BY CARL-ERIK ISACCSSON
STOCKHOLM, Sweden - The European Monetary Union (EMU),
now set to begin in January 1999 with 11 member governments
and the new common currency, the euro, are the focus of
intense debate among ruling circles in Europe. Despite
rhetoric ascribing almost mystical powers to the euro,
however, the debate reveals divisions, doubts, and fears,
not confidence, among the capitalist rulers of Europe as
they confront growing economic woes.
The employers hope the new currency will give them the strength and unity needed to inflict the kind of blows to labor that their capitalist rivals in the United States have dealt to the wages and living standards of working people there since the beginning of the 1980s. With the partial exception of the United Kingdom, the capitalist powers throughout Europe are several years behind the U.S. rulers in "downsizing," cost cutting and imposing what the employers call "labor flexibility."
Among the social democratic misleaders of the labor movement, some believe the EMU will make it possible to shorten working hours and reduce unemployment, and maintain or even extend social benefits and other gains of working people.
These high hopes surrounding the birth of the euro were shaken from the start, both with the quarrel that broke out in early May between Bonn and Paris over the appointment of the head of the European Central Bank and with the eruption of a general strike in Denmark.
As the strike by 500,000 workers in Denmark unfolded and heads of state in Europe met in Brussels to decide which governments would qualify to be part of the single currency from the start, the Swedish conservative daily Svenska Dagbladet editorialized in its May 3 issue, "The EMU is seen by some as a way of defending the `European model.' Because of this, many social democrats like it." They added, "In reality, the need to shape a European labor market that is more American is now increasing. Perhaps more American than the American one."
Svenska Dagbladet is the main paper of the conservative party headed by Carl Bildt, who favors Sweden participating in the EMU. But the paper's editor, Mats Svegfors, is opposed to such a move. In several articles in late April, Svegfors argued that the competitiveness of Swedish capitalism has been crippled by higher wage increases over the past years than the other European Union countries, and that employers must be able to reverse this situation before Sweden joins the EMU. Otherwise, he stated, they will be unable to overcome the competitive disadvantage they face, and EMU membership will block their last resort - a devaluation of the Swedish currency.
Devaluation is a move the Swedish rulers resorted to often during the 1970s and early 1980s from a position of weakness, seeking to spur the competitiveness of Swedish goods on the world market. If the rulers of Sweden aren't able to push down labor in order to boost their competitiveness and cannot devalue their currency, then it is likely that a sharp crisis will develop.
Danish general strike: a blow to euro
The rulers of Denmark face similar problems. In 1987 an
agreement between the unions and the employers stipulated
that wage increases take into account the competitiveness of
Danish industry. That year the government in Copenhagen also
officially pegged the Danish krone to the German mark in the
European Exchange Rate Mechanism (at the time the European
Monetary System).
Danish industry has been competitive relative to its capitalist rivals in Europe over the last decade. Unemployment has actually gone down somewhat and, with regard to the criteria established for participation in EMU, Copenhagen's performance is one of the most favorable in Europe. In essence the 1987 agreement has been applied, although there were signs it would not work over the long term, as in 1992 when Danish voters rejected the Maastricht treaty in a referendum. In a new referendum in 1993, the Maastricht treaty - this time with four exemptions including participation in the EMU, received a majority vote in Denmark. The rejection by workers in Denmark of the contract that union officials and employers had agreed on in late April exploded the illusion that it was possible to push the working class out of the center stage of politics through agreements between the union bureaucracy and the bosses.
The Swedish employers, with the union officials in tow, also want to apply what they called the "Danish model," but the general strike there has given them a jolt. In an article headlined "Concern in Sweden when the Danish model falls," Svenska Dagbladet wrote, "What is happening in Denmark shows that [from 1987] until now the Danish agreement could discipline the union officials and the employers - but not the workers." It asked, "What road should Sweden then choose?"
The increasing resistance of the working class throughout the continent is fueling tensions between Bonn and Paris. Bonn needs a euro as strong as the mark to be able to continue financing the results of Germany's reunification by attracting capital on the international bond markets while postponing a showdown with the workers in eastern Germany. Paris could let the euro fall somewhat to spur the competitiveness of French goods on the world market and make some concessions to workers.
Paris fails to push back workers
The Juppé government in France failed to deal the blows
to labor in late 1995 that would have put Paris in the
undisputed lead in the offensive against the working class
in Europe. The election of the Jospin government last year
reflected the fact that workers' resistance was increasing.
Now the tensions between Bonn and Paris have heightened over the so-called stability pact that Bonn was pushing in order to have a strong euro. The Amsterdam meeting, called to discuss modifying the European Union's constitution so that governments in eastern and central Europe could join it, was marked by sharp conflicts between Paris and Bonn over how to deal with demands by workers for relief from the economic crisis, especially unemployment.
The French rulers, with protesting workers breathing down their backs, won a fig leave - the "stability pact" was renamed "stability and growth pact," suggesting that not only price stability but also employment was a goal of the European Union. Legislation for a 35-hour workweek starting in the year 2000 was recently passed in the French parliament May 19, and strikes and other working-class protests continue.
Nor has Bonn been able to deal workers any significant blows, and it is not in the undisputed lead among the ruling classes of Europe. Eight years since the reunification of Germany, the government still must funnel about $100 billion from the west into the east to try to postpone a confrontation with working people in the east over the attempts to reestablish capitalist social relations in that region.
In the drive to cut workers' social wage, the Christian Democratic-led coalition government in Bonn is behind even the social democratic government in Sweden. Meanwhile, protests against unemployment have been taking place in Germany virtually every month.
In Greece, workers and farmers have mobilized in strikes and demonstrations to a larger extent than in other countries in capitalist Europe against the attacks being waged under the banner of the euro. But Athens has already joined the Exchange Rate Mechanism and promised to impose further austerity measures to be able to join the European common currency in 2001, an indication of how desperately the ruling class in Greece - as in Italy, Spain, and Portugal - needs the support of the stronger imperialist powers in Europe.
The current upturn in the business cycle in Europe lately has been mainly export-led. This means that the financial meltdown in Asia - and the next recession in the United States - will have a major impact on the European economies. Disputes within the EMU are then bound to increase over a "hard" or "soft" euro, confrontation or concessions to workers and farmers, protectionist measures, and other questions. This will heighten the centrifugal forces that can lead to the unraveling of the EMU and the European Union as the class struggle intensifies throughout the continent - east and west - in the years to come.
`Beware the delugé
The expansion of the European Union to eastern and
central Europe has exposed divisions among the big powers in
Europe over foreign policy. The Amsterdam treaty failed to
resolve urgent problems such as how to give more votes to
the big powers to guarantee them a majority when more
governments join the EMU.
"Agenda 2000," the proposed change in agricultural and regional subsidies to prepare the way for the enlargement, was criticized by the agricultural ministers of most of the EU countries when it was publicized in March by the European Commission, the EU's executive body.
Following the elections in Germany on September 27, the European Commission is to propose how much the different EU members must pay to finance EU budgets in the coming years after enlargement. This will cause even more tensions than the proposed cuts in the agricultural and regional subsidies. German minister of finance Theodor Waigel has threatened to block the budget if Bonn's payments are not reduced.
Meanwhile, Athens is threatening to block EU enlargement if Cyprus is not treated as a serious applicant for membership. In the European Union every member has veto power over the main decisions and, as the former British prime minister John Major did during the crisis around the mad cow disease, could block the EU from effective action.
The worries among ruling classes in Europe over the turbulence accompanying the moves toward economic monetary union were captured in the headline of an opinion column in the April 25 International Herald Tribune, "The euro will arrive, but then beware the deluge."
Carl-Erik Isacsson is a member of the metalworkers union in Sodertalje, Sweden.