The budget includes a tax cut promoted by President Jacques Chirac that amounts to 30 billion euros over the next five years, and a substantial increase in "law and order" spending on the police and other agencies of repression. These plans would "delay the move to a balanced budget," reported the Financial Times.

The French rulers, along with their counterparts in the 14 other EU-member governments, had previously pledged to abide by the 1991 Maastricht treaty stipulating that budget deficits are not supposed to exceed 3 percent of Gross Domestic Product.

Paris is not the first government to be placed in this position. In February, officials in Germany--the other dominant power in the EU--successfully pressured a meeting of finance ministers to refrain from issuing an official warning about the scale of the German deficit. The budget shortfall rose to 2.7 percent this year, close to the 3 percent ceiling. The government of Portugal has also admitted that it is struggling to stay under the 3 percent limit.  
 
Pressures with common currency
The January 1 adoption of the euro as the official currency of 12 member governments, following a three-year phasing-in period, has tended to pose more sharply than before the tensions and contradictions inherent in a monetary union and trade bloc made up of competing capitalist powers.

For the ruling classes in the EU-member countries, the new currency brings with it the potential benefits of rationalizing and simplifying international exchanges in their ballooning trade across Europe. As the EU expands eastward to incorporate a dozen more members, the capitalist rulers are more concerned than ever with reducing the overheads and complications involved in the use of dozens of different national currencies.

From the first, however, the adoption of the euro exacerbated tensions and conflicts among the competing imperialist powers. Immediately following its roll-out in January, the Italian foreign minister resigned, saying that he was "filled with sadness" by his fellow ministers’ lack of commitment to the new currency and to European integration.

Italian prime minister Silvio Berlusconi, a rightist who leads a coalition government that includes the fascist-oriented Northern League Party, said that "we remain totally committed to Europe, but we also reserve our right to defend our interests, just as the French and the Germans and the British do."

On paper, at least, the EU rules are enforced by the European Commission, made up of 20 delegates from member governments. Most countries are entitled to one representative, while Germany, France, and other larger powers qualify for two. The commissioners, who sit on top of a bureaucracy numbering 27,000 people, have the formal power to institute legal proceedings against member states or businesses that fail to comply with EU regulations and with laws passed by the elected European parliament.

In theory, the commissioners are pledged to put EU laws and regulations before national concerns. In reality, reported the Times, they have tended to act "on behalf of their own national governments rather than in the interests of the European Union as a whole."

One month ago, reported the London-based daily, the governments of France, Italy, and the Netherlands instructed their representatives on the European Commission to split the body and block its attempts to outlaw tax incentives to trucking firms based on their soil. Their action dealt a significant blow to the commission’s declared aim of curbing "state aid" to national enterprises.

Relations between the "unelected bureaucracy" in Brussels and the member states are in danger of deteriorating further, noted the Times, citing calls by the German government for "a more flexible industrial policy" and for fewer restrictions on corporate mergers. Earlier this year the Commission took the Portuguese government to court to try to reestablish a ban on subsidies for pig farmers.

The "Brussels bureaucracy" and the way its rulings can impinge on national capitalist interests have increasingly become issues in domestic politics. Rightist politicians like Jean-Marie Le Pen in France have increased their electoral following by attacking ruling parties for allegedly selling out their "national sovereignty." Le Pen has demagogically described the euro as a "currency of occupation."

Among working people confronted by a government and employer offensive on their living standards and rights, such right-wing rhetoric has at times gotten a hearing, since ruling-class attacks are frequently carried out in the name of qualifying for membership in the "eurozone."  
 
Differential impact of economic crisis
The EU is marked by deep social and economic inequalities between the largest powers, such as France and Germany, and the more backward imperialist countries like Spain and Portugal.

Faced with the probable failure of her government to meet the EU 3 percent limit, the Portuguese finance minister, Manuela Ferreira Leite, said in early May that "the consequences of deviating from the [Maastricht] pact are far more serious for Portugal, which needs Community funds to catch up with the rest of Europe, than for countries like Germany or France. We have to take drastic action because the threat of sanctions is very real." Ferreira Leite announced "emergency measures," including an increase in the country’s value-added tax from 17 percent to 19 percent, a freeze on new hiring by the government, and the closure or merger of more than 70 state institutes.

The Spanish government has raised concerns about the proposals to expand EU membership to incorporate a number of countries to the east of Germany, all of which are relatively underdeveloped. Madrid fears that with such an influx it will no longer qualify for the EU development funds of which it is the largest recipient. The funds are earmarked for countries where the per capita income is less than 75 percent of the EU average.

In May of last year, reported the Financial Times, the Spanish government "backed down from a bruising dispute with Germany over Madrid’s bid to link an agreement on European Union enlargement to guarantees on future regional aid."

Sinn Fein, the party that fights for Irish unification and against British rule in the north, pointed to the inequalities among the EU member states during the campaign it waged last year against the incorporation of the EU’s Nice Treaty into the Irish constitution. The proposal was defeated in a June referendum.

The treaty, said Sinn Fein leader Gerry Adams, would pave the way "for the creation of a new superpower, an EU Superstate with its own army dominated by the largest countries." In the structure outlined in the document, he said, "larger states like Germany, France, Italy, and Britain automatically treble their votes in making EU laws from 2005 while small states like Ireland only double theirs. [This] is about further centralizing the EU, placing greater power in the hands of the largest states and allowing them to create a two-tier EU."  
 
Berlin asserts ‘leadership role’
Even between France and Germany, the two most powerful imperialist powers in the EU, the member countries’ voting powers have proved a bone of contention. Under a plan floated by German chancellor Gerhard Shröder last April, the European Commission would assume some governmental powers over the member states. The proposal "reflects Berlin’s efforts to carve a greater German leadership role in Europe," wrote the International Herald Tribune.

Under Berlin’s blueprint, the limited authority of "the existing European Parliament...would command ‘complete budget authority’ in a move that could infuriate French champions of the union’s common agricultural policy," reported the paper. "The French have fought to retain influence over farm policy and its massive subsidies, which accounts for almost half of the total EU spending." Paris is the largest recipient of these funds.

"The French are tense," said Anne-Marie Le Gloannec, the deputy director of a French social science institute in Berlin. "If the Germans speak of federalism, they will think that Europe will become Germany writ large." In May of last year French prime minister Lionel Jospin rejected the German proposals and huffed that "like many convinced Europeans, I am attached to Europe, but also to my own nation."

Indicating the chauvinist fear of German imperialist power nurtured by many in the British ruling class, one Tory MP bluntly described the German chancellor’s blueprint as a "Germanic master plan."

The German-promoted proposal to expand the EU eastward, incorporating 12 new governments, has been a growing source of tension. The German rulers stand to benefit the most from this expansion, since it will permit further development of their invest ment and trade with the countries of eastern Europe, two of which, Poland and the Czech Republic, share a common border with the German imperialist colossus. In the past decade a number of German corporations have moved their manufacturing operations the two countries, where wages are frequently 80 percent lower than those in Germany.

All but two of the prospective members are workers states whose economies are still marked by the social relations forged with the overturn of capitalism following World War II. The pro-capitalist rulers of Poland and other such states are driving to impose austerity measures on workers and farmers in order to qualify for EU membership and the trade and investment they expect it to bring.

At the same time, they balk at the massive task of dismantling the institutions of the nationalized economy and the social relations bound up with it. Warsaw has proposed a delay of 18 years in granting permission for private sales of land following its accession to the EU. Hungary and the Czech Republic, which have proposed a ten-year land-sale moratorium, "fear Germans would snap up much of the land," according to the Financial Times. The French government has declared its opposition to such transitional measures.  
 
Tensions over agricultural subsidies
Far from diminishing, tensions and disputes between the two largest imperialist powers in Europe are tending to sharpen somewhat. Writing in the May 10 Tribune, John Vinocur stated that a "major clash" is in the offing between France and Germany that "nobody in France’s hierarchy likes to talk about."

Both the Social Democratic and Christian Democratic candidates in this year’s German elections, wrote the journalist, "have made clear that time is up for the European Union agricultural arrangement that requires Germany to shell out billions to support French farmers. The arrangement is one of the basic Franco-German political understandings of postwar Europe and the Germans, across the board, want rid of it."

Berlin’s stance, added Vinocur, "signals Germany’s readiness (in full observation of the diplomatic niceties) to assume leadership of Europe now that 10 countries in its economic orbit are entering the EU over the next five years."

Even as they jockey to try to gain advantage against their rivals, the French rulers are confronted with the fact of the much greater weight of the German capitalist economy. At $1.8 trillion, the German GDP is almost 40 percent greater than that of France, the next largest European economy. Some 35 percent of the economy is devoted to exports, more than half of which are in the EU.

At the same time, in spite of its exporting prowess, the German capitalist economy has been in the doldrums for much of the last decade, recording the slowest or second-slowest growth in Europe for the last six years. Official national unemployment stands at almost 10 percent. In the east the figure reaches above 15 percent.

Assessing these problems, the February 28 New York Times described Germany’s "economic anemia at home, unhealthy dependence on exports...[and] inability to carry out much-needed financial and economic changes."

The "changes" advocated by the Times would involve cuts in social services and wages, requiring a deepening of the offensive against working people that the German capitalists--in common with others in continental Europe--launched years later than their rivals in the United States and the United Kingdom.

"The biggest reason why, in the past decade, the American economy has grown more than 60% faster than Western Europe’s and why its unemployment rates have been nearly twice as low," lamented an editorial in the May 11 issue of the London-based Economist, "is that Europe’s product and labour markets have been too rigid, its welfare too generous, its social costs too high for would-be entrepreneurs, its governments too scared to liberalize faster."

Two errors in an article which appeared in the May 13 issue, titled "Vote in France deepens crisis of bourgeois parties," have been brought to our attention. The first is the statement that the 28 percent abstention rate was the highest in French history in a "national vote." In fact the abstention rate was the highest ever in a presidential election. The presidential system in France began under the government of Gen. Charles de Gaulle in 1958. De Gaulle was the first president and assumed office in January 1959.

The article also noted that both the Gaullist party of President Jacques Chirac and the social democratic party of Lionel Jospin "are more and more seen by working people as co-responsible for the antilabor offensive at home. Offering no solutions to the economic hardship millions face on a daily basis, they face collapse." The final phrase of the last sentence is, on the face of it, incorrect, since both parties continue to function in French bourgeois politics.
 
 
Related articles:
Industry-wide strikes rattle bosses in Germany  
 
 
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