NEWSPAPERS declared “an historic chance to reshape Europe”, as Britain took over the presidency of the European Union on July 1. Two months later, the expectations the media created already look wildly exaggerated. Our EU stewardship until the end of the year is now overshadowed by domestic problems caused by the suicide bomb attacks on London. But even before July 1, the optimistic talk of the British Prime Minister promoting reforms to revive the EU’s dormant economy and cut long unemployment queues was always way out of step with reality.
Tony Blair’s tiff with French President Jacques Chirac in June ensured a poor start to the British presidency. Rather than show leadership, Blair played to the tabloids by waving a handbag over the British rebate and attacking the Common Agricultural Policy, just three years after agreeing to a reform of the CAP. However, the key problem with Blair’s mission to anglicise the continent revolves around the debate he has launched on Europe’s “social model”.
European governments have been aping Britain for some time now in a bid to kickstart their economies and adapt to globalisation. Silvio Berlusconi’s Italy has made it easier and cheaper to hire and fire. In Gerhard Schroeder’s Germany, trade unions are doing deals with employers to increase the working week. In France, the Government has abolished the 35-hour week. Governments from wealthy Austria to poor Portugal have cut corporate and income taxes — so much so that United States hawks are now arguing for zero corporation tax in America to allow US corporations to compete.
There has been a veritable explosion in low-wage (“Macjobs”, as they are known in Germany), part-time and fixed-term employment. European governments have slimmed down their “bloated” welfare states, trimmed their public spending and shed state assets. Yet Europe is stagnant and “belt-tightening” remains the mantra in European capitals.
The problem is that Europe has been learning the wrong lessons from Britain. This country’s impressive employment and growth record in recent years is not down to “flexibility”. It is due to a monetary policy designed to suit Britain alone, a fiscal policy that has allowed sustained investment in public services and a credit and housing boom that has created a seemingly unending consumer spending spree, although at the cost of record levels of private debt.
Across the channel, the euro’s single monetary policy and budgetary Stability Pact have been doing the exact opposite — starving the economy of the oxygen of domestic demand.
Pay restraint, unemployment and growing insecurity in employment have only engrained a tradition of saving, despite the exhortations of governments to go out and spend. Economic data shows that Britain has only started outperforming the EU as a whole since 1997, when the austerity measures in preparation for the single currency really began to kick in on the continent — and, in parallel, the Labour Government was actually re-regulating parts of the British economy.
There simply is no evidence that AngloSaxon workhouse welfare and flexible labour markets deliver higher growth or lower unemployment, as studies by the normally promarket OECD show. And so far as productivity, manufacturing, hi-tech industries and transport infrastructure are concerned — key measures of an advanced economy — there is little or nothing the British can teach the Europeans and much we can learn from them.
Yet the truth rarely forms part of the debate about Europe. The French call it “la pensee unique”. Margaret Thatcher said: “There is no alternative.” But whatever it is called, the failed ideology of the Iron Lady and Tony Blair is now being adopted by all Europe’s mainstream political parties, regardless of political allegiance.
The upshot for the European project has been played out in the votes on the European constitution.
European integration from its outset with the Treaty of Rome in 1957 was supported widely as an antidote to the devastating experience of war. But from the Single European Act in 1986 to the single currency and the EU constitution, it has become an ever more naked project for the expansion of corporate power.
The logic was simple: a giant European market and a powerful European currency enabling the creation of giant European corporations able to compete with America, Japan and, now, the rising competitive threat of China.
Barriers to European capitalist expansion, including strategic national industries and public services, would be removed by waves of market liberalisation and powerful regulators in Brussels whose task was to ensure the primacy of the market over all spheres of activity. The monetary and budgetary straitjacket would shift the burden of “adjustment” to workers as labour costs became the only variable.
Ultimately, this would be underpinned by a super-state and the constitution was part of that process. “Social Europe”, meanwhile, was only ever a sop to trade unions too weak — or unwilling — to give serious challenge to the EU’s neo-liberal bent. Further, it has failed to counterbalance the upheavals Europe has brought to workers’ lives.
Despite the shock provoked by the rejection of the EU constitutional treaty in France and the Netherlands, the writing has been on the wall for at least a decade. When, from 1996, successive governments turned to the Left across the EU, they came armed with a popular mandate to radically change direction.
At first, it appeared that they would act on this mandate. Then French Socialist Prime Minister Lionel Jospin talked of reasserting political control over the European economy with “economic government” and a “social treaty” setting uniform labour laws and wage policies across the whole EU to prevent “fiscal dumping — . Social Democrat German Chancellor Gerhard Schroeder talked of “redistributing” wealth to workers.
Portuguese premier Antonio Guterres was outspoken in his critiques of globalisation.
A pan-European programme of public works was to inject life back into the EU economy and help tackle unemployment while improving infrastructure such as the railways.
Some kind of co-ordinated reflation, after years of senseless austerity, and an end to beggar-thy-neighbour competition was not inconceivable. But ultimately, thanks in part to Britain, the political will wasn’t there.
Blair’s “Third Way” prevailed.
When the history of European social democracy is written, the time when Left governments held power in 12 of the then 15 member states and did nothing will be seen as one of the great missed opportunities.
They could have used their collective political power to build a progressive Europe in the knowledge that capital would have been reluctant to flee a market of 400 million, wealthy, well-educated and trained people.
Left governments failed to use that collective political power and as a result have been ejected from power one after one, replaced by conservatives in alliance with a hitherto marginal far Right.
The latest casualty looks set to be Schroeder’s Social Democrat-led administration. Angela Merkel and her Christian Democrats are heading for victory in Germany’s general election this September.
Whether social democratic parties can recover lost ground depends on whether they can learn from past mistakes. What is clear is that there remains a large progressive constituency and a widespread but untapped desire among working people across the EU for less of the market and more of the “social” in their lives.
Chancellor Schroeder’s opportunism reflected once again a broadly progressive manifesto for an election he precipitated to win back public support for the regressive welfare and labour market reforms he has been pursuing — has sent confused and distrustful voters into the arms of the Right.
But a significant number of people look as if they will support a new alliance of Leftwing SPD dissidents such as former finance minister Oskar Lafontaine and the PDS, the former East German Communist Party.
The Left Party ticket is garnering 12 per cent of the vote, according to opinion polls, and is expected to be the third largest party in the next parliament.
In France, the Socialist Party is riven with division after a bruising internal debate over the EU constitution in which former premier Laurent Fabius — now demoted defied the pro-constitution leadership and took the lead of the “No” camp. Yet the campaign by Fabius, a popular if ambitious figure, helped create new common ground between many socialists and their sometime allies, the reviving Communists and Greens.
Elsewhere, in countries such as the Netherlands, radical Left parties are on the up, picking up the votes of those disillusioned by the social democrats.
Admittedly, EU enlargement has made it an even more difficult task to build a genuine Social Europe as the new member states accelerate competition on taxes, welfare, wages and working conditions.
Nevertheless, the much-trumpeted neo-liberal axis between Britain and eastern Europe could prove short-lived. Having demolished the Iron Curtain and achieved EU membership, eastern Europeans face a new wall.
They are second-class citizens, shortchanged on EU aid and basic freedoms such as the right to travel and work, and they don’t like it. The Poles, angry about meagre EU agricultural subsidies, are among them.
What is clear is that whoever pursues genuinely progressive reform in Europe will need a painful reality check about the state of the European project.
They will need to go beyond rejection of the EU constitution and offer a genuine alternative. Not to do so will allow the Right and far Right to continue to exploit the prevailing fear and sense of insecurity, which the Iraq war is doing nothing but deepening.
There is indeed an historic opportunity to reshape Europe. But it won’t be for Blair, peddling untruths about “flexible” Britain, but the European Left and the European people alone to seize.