More on the Euro-plus Pact

This is a rush translation of another piece from ATTAC España, by Alberto Garzón Espinosa, titled “The new neo-liberal threat: “The Euro Pact“. As mentioned in the previous post, this is what people are mobilising against across Europe on the 19th of June. The writer identifies the pact as a means of intensifying neo-liberal policies. Remember that whenever you hear speculation in news media about whether an agreement has been reached. Assuming you’re not a member of a wealthy elite, the agreement reached will involve taking you to the cleaners.

La nueva amenaza neoliberal: “El pacto del euro” | ATTAC España

As many of you will know, I am of those who consider that the economic crisis that afflicts us is neither a temporary accident nor part of an economic cycle that supposes that recovery will necessarily come along sooner or later. In my view we are living through a structural crisis, which furthermore is not just economic, and the resolution of which will depend on the relation between political forces.

I believe that of all the possible scenarios unfortunately the most probable in the short term is the one that involves an intensification of neoliberalism, and as such, the maintenance of a permanent crisis. And it is this way because neo-liberal measures that attempt to recover private profitability -affected by the crisis- will not be successful precisely because they consist of depressing even further the consumption capacity of families and State.

The structural adjustment reforms that are being applied across all of Europe are bringing us into a new situation of social regression which, by the way, will also be what continues to feed the unrest that is bringing people out onto the streets these days. Throughout this process, applied by national governments but directed at the end of the day by the large economic powers (banks and big business), we are going to lose rights and of course living standards as well.

The next phase of the neoliberal adjustment plan is the Euro Pact. A pact against which society must position itself clearly, and no union should cede an inch on this. To lose in this trench would be to enter a new Middle Ages. However, what are the basic points of this pact. Here follow the most prominent:

Evolution of wages in parallel with productivity. It is a matter of freezing the present relationship between wages and productivity, without taking into account, by the way, that during the last decades productivity has risen much quicker than salaries. The final objective is to improve the competitiveness of the economy as a whole, and the demand will be “to guarantee that the fixing of wages in the public sector contributes to competitiveness efforts in the private sector. This involves, as Toledano notes in a highly recommended article, that public sector wages fall in real terms so that private sector wages fall afterward.

Job stimulus via fiscal reforms while maintaining total tax revenues. This means that direct taxation will fall and indirect taxes will rise. We will probably see an increase in VAT and a decrease in social contributions. Given that social contributions are part of wages, we are faced with yet another cut to wages.

Public finances. Reforms in the pension system, which as we already know has been partially applied in Spain but which will continue in the years to come. Furthermore we will enter a period of more intense questioning of health and public education, and we will see measures such as Copago [Co-payment in English – HG] (which should be called Re-payment), cuts in social provisions and many more privatizations (let us remember that those of RENFE, AENA and the Lotteries have already begun).

Financial Stability. Struggle against fraud, which is an appropriate measure but one of which we must be suspicious (will fiscal paradises be included), and co-ordination of fiscal policies but without establishing a Fiscal Union as would be most appropriate. Moreover, we will probably see this co-ordination as downward convergence.

Control of the deficit. This is one of the greatest aberrations of the pact at a legal level. States will commit themselves to establish by law, or even constitutionally, measures that limit the fiscal deficit. That is, they try to armour-plate, via legislation, against a certain range of economic policies. This is something which, while not unfamiliar (the Stability and Growth Pact contained it), is no less acceptable for that.

In short, we are facing one more step in the intensification of neoliberalism and towards the ravine of extreme social regression. Very difficult times are approaching for lower and middle classes, and we will witness a stagnation of the crisis which will be at least as long and deep as these neoliberal policies last themselves.

In my opinion the first thing the left must do is resist. And resist means recognising that there is no social pact that is valid and that only the immediate withdrawal from all these measures and pacts is acceptable. Secondly the left has to build. And this means aiming for a new model of Europe radically different from the one that dominates today, and this involves leaving behind the antidemocratic character of current institutions and recovering the democracy that has been kidnapped by the economic powers. The resistance movements across Europe must co-ordinate themselves to build an alternative model of society based on left principles. And to do all this we must concentrate in reversing the present relation of forces, dedicating our energies to finding points in common among the “multiple lefts” and abandoning the always horrible sensation that we like having enemies more than having friends.




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