The Disappearance of the European Union

This is a translation of a piece by Vicenç Navarro on the specific interests in operation behind Germany’s present drive for austerity in peripheral countries. (I have to admit, the ‘Gipsy’ acronym is a new one on me, but it does exist: there is a Centre for European Policy Studies paper by Daniel Gros entitled Adjustment Difficulties in the GIPSY Club – ‘Greece, Ireland, Portugal, Spain and ItalY’) I am not sure I share his contention that the likely outcome of Germany's insistence on austerity for the periphery will be the disappearance of the European Union. Rather, I think that if things carry on in the way he describes, we will see a political union of authoritarian kleptocratic oligarchies that still goes under the name of the European Union, but stripped of any of the let's-all-be-friends pastel propaganda that sugar-coated the European Union in bygone days.

A brief note on the nationalisms –German and anti-German- cited by Navarro in his article. There is an article in the Irish Times today by commentator John Waters, which, with characteristic aloofnesss and preposterousness, makes reference to ‘the Germans, who have now managed to dispense with the thin veneer of democracy that previously graced the EU’.

This is a good example of how the logic of the European Union, in its current form, exerts a kind of centrifugal force that generates and bolsters facile reactionary nationalism. We might ask, if we were to take Waters seriously: which Germans have dispensed with democracy? The '8 million people in Germany (who) now work for an hourly wage of less than €9.15', or the '1.4 million' who receive 'less than €5 per hour'?

And even if we were to commit the habitual barbarism of taking ‘the Germans’ to mean ‘German elected representatives’, and ‘democracy’ to mean ‘representative democracy’, which is what it normally means in Ireland, how does the accusation of dispensing with democracy tally, for instance, with the failure of the German parliament to ratify the Fiscal Treaty? This is not to claim that Germany is some sort of exemplary democracy, but it is worth pointing out that the coarsening ignorance of such remarks, when widely broadcast, have an impoverishing effect on public political discourse.

The nature of the EU crisis makes it easier to speak casually of ‘the Irish’, ‘the Germans’, and ‘the Greeks’ and so on, glossing over conflicts within member states and obscuring common interests held by populations across member states. Among other things, speaking in this way is a handy way of denying that the capitalist system is in crisis, with its ready-made vocabulary for simplifying a crisis of sprawling complexity to a question of mere incompatibility between national caricatures.

From the point of view of ruling elites, this simplification is a handy tool for steamrollering awkward questions about democratic failure and for disciplining the population. Consider, for example, Labour Party minister Ruairi Quinn’s claim, in the early days of the first Greek bailout, that ‘we’ (i.e. ‘the Irish’) “instead of learning to behave like Germans we continued to act like Italians, or should I say Greeks”.  

It is also an important factor in socialising guilt for the financial crisis: ‘we’ –on account of some essential national characteristic (land hunger, residential property lust, congenital immaturity, ginger hair)- behaved badly; therefore ‘we’ deserve to be punished, both through the withdrawal of wages and public services, and through the imposed burden of private debt, which, if ‘we’ had been more careful, would not have befallen ‘us’.  

What they don't say about why Merkel still clings to austerity policies

The austerity policies that the German government led by Chancellor Angela Merkel is imposing on the peripheral Eurozone countries, called Gipsy in the Anglo-Saxon world, is driving them to a disaster (there is no other way of defining it). A large number of economists have been emphasising this fact (though this number has been very low in Spain), showing that the great recession that these countries are suffering is primarily due to these austerity policies. The reality is that the spreading of this disaster can even affect the German economy itself. One way would be by making it impossible for the peripheral countries to pay their debts, public and private, to German banks. It was the Finance Minister of the Merkel government himself who warned that the collapse of the Greek economy and its exit from the euro would have a very negative effect on the European financial system, centred on the German banking sector.

In actuality, a key objective of the austerity policies imposed by the Merkel administration on peripheral countries and their governments is to force them to pay what they owe to German banks. If these austerity policies are continued, the German banking system itself can be affected very negatively. This reality is ignored by those mainstream media columnists who, somewhat frivolously, claim that the Merkel government wants to ‘expel’ Greece from the euro.

Now, the persistence with austerity policies, despite the risk it poses to the German banking sector, also brings it great benefits. That is, the enormous crisis of peripheral countries is benefitting the German banking sector and the German State which, under the Merkel government is heavily influenced, not only by the banking sector, but also by the German industrial exporting sectors that are increasingly exporting to countries outside the Eurozone. Thus, German State bonds, in light of the deep crisis of confidence in the markets (assisted by the policies of the ECB which contribute to this lack of confidence, with the consequent rise in interest rates for public debt), become a safe investment, highly in demand. Thus there exists a flow of capital towards the German financial system, as a result of the crisis in the peripheral Eurozone countries.

Something similar is happening in the industrial sector. As German economist Frank Hoffer indicates, the decline in the automobile industry in peripheral countries, as with Fiat, positively affects the German automobile industry, as with Volkswagen. Hence austerity policies contribute to the immense dominance of German financial and industrial capital and the German State, which, in the long term, will have a high political cost, since this domination is being established at the cost of the other countries that are resisting these impositions. The case of Greece is an example of this. From this comes the rebirth of nationalisms, both German and anti-German, which can break up the European Union itself. It is not the viability of the euro but the viability of the European Union that is being called into question by these austerity policies, since the promotion of these policies is very quickly diluting the culture of European cohesion (which was always very limited), and replacing it with the culture of nationalisms that led to the First and Second World Wars, which the European Union sought to prevent.

Hence German figures who have shown their commitment to the European project, such as the former Chancellors Helmut Schmidt and Helmut Kohl, have criticised the German Chancellor for placing German business interests above the European project, to the point that they can destroy it. There will be no World War III, but what could happen is that the European Union and not only the euro might disappear. But it would not be the disappearance of the euro (contrary to what is said, its survival is not in danger) that would destroy the European Union, but the disappearance of the European Union that would bring about the disappearance of the euro.

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