BY MAURICE WILLIAMS
BROOKLYN, New York - "Capitalist politicians in the European Union [EU] say that they have to reduce public spending to qualify for the European Monetary Union, [EMU]," said Sven Carlsson, a communist leader from Sweden, at a December 6 Militant Labor Forum here. He noted that the falling rate of the bosses' industrial profits and the competitive edge of U.S. imperialists is driving their rivals in Europe to attempt to squeeze more out of the working class there. "The attacks by the bosses are made in the name of achieving European unity and a common European currency," he explained.

Carlsson stated the deepening capitalist economic crisis is tearing apart the European Union, not leading to any convergence or unity among those regimes. The rulers are pressed to gut the social wage of working people, but with unemployment hovering at post-war highs, they are fearful of provoking social explosions as they attempt to carry out these assaults. While participants in a recent meeting of EU ministers agreed that governments in Europe must try to end what they term the "dependency culture," they passed a resolution acknowledging that social benefits "can make a significant contribution to the maintenance of social peace."

These social gains are the product of massive struggles by workers in Europe. In Germany, for instance, 60,000 steelworkers waged a 114-day strike in 1957 that ended with the unions establishing sick pay benefits of 90 percent where none existed before. The workweek for many there is 35 hours, and some plants in the steel industry shut down for five minutes once an hour. Employees are entitled to four weeks at a health spa every three years and workers suffering from stress or backache are prescribed breaks in mountain resorts, which do not count as holidays.

Carlsson pointed to the 12-day truckers strike in France last November, where drivers won demands for higher pay, better sick benefits, shorter hours, a ban on Sunday driving, and a retirement age of 55, instead of 60, on a pension at 75 percent of gross wages. In 1995, French prime minister Alain Juppé tried to raise the retirement age for public workers to 60 years. This measure was pushed back, after it ignited a strike wave in November-December led by rail workers. A third of Francés public workers retire at 50, including rail conductors and Paris bus drivers.

Editors of London's Financial Times expressed "outrage" at the "substantial victory" by the truckers, and worried that their victory might be "contagious."

Criteria to join monetary union
The heads of state in the European capitalist governments declared Jan. 1, 1999, as the date to establish a common currency - the euro - and to qualify for membership in the EMU. The requirements for membership include slashing public deficits to no more than 3 percent of gross domestic product and a two-year membership in the Exchange Rate Mechanism (ERM) system, which limits currency fluctuations to a range of 15 percent above or below the German D-mark. Twelve of the 15 EU countries participate in the ERM.

The terms were derived from the Maastricht Treaty adopted in 1991, which was renamed the "stability and growth pact" at an EU summit held in Dublin December 12-14.

In his talk Carlsson explained, "European unity was promoted in the late 1980s by rulers in France to as a way to counter competition on capitalists in Europe from U.S. bosses." French president Jacques Chirac recently declared on television that Paris wishes to use the euro as a "means to fight against the U.S. dollar."

If capitalist bosses in Europe do not consolidate their enterprises, "it will be impossible to challenge the U.S. giants," wrote Bernard Gray for the London daily Financial Times.

An assault by the U.S. bosses on the working class in the 1980s lowered their production costs by driving down the price of labor power, Carlsson said. Before 1985, the hourly wage rates in the United States were higher than any of its major imperialist competitors in Japan, Germany, France, Britain, Italy, or Canada. Within a decade, U.S. capitalists became more competitive against their rivals in Europe or Japan.

Manufacturing output in the United States rose by more than 57 percent between 1980 and 1995, while the output of countries in the EU increased only 23.4 percent during this period. The U.S. industrial output per person remains the highest in the world. Capitalists in Germany and other countries in Europe are hampered by the fact that they have not yet been able to smash the system of social insurance and related gains - health care, unemployment compensation, pensions, vacations - that the working class and labor movement won in the decades following World War II.

Unified Germany doesn't resolve crisis
Carlsson explained how capitalists throughout Europe dreamed of massive profits with the fall of the Stalinist police apparatuses Eastern Europe in the beginning of 1989, which opened the door for reunification of Germany. "The capitalists exuberated a huge euphoria over prospects for capitalist growth in Eastern Europe, Central Europe, and the former Soviet Union," said Carlsson. "They all jumped on the train, pegging their currencies to the D-mark, even Sweden."

In the post-war economic boom in the 1970s, the "German miracle" became an expression as West German capitalism had rebuilt its productive capacity with the latest technology, becoming the dominant power in Europe.

The rulers in France, the United States, the Soviet Union, and elsewhere wanted to keep Germany divided. Reunification, Carlsson pointed out, was feared by Paris and London because it meant reduced status for them in world politics and less weight in politics in Europe. Also Britain's capitalist rulers are less able to lean on a "special relationship" with Washington as a counterbalance to the growing dominance of Germany in Europe and the continuing decline of British imperialism.

"We underestimated the problems in eastern Germany," stated Chancellor Helmut Kohl in 1992. "To get the economy going the east will take longer and cost more money than we thought." By the end of 1995, Bonn was spending between DM150 and DM200 billion a year [US$59-127billion] to subsidize state-owned industries in the eastern part of the country. Lothar Spath, a prominent west German politician and businessman, estimated in September 1995 "the new federal states are dependent on subsidies in amounts comparable to today for at least 10 years." The social relations of the workers state in eastern Germany block profitable capitalist investments, and will not be reversed short of violence to reestablish capitalist property relations.

Bonn has also paid $70 billion in loans and aid to Russia since reunification, including money Moscow demanded to pull its troops out of eastern Germany. The German government has paid a disproportionate amount of the sums paid by the IMF and World Bank to Russia. France and other capitalist countries in Europe had squeezed Bonn to do so because the German mark had grown very strong.

Reunification has become a tremendous burden on German mark, and in fact makes the prospects for a united Euro dimmer than ever. Bonn pays nearly two-thirds of the nearly $100 billion a year budget of the European Union that financed mostly agriculture subsidies for countries in the southwest of Europe - France, and especially Italy, Greece and Spain.

Rising tensions in currency talks
The November 25 admittance of Rome to the exchange rate mechanism highlights the growing tensions between the capitalist regimes in Europe. Along with London, Rome was booted out the currency system, following a devaluation of the lira in 1992. Finance ministers debated the terms of agreement for two days in Brussels.

Rome introduced a special "Euro tax" in November which would be applied on a one-off basis for 1997, starting at 1.5 percent of incomes over US$14,973 a year. The tax is part of an austerity package designed as an attempt to meet the criteria for Italy to join the EMU. The government has pledged to repay up to 60 percent of the tax beginning in 1999.

The right-wing opposition led by former prime minister Silvio Berlusconi attacked the levy and organized a demonstration in Rome on November 9 of 500,000 people to protest the tax increase. Groups of young fascists participated in the rally shouting "Duce" and raising their arm in the fascist greeting as a tribute to Benito Mussolini.

Other capitalists in Italy expressed disappointment with the agreement for the country's reentry into the exchange rate mechanism. "There isn't anyone in the chancelleries of Europe who does not know that one of the conditions of success of the euro is that Italy remain outside," wrote a commentator in the Italian daily Il Messagero. "First of all, neither the Germans nor the French want us."

Chirac accused Italian government of joining the EMU for competitive advantages because of the weak lira. "Paris wants the lira to be brought back into a system that favors French exports," Carlsson explained. According to the International Herald Tribune, diplomats say Paris has been pushing for the lira to be readmitted at a rate of 950 lira to the D-mark rather than 1,000 the Italian rulers wanted.

When the lira was accepted into the ERM at 990, Hans Tietmeyer, president of the Bundesbank in Germany remarked, "It is certainly not a comment on Italy's qualifications for monetary union." Tietmeyer said the decision did not guarantee Rome's chances of being admitted to the monetary union. He denounced as "tricky maneuvers" the attempts by the governments of Italy, Spain, and France to achieve the requirements of the EMU.

French officials call for devaluation
In another EU controversy, Valéry Giscard d'Estaing, former president of France and a founder of the European Monetary System, sparked a ruckus when he asserted that the franc needed to be devalued, particularly against the dollar, to make French industries more competitive. He said the move would also boost growth and reduce unemployment, which is nearly 13 percent of the workforce.

Two members of the Bank of Francés monetary council have also called for a devaluation of both the franc and the D-mark against the dollar. They openly questioned whether the government's 14-year policy of linking the franc with the mark has become too burdensome.

Aides to Chirac say any abandonment of the franc-mark parity would inflict a mortal blow to future European unity and would encourage Bonn to establish a mark zone in central Europe, leaving France stranded on the periphery.

Tietmeyer, however, asserted that Europe's fate may depend less on whether it creates a single currency than on its ability to restructure the welfare state - that is slash workers' social wage - and cope with the strategic repercussions from the collapse of the former Soviet Union. He stated Europe's competitiveness can only be restored when politicians show the courage to cut deficits as stipulated by the Maastricht treaty and if discipline is enforced to make the new euro as sound as the D-mark.

"There is no chance for Europe to become a federal state like the United States. We do not have the same binding forces, with one big single budget, the same tax and pension system," said Tietmeyer. "That's why, in 10 years time we in Europe will still live in separate nation- states."

Meanwhile, government officials of two of the three EU countries still outside the ERM, Britain and Sweden, opined that participating in the exchange rate system would not be a decisive condition for joining the EMU. "Our position is clear: we do not intend to join the ERM and we cannot be forced to join," one UK treasury official told the Financial Times in late November.

Erik Asbrink, finance minister from Sweden, asserted that Rome's decision to enter the ERM would "not influence Sweden's decision on ERM participation."

Yannos Papandoniou, national economy and finance minister of Greece, the other EU country outside the exchange rate mechanism, said November 25 that he was preparing the "toughest budget in 15 years" to ensure the country was ready for EMU.

Carlsson pointed to the Maastricht treaty as "sort of a political action program for the ruling classes in Europe." They must wage

assaults on the working there and lower the social wage, Carlsson said. "When the bosses in Germany attempted to implement a cut in sick pay benefits, they set off defensive strikes and protests involving hundreds of thousands of workers.

"Giscard d' Estaing can dream of devaluing the franc, and sell more commodities, but in the end you can't make a dent by writing down your currency," he explained. "You have to lower the social wage. But like the French truckers strike, there will be more battles by workers that destabilize capitalist equilibrium."

Carlsson mentioned the walkout of more than 400,000 steelworkers in Germany on October 24 protesting the bosses' attempts to cut sick pay benefits. An earlier strike and demonstrations involving up to some 100,000 workers forced the employers at Mercedes-Benz and other companies to back down over the sick pay dispute.

Elsewhere in Europe, a national strike involving some 7 million workers demanding higher wages was organized December 13 in Italy, while thousands of working farmers in Greece ended their road blockades just before Christmas. The farmers, who were calling for higher prices for their products to guarantee them a living income among other demands, had mobilized up to 10,000 tractors to shut down the country's main transportation arteries.

Carlsson noted that some figures in the workers movement, such as Socialist Party leader Lionel Jospin of France, have called for supporting the EMU. But workers should not get trapped in the framework of the EMU debate.

"Whether there will be a European Monetary Union is not so important for the working class," Carlsson explained. "The key is to resist attacks by bosses. Workers need their own action program." Defending immigrant rights and extending social entitlements are an important part of a working class program to fight against the bosses' austerity measures. The fight for a shorter workweek with no cut in pay and jobs for all is essential to forging unity among the working class, he said. More than four million people are unemployed in Germany while the jobless rate in France is at record highs. Above all, he said, working people need international solidarity, not to take sides in the conflict among capitalists over a common currency.

"There will be more and more instability in Europe," Carlsson stated. "The great thing about this is the struggles and the political polarization, which will increase. The rulers in Europe today have to go directly after the working class as a whole and that will provide great openings for communists."  
 
 
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