister, Hans Eichel, and Axel Weber, President of the Bundesbank, a representative from Morgan Stanley (an investment bank) Joachim Fels, expressed concern about the sustainability of the euro. According to the Financial Times even the extreme pro-EU lobby group, ‘Centre for European Policy Studies’ published a report in early June that raised the prospect of a collapse in the euro. (8 June, 2005).

(Extract from a 2005 CWI statement written at the time of an earlier crisis after a draft EU constitution was rejected in referendums in France and the Netherlands)

Extracts from UBS study “Euro break-up – the consequences”:
The economic cost for a “weak” country leaving the euro
The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak euro country leaving the Euro would incur a cost of around 9,500 to 11,500 euros per person in the exiting country during the first year. That cost would then probably amount to 3,000 to 4,000 euros per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The economic cost for a “stronger” country leaving the euro
Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around R6,000 to 8,000 euros for every German adult and child in the first year, and a range of 3,500 to 4,500 euros per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over 1,000 euros per person, in a single hit.

The political cost
The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

Youth must join pensions struggle

Strike together as in France 2010
Article first published in issue no.685 of the socialist by
Jack Poole, Brighton University Socialist Students


The government and their friends in the media will always try, as they did in June, to spread division between workers and service users during strike action. It is important to cut across these lies with solidarity action and unity between young people and workers on strike.

Three quarters of a million teachers and civil servants took coordinated strike action in June against the government's decimation of public sector pension schemes.

This unity between students, young people and workers was shown last year in France, in the struggle against the pension reforms. With the Con-Dem coalition likely to face more strike action over pensions this autumn, it is important to analyse and draw lessons from struggles such as this.

Last October, President Sarkozy's plans to raise the retirement age saw a furious and enormous reaction from the French working class, with massive strikes and demonstrations - at the height of the movement, 3.5 million people demonstrated across the country.

A crucial turning point for the dispute was when young people and students began to take part in the struggle in a large and organised way. Ignoring the lies of Sarkozy's supporters and the right wing media who tried to re-assure young people that pension reform did not concern them, student strikes in solidarity with the workers helped shut hundreds of schools.

The idea that raising the retirement age does not affect young people is a downright lie used to divide the movement. For example, with one million young people unemployed in Britain, it is madness for the government to be forcing older workers to work for longer while these young people waste their talents on the dole queue.

Sarkozy revealed a lot when he was quoted as saying about the strikes, "school and college students...must be watched closely like milk on a stove."

Politicians like Sarkozy and Cameron are right to be frightened of a mass movement of youth and workers opposing their austerity measures! Such a movement would stand a real chance of stopping them and their cuts in their tracks.

Young people and students on their own do not carry the social weight to defeat governments, even weak ones such as the coalition in Britain. However, as last year's student movement in Britain showed, the energy and anger of a movement of young people can give confidence and inspire others in society to fight back. Three months after the last major student demonstration, half a million trade unionists marched through the streets of London.

Combined with the organised working class, which holds the power to make society grind to a halt, this kind of action would stand firmly in the way of the brutal austerity cuts of governments across Europe and beyond.

If more workers take coordinated strike action to defend their pensions, young people and students need to unite with them. We should take our solidarity to the picket lines but also organise walkouts at our schools, colleges and universities and join the protests and demonstrations taking place. Any blow against this government is a step towards a decent future for young people.


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Why france is wrong to ban the burka

In britain we pride ourselves on being open and tolerate people. We are a wide diverse nation with so many different cultures living alongside eachother in somewhat harmony.

The news that France is this week to bring in a law banning the muslim garmant the burka saddens me persoanlly. I am not french of course and their laws are their laws to see fit to do waht they like with but i do feel this is a sad bit of news.

The arguement is over safety and security ever since 9/11 and the Madrid and London bombings muslim garments have been slammed for being too secretive and a security risk.

French polititians argue that we need to be able to see peoples faces at all times. This is to identify people i think this is all well and good but this is their religion and something which is very personal to many women.

In the muslim culture women are not forced to wear a burka but it is their choice they if they do. Due to the predatory nature of men and the lure of the se xual desire wearing a burka can ease their fears of being attacked due to the way they are dresing.

In the UK many young women dress very provocatively which is their choice but there is a arguement that due to the way they dress this attracts men and those sorts of men who will take advantage of their innocence which is of course is wrong. I can see both sides of this arguement myself but feel a all out ban on the burka more than being unforceable and unworkable is the law bordering on telling a religion and its people how they should live.

I think we should be careful to not go down this road in Britain too as this will anger many in the muslim communities who feel very proud of their traditions and their lifestyle. We do not want to give rise to far right groups like the EDL or the BNP and try to drive these people out of our country so whilst i feel that banning the burka in France is wrong and the law goes too far in trying to enforce what people wear i feel in Britain we will not go down this road due to our liberal nature of the country.

We should embrace all our various cultures in this country and celebrate them for their each eindividual uniqueness. That is why i love Britain so much the way we are so tolerant to other faiths, religions and cultures. We of course have our own and that must never leave or be abandoned but we can add to our own by appreciating others.