The EU and Capitalism Have No Fix

Faced with pandemic and economic crisis, they privilege corporate profits over life.

By Rubén Tzanoff

The European Central Bank (ECB) predicts an unprecedented recession this year, with a fall of 5% to 12% of GDP for the Eurozone and 9.4% for Spain, whose debt will increase 115.6%, with an unemployment rate that will rise to 18.9%. Amid the disaster, the dispute over the EU’s “aid” continues. On April 23, the European Council agreed to create a recovery fund for the countries most affected by the crisis. Though it was announced with fanfare, the agreement was only possible by postponing the resolution of the main differences: the amount to be committed, its financing and the form of access.

As for the amount, there are various positions. The President of the European Commission (EC), Úrsula Von del Leyen, had mentioned at least one trillion Euros, but her credibility is down. Senior officials from different countries openly argue that, behind the promises, there are exaggerated multipliers of private investments and that the design of the fund that is being prepared is composed mainly of loans and not of non-refundable investments. How will it be instrumented? Some countries, mainly from northern Europe, demand that the loans be accompanied by “reforms and improvement of competitiveness in southern Europe.” That is, austerity measures and strict payback conditions. The southern countries, mainly Spain, seek perpetual fund aid, paying only the interest on the debts.

… It is not strange that many analysts refer to the imperialist bloc as the ED, “European (Dis)Union” and “Eurochaos” instead of Eurozone.

A concrete European Commission proposal was expected by May 6, however, there were more divergences. The German Constitutional Court has questioned a judgment by the Court of Justice of the European Union (CJEU), issued in 2018, when it found legal problems in the participation of the Bundesbank in the debt purchase program of the European Central Bank (ECB) and it has given the institution chaired by Christine Lagarde (former IMF president during the Greek crisis) a period of three months to justify its action.

Why is so much importance given to this ruling? Because it questions the future of the ECB’s debt purchase program and “the viability of the Treasury depends on continuing to issue at a very low interest cost the debt with which the State covers the ERTE contributions, indemnifies the self-employed, finances the extraordinary health expenses to face the virus and will soon pay the future minimum insertion income. All unforeseen expenses, which can only be financed with a deficit, that is, spending above inputs.

Banks, bosses and the wealthy must pay for the crisis.

At this point, it is not surprising that many analysts refer to the imperialist bloc as the DE, “European (Dis) Union” and “Eurochaos” instead of the Eurozone. The EU crisis is complete: health, economic, social, humanitarian, political and institutional. And it comes from before, from the terrible responses to the bankruptcy of Greece, the crash of 2008, immigration, the self-determination of Catalonia, Brexit and now the pandemic. The mistakes make the image of the EU more blurred and cloudy than ever. Whatever is defined about the “aid packages”, no expectations can be placed in the EU or the ECB, EC and IMF troika. A sudden manifestation of “spirit of solidarity” will not emerge from these institutions, nor will any utopian “humanization” of capitalism. The economic authorities of the EU have warned that they are oriented toward grant funds in a balance between transfers and credits, which will centrally serve to save business profits. The social palliatives that are incorporated will aim to ensure that the broad unrest in confinement does not become an explosion of mobilizations, struggles and general strikes.      

Who will pay for the health, economic and social crisis triggered by the Covid-19 pandemic? It should not be working people, like in the 2008 crisis. We must not accept calls from the government of the “progressive coalition” PSOE-United We Can, from employers and union bureaucrats of the majority centrals to carry out “pacts of national unity,” to “collaboration between employers and workers,” or to meekly agree to work more for less and in worse working conditions. The recovery of democratic protest rights is an immediate necessity. Banks, bosses and the wealthy must pay for the crisis. This can be achieved with transitional measures such as those proposed by the International Socialist League, on the road to a fundamental solution: socialism with democracy, in solidarity, without privileges, in which the social and democratic needs of the great majority are met.

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