A new European video summit will take place on Thursday. The path of the Eurobonds is definitively closed. “Alternative routes” with less weight are being put forward to the media which, because they take place “within the treaties”, would not require extensive negotiation but would … further centralize the Union as a paradoxical response to the greatest wave of disapproval by the member states since its foundation. And at a time when rough Brexit seems more likely than ever and the Brussels bureaucratic machinery is jammed as never before.
One does not need to be a genius in order to see that the balance of power between the European states is being shattered. In Germany, the nationalist ultra-right wing is calling for a referendum on exiting the EU, using the same arguments that Merkel and her economic teams have been using for the last fifteen years against Greece first and then against all the southern countries, the famous “Nordism”.
Who would have imagined just six months ago in Spain that statements like those made by the Extremaduran president yesterday would not create a scandal?
Europe doesn’t mean countries coming together to buy cars from Germany. It is not just a market where people buy and sell, it is a political space that we share. If the northern countries want us in the south to continue consuming, they will have to help us in this difficult time. Furthermore, I think that the impact of the virus has had a direct relationship with the levels of tourism. In countries where there has been more mobility of people there are more cases.
Meanwhile, 71% of Italians believe that the covid-19 epidemic destroyed the EU and approximately 55% would agree that the country should leave the Union, or at least the euro. Following the tide, Conte hardens his anti-German discourse. But doing so means increasing the tension with Renzi’s in the coalition government. A first sign that the coming battle in the countries of Southern Europe will be simultaneously between factions of the national bourgeoisie over their imperialist alignment and increasingly against Germany.
Brussels, Frankfurt and Merkel
Faced with the increasingly clear prospect of a EU collapse, the European Commission is reacting by raising the tone of conflict with China and the US. It is already talking openly about an “economic war” accelerated by the Covid, and invites its member states to “relearn the language of force as a first level geostrategic actor”.
And yet, when the ECB proposes to create a “bad bank” to clean up the irrecoverable debts that remain, above all in the Italian and Greek banks, and reduce the risk of financial crisis during the recession that is already underway… The European Commission blocked the attempt on the grounds that the Union, in order to be able to accept accounting changes or public aid, requires shareholders and bond holders to first have a “resolution with a loss”. A principle that was actually created so that all anti-crisis actions in the South would result in the possibility of a buy-out of large masses of assets by international funds and the countries of the North. In other words, Brussels is putting forward the creation of opportunities for funds such as Black Rock to implement one of the few measures available to the ECB to reduce the extent of the financial crisis it is fearing.
Merkel, meanwhile, also realizes that the situation is unsustainable, so she claims that Germany is “willing to help”, not without rejecting Coronabonds and “bad banks” first, and offering instead any system that is “already in the treaties” because the money is “already needed”. What is she talking about? According to Der Spiegel, a move promoted by Ursula von der Leyen: increasing the budget under the control of the Parliament and the Commission. Within the next seven-year budgetary framework, the Commission itself could increase bond debts, which in turn would be guaranteed by the Member States. According to German sources, this solution could be acceptable to all parties … and would strengthen Brussels at a time when having extra resources could also be useful in negotiations with Britain.
The point is that, as Juncker, the former President of the Commission, immediately recalled, a “very significant” increase is needed to make it work. Sánchez quickly jumped into the fray by quantifying the fund for direct aid at 1.5 trillion euros.
Can the contradictions in the EU be overcome?
Let’s summarize. The EU is built on a basic contradiction. The “Nordist” countries, exporters, want to keep the EU as a captive market, an extension of their own internal market. But the euro mechanism chronically causes these countries’ surpluses to turn into debt crises in the countries that are the destination of their imports. So when the recession hits, the countries “of the South” want the debt to be mutualized because otherwise, under EU rules, it becomes a massive decapitalization in which every “aid” blow condemns every national capital to lose a significant chunk of its best capital investments.
Where, as in Spain or Portugal, the first big shock to the accumulation of Southern national capitals – the recession and open debt crisis in 2008 – could be “solved” by increasing the precarization and impoverishment of workers, the crisis did not increase “Euro-skepticism”. Until the Covid, the petty bourgeoisie’s policy focused on demanding a piece of the transfer of income from labor to capital that was taking place. In contrast, where, as in Italy, the bourgeoisie did not succeed in cleaning the sinks of its financial system forcefully enough or shifting the costs to the workers in sufficient volume for their needs, growing parts of the national bourgeoisie began to support “anti-EU”, “anti-euro” or at least “anti-German” options, such as Salvini. On this map, France would represent an unstable and intermediate situation, with Macronism trying until the last moment to find a Spanish style solution under the permanent threat of an alliance of petty-bourgeois revolt (the social base of the “yellow vests”) with “hard” sectors of national capital.
With the current recession, all these contradictions are rising, putting Spain and Portugal increasingly in line with Italy and France in a situation increasingly distant from Germany.
As always in these cases, the only solution on which they can build a short-term agreement, however precarious it may be, is to increase the power of the center (Brussels)… which in turn can only irritate the capital of all sectors in the countries of the South – especially those linked to industry – which are increasingly aware that the real problem lies in the design of the EU and not in the organization of some palliatives that, on the other hand, they cannot renounce to.
And this, which would already be a serious problem, is multiplied because one of the common elements of the national capitals of Italy, Spain, Greece and Portugal is their dependence on the tourism sector to obtain foreign currency with which to deal with imports. A sector that also nourishes a good part of the productive small bourgeoisie and creates a very relevant volume of work contracts. Tourism, which is highly financialized and therefore very fragile, will more than likely produce bankruptcies and a very significant devaluation of national capital. In other words, the increase in spending and funding from Brussels will not even be able to cushion the bulk of the problem. The recession will increase the differences in accumulation to the benefit of the ‘Nordist’ countries, further devaluing the national capitals of the South.
What does this mean politically? That the palliatives will not reduce the growing “euro-skepticism” among an increasing number of national bourgeoisies and their angry petty bourgeoisies. It can only fuel them. And centralization in Brussels – on the rise to meet their short-term needs – will be increasingly described as a bane to their own “exit” options.
The EU cannot resolve its contradictions, only by raising them again and again to a higher level, in the hope that the developing global environment of “economic warfare” will be enough, as external pressure, to precariously hold the structure together.