SocialismToday           Socialist Party magazine

Socialism Today No 80 - February 2004

Fiasco in Brussels

THE ENTIRE European Union project faces its worst ever crisis after the breakdown of negotiations for a new constitution. The Brussels summit in December ended in an "extraordinary fiasco", as the Swedish news agency TT commented. This was only a few weeks after the effective breakdown of the eurozone’s so-called stability and growth pact.

Italy’s prime minister, Silvio Berlusconi, aimed to crown his period as EU president with the ratification of the new constitution. However, with the Polish prime minister, Leszek Miller, already on his way home, and French delegates packing their bags, Berlusconi was forced to admit that, "it became impossible to reconcile the contradicting views".

This is the first time a summit has failed to negotiate a new treaty. Previous problematic summits – Maastricht 1991, Nice 2001, Copenhagen 2003 – ended in some kind of compromise. "In reality, it was almost ten years of preparations for enlargement, 18 months of democratic debate in the European convention and two and a half months of governmental negotiations which ran into the wall", declared the Danish paper, Politiken.

The purpose of the constitution was to prepare the EU for the accession of ten new member states on 1 May 2004. The proposals included bringing in an EU president (instead of rotating the presidency as at present), a foreign minister, abolishing veto rights on several issues, and cutting the number of commissioners.

The hardest nut to crack, however, was the proposed voting rules. The draft put forward a ‘double majority’ system for decisions, requiring the support of at least 50% of the states, accounting for 60% of the EU population. This would have increased the power of Germany. According to the present rules, agreed in Nice 2001, Spain and Poland have almost as many votes as Germany, despite its population being bigger than these two combined. Miller and Spain’s José María Aznar used the issue in a nationalistic way, attempting to win back the support lost at home because of their backing for the US war and neo-liberal policies.

The war against Iraq was the catalyst bringing EU tensions to the surface. The ruling classes of Germany and France were not prepared to blindly obey the Bush doctrine and give a blank cheque to pre-emptive military attacks. At the same time, the Bush administration encouraged splits within the EU, where the Franco-German axis was challenged by Britain, Spain, Italy and others, as well as by the applicant states. The split between the US and Germany-France was partly covered up by the quick conclusion of the war, but has re-emerged with the growing problems facing the US occupation forces.

The other main crisis factor is economic. The eurozone economy did not grow in 2003, with actual recession for parts of the year in Germany, the Netherlands and Italy. This has resulted in an increased pace of cuts and counter-reforms, plus higher unemployment. The Netherlands has implemented a wage freeze, Portugal has sacked thousands of public sector workers, France, Austria and Greece have reduced pensions, Germany is attacking the benefits of the unemployed and sick, etc.

The budget rules of the EU - the so-called stability and growth pact - have become a millstone around the neck of the European economies. It demands that the total public sector deficit is kept below 3% of gross domestic product (GDP), with balanced budgets as the aim. Public sector debt must be less than 60% of GDP. But deficits are growing everywhere as a result of economic stagnation.

Last year, Portugal was forced to make massive cuts to reduce its deficit. But Germany, and even more clearly France, refused to obey the rules. For three years running, the two countries’ deficits have exceeded 3%. France’s state debt is over 60% of GDP. The eurozone countries are supposed to be fined if they break the rules – between 0.2-0.5% of GDP, depending on the size of the deficit. On 25 November, however, EU finance ministers decided not to punish France and Germany. Against were ministers from Austria, the Netherlands, Finland and Spain.

These two serious breakdowns within a month are a result of the new world situation, economic instability and the enlargement of the EU. German capitalists and politicians in particular have been a driving force behind enlargement, for economic gains and to create greater political stability. But the closer actual enlargement comes, the bigger the doubts.

The Polish government’s threat to use its veto at its first summit is one indication that the previous conciliatory approach within the EU has disappeared. The dominance of the French and German governments has been weakened. Additionally, the collapse of the present stability pact has undermined the EU in relation to the new member states. Only three out of ten new states have deficits in line with the pact’s rules.

This is why the German chancellor, Gerhard Schröder, and French president, Jacques Chirac, were so eager to reach agreement on the proposed constitution. In order to strengthen their position, the British prime minister, Tony Blair, was invited to join an unofficial ‘trilateral’ leadership grouping. The most concrete outcome was the decision on military cooperation, where EU states can form an inner military nucleus, partly outside both the EU and Nato. Despite being part of this agreement, Blair has assured Washington that this is not a challenge to US military superiority.

The German foreign minister, Joschka Fischer, warned after the fiasco in Brussels that the EU could split in two. This is a scenario for which the German and the French governments have been preparing: "According to the French president, the main powers of Europe must ‘seriously consider’ an EU at several different speeds" (Politiken). Chirac spoke of "pioneer groups" of countries acting in advance of others – an ‘avant-garde’. Schröder referred to an EU on different levels. Militarily, there is already an agreement between Belgium, Luxembourg, Germany and France. The Netherlands is also regarded as part of the inner nucleus. At the same time, however, these states are in constant competition with each other.

The constitution itself is less important than the political crisis and the loss of prestige caused by the fiasco. The EU has rules in place without the constitution. Even if a compromise could be reached under the Irish presidency in the first half of 2004, it still remains for the member states to agree. Seven have promised referendums, among them Ireland and Denmark where No campaigns have won recent EU referendums. The Swedish prime minister, Göran Persson, was among those advocating that all negotiations be postponed until the second half of 2004 or even 2005.

The Swedish daily, Dagens Nyheter, asks in its editorial, ‘will the EU hold in a future with 25 member states?’ Even the most prominent EU supporters no longer know which EU they are defending. The deep crisis could lead to an EU which is a ‘mini United Nations’, where leaders meet and talk without reaching any real decisions. Federal ideas, to move power to an executive in Brussels, are now weaker than for a long time.

The deep crisis shows that the capitalists and the politicians cannot reach their dream of a united Europe, with a ‘free’ economic market and political/military muscles strong enough to challenge the US as a world power. The governments of the big countries, representing their countries’ capitalist classes, are not prepared to give up decisive powers. The contradictions between the interests of the capitalists in different countries are too big. New conflicts are already appearing – over the new EU budget to be implemented in 2007, for example. Germany has warned Poland and Spain that their grants will be cut, a punishment for the recent disputes.

The whole eurozone will be economically shaky, with the possibility that the economic and political crisis in Germany even leads to a break up of the euro. The new member states are therefore very far from ever entering the single currency.

One thing is sure, however. The politicians will continue to agree with each other on attacks on workers, young people, pensioners, refugees and other groups. The present attacks in Germany and France are only a prelude to what the capitalists demand. These attacks will further increase the gap between the rulers and ordinary people. According to a recent EU survey, only 48% of EU inhabitants see the EU as something positive, the lowest ever figure. The EU elections in June will most likely see the lowest ever participation, but also give opportunities for new alternatives. Nationalist parties will attempt to gain from the crisis. The necessity to make the trade unions into fighting organisations and to build new mass workers’ parties is therefore urgent.

Per-Åke Westerlund,

Rättvisepartiet Socialisterna (CWI Sweden)


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