Strikes and Protests Across the Continent
Europe is Revolting
by TOM GILL
London.
A general strike in Greece, massive protests by the indignados in Spain, public transport strikes in Portugal (and Spain), and industrial action by aluminium, steel and public sector workers in Italy headlined this week.
On Saturday mass protests will erupt again in Portugal as the indignaos movement that brought out a million into the streets of the country on September 15 – the same day there was another huge scale turn out into the plazas in Spain – join action called by the country’s largest trade union, CGTP.
And it’s not just in the Continent’s south. On Sunday mass demonstrations are expected in France, calling for a referendum over the EU Fiscal Compact, the ‘permanent austerity’ treaty.
The focus of popular anger is ‘Europe’s austerity madness’, as Paul Krugman puts it in his latest column in the New York times. But the protests also reflect a wider rejection of a political elite that is rolling back basic democratic rights, from protections at work to welfare support and gains for women and minority groups, and privatising as well as slashing public services.
A slew of economic data this week confirmed what is now patently obvious to anybody but the criminally insane (and economists) – austerity is not working. Eurozone business confidence fell to a three-year low and a number of other indicators across the continent pointed towards recession. Most damning for the architects of austerity, unemployment is rising in Germany, which was until now a mainstay for growth in the 17 nation economic and monetary bloc.
Overall, the eurozone economy stagnated in the first three months of the year and contracted 0.2% in the April-June period. Economists now expect another economic contraction in the third quarter. The European Central Bank meanwhile released data that showed lending to households and companies fell, and by more than expected, in August.
Yet Europe’s austerity madness continues. This week Spain, Greece and France pushed ahead with fresh programmes of spending cuts. In Greece, at least 11.5bn euros ( £9.1bn) will be axed from the national budget. In Spain there will be another 20 billion euros of cuts. In France, President Francois Hollande’s government is going for a 30 billion euro cuts package.
What do these huge but dry numbers mean in practice?
18 million unemployed across the Eurozone, for starters, to which another million will be soon added, according to a new report by Ernst and Young.
In Greece, a cuts package near agreed by the government will see wage cuts, a rise in the retirement age from 65 to 67 years, cut backs to pensions – lengthening the contribution period to get the minimum pension – cuts in benefits for the disabled and the sick, cuts to health benefits, cuts to unemployment benefits for workers temporarily laid off in the construction industry, in hotels and in other sectors, new cuts to spending on hospitals, and an average 12% reduction in the salaries of soldiers, policemen and judges.
In Spain, the “depression budget” as Socialist economy spokeswoman, Inmaculada Rodríguez Piñero, describes it, will see the wages of millions of public sector workers frozen for the third year in a row and pensions cut in real terms, and there’ll be no relief for collapsing health services, schools and social services. And the arts and culture will take a massive hit, with cuts hurting renowned institutions such as the Prado and Reina Sofía museums, another self-defeating move that will no doubt hit tourism.
Austerity has already resulted in over a million Spaniards queuing at the doors of charities for food handouts and other aid. That’s a tripling since 2007, according to Caritas. And it is not just in the south. In France poverty is on the rise particularly among the young, including students.
The health effects of mounting misery are being felt too. A quarter of Portuguese are now suffering from depression, according to a new study.
The perversity of austerity – which at its most fundamental level is about drastically curtailing the capacity and incentives for 320 million odd people to spend – was highlighted yet again this week. Despite all the cuts, it turns out that Spain’s spending is actually set to go up. That’s because of a soaring social security bill to pay benefits to the unemployed and interest rate payments on sovereign debt that have been driven once again by international speculators who are right in just one respect – without growth a country’s public finances will just go from bad to worse and so lending to Spain and other recession-hit countries is most definitely a risky business.
This is something that the new mechanism to ‘save’ struggling Eurozone states – the ?500 billion European Stability Mechanism that forms part of the EU Fiscal Compact – will not fix. To the contrary. It will bury them deeper into the ground. The fund will swallow up about a quarter of the cuts Spain has just pushed through its own budget in order to save itself, and around a third of those planned in Portugal.
The reality is the latest round of EU centralising moves, from banking union, to ECB sovereign bond purchases and the EU Fiscal Compact that President Francois Hollande wants ratified in parliament next month – even at the cost of splitting his Socialist Party and deep divisions with his Green allies – are based on a huge lie. That greater integration and renouncing national sovereignty are essential to fix the Continents’ financial and economic problems.
Spain, Italy, Portugal and Greece don’t need an international rescue. Their own ruling classes have more than enough to bail their own nations out. In Italy, private wealth stands at 8.6 trillion euros, according to the Bank of Italy, or more than four times the country’s public debt mountain of around two trillion euros. If the wealth of the top 50% richest were taxed at a rate of 2%, that could raise more than 100 billion euros annually. A moderate tax on the top 1% could bring up to ?15 billion annually into the state coffers. And then there’s the hundreds of billions in dodged taxes, facilitated by tax amnesties and tax havens that cash-strapped governments across the currency bloc like to talk much about, but don’t ever shut down.
Even Portugal, the poorest of EU nations, can dig itself out of its own hole if it wishes. The government caused outrage by proposals to raid the incomes of workers through a massive hike in social security contributions, a measure now withdrawn the mass protests earlier in the month. The government needs to save ?4.9 billion in 2013. The CGTP trade union confederation knows how it could plug that hole and indeed beat that target. Its ?6 billion budget proposals, unveiled last week, comprise a new 0.25% tax on financial transactions (?2 billion), a 10% surcharge on dividends targeting the largest shareholders (?1.7 billion), a higher, 33.33% rate of corporate tax for larger companies with turnover above ?1.2 million to be implemented in a progressive fashion (?1.1 billion) and a plan to combat fraud and evasion, through deploying more inspectors, setting targets to reduce the black economy and by broadening the tax base (?1.2 billon). But that plan would of course mean Portugal’s 1% paying their dues.
There’s dozens of other costed proposals out there that could tackle Europe’s debt burden and provide plenty of funds for growth, jobs and public services without hurting raiding the pockets of working people.
Take Italy again and international missions like Afghanistan that are in place in the name of peace and humanity but are instead resulting in death and destruction. Withdrawing from these commitments would not only save lives abroad but save Italians ?a tidy 616 million, according to campaign group Sbilanciamoci!, money that could be spent on improving their quality of life. Taking the axe to the military budget could yield ?3 billion.
But these solutions don’t fit the priorities of the current crop of EU leaders (with the notable exception of socialist-led France where at least the government has moved to impose a 75% tax on the incomes of the very rich). Their number one goal is to protect the billionaires, the corporations and the banks. And so, amid on the penury for ordinary people, plans roll on for blank cheques– including the 100 billion euro bailout of Spain’s reckless bankers – underwritten by millions of ordinary Spaniards and their European brothers and sisters.
Opinion polls across the EU show a growing popular rejection of European governments and their neo-liberal policies. In Spain, almost three quarters of Spaniards disapprove of Mariano Rajoy’s handling of the country’s economy. More serious for Euro supporters, a majority in a nation that once was a bastion of support for the EU now think the Single Currency is bad for the economy. And if it can’t deliver on that, what’s the point of it at all? A question no doubt on the minds of a great many people in a Europe now in open revolt.
Tom Gill is a London-based writer and journalist. He blogs at www.revolting-europe.com on European affairs from a radical left perspective.
Rioters beat a policeman during a rally against government austerity measures in Athens. Photograph: John Kolesidis/REUTERS
Throughout the 1980s and 90s, when many developing countries were in crisis and borrowing money from the International Monetary Fund, waves of protests in those countries became known as the "IMF riots". They were so called because they were sparked by the fund's structural adjustment programmes, which imposed austerity, privatisation and deregulation.
The IMF complained that calling these riots thus was unfair, as it had not caused the crises and was only prescribing a medicine, but this was largely self-serving. Many of the crises had actually been caused by the asset bubbles built up following IMF-recommended financial deregulation. Moreover, those rioters were not just expressing general discontent but reacting against the austerity measures that directly threatened their livelihoods, such as cuts in subsidies to basic commodities such as food and water, and cuts in already meagre welfare payments.
The IMF programme, in other words, met such resistance because its designers had forgotten that behind the numbers they were crunching were real people. These criticisms, as well as the ineffectiveness of its economic programme, became so damaging that the IMF has made a lot of changes in the past decade or so. It has become more cautious in pushing for financial deregulation and austerity programmes, renamed its structural adjustment programmes as poverty reduction programmes, and has even (marginally) increased the voting shares of the developing countries in its decision-making.
Given these recent changes in the IMF, it is ironic to see the European governments inflicting an old-IMF-style programme on their own populations. It is one thing to tell the citizens of some faraway country to go to hell but it is another to do the same to your own citizens, who are supposedly your ultimate sovereigns. Indeed, the European governments are out-IMF-ing the IMF in its austerity drive so much that now the fund itself frequently issues the warning that Europe is going too far, too fast.
The threat to livelihoods has reached such a dimension that renewed bouts of rioting are now rocking Greece, Spain and even the usually quieter Portugal. In the case of Spain, its national integrity is threatened by the separatist demand made by the Catalan nationalists, who think the austerity policy is unfairly reducing the region's autonomy.
Even if these and other European countries (for other countries have not been free of protests against austerity programmes, such as Britain's university fees riot and the protests by Italy's "recession widows") survive this social unrest through a mixture of heavy-handed policing and political delaying tactics, recent events raise a very serious question about the nature of European politics.
What has been happening in Europe – and indeed the US in a more muted and dispersed form – is nothing short of a complete rewriting of the implicit social contracts that have existed since the end of the second world war. In these contracts, renewed legitimacy was bestowed on the capitalist system, once totally discredited following the great depression. In return it provided a welfare state that guarantees minimum provision for all those burdens that most citizens have to contend with throughout their lives – childcare, education, health, unemployment, disability and old age.
Of course there is nothing sacrosanct about any of the details of these social contracts. Indeed, the contracts have been modified on the margins all the time. However, the rewriting in many European countries is an unprecedented one. It is not simply that the scope and the speed of the cuts are unusually large. It is more that the rewriting is being done through the back door.
Instead of it being explicitly cast as a rewriting of the social contract, changing people's entitlements and changing the way the society establishes its legitimacy, the dismembering of the welfare state is presented as a technocratic exercise of "balancing the books". Democracy is neutered in the process and the protests against the cuts are dismissed. The description of the externally imposed Greek and Italian governments as "technocratic" is the ultimate proof of the attempt to make the radical rewriting of the social contract more acceptable by pretending that it isn't really a political change.
The danger is not only that these austerity measures are killing the European economies but also that they threaten the very legitimacy of European democracies – not just directly by threatening the livelihoods of so many people and pushing the economy into a downward spiral, but also indirectly by undermining the legitimacy of the political system through this backdoor rewriting of the social contract. Especially if they are going to have to go through long tunnels of economic difficulties in coming years, and in the context of global shifts in economic power balance and of severe environmental challenges, European countries can ill afford to have the legitimacy of their political systems damaged in this way.