Anatomy of the Eurocrisis

The European project of the second half of the 20th and the beginning of the 21st centuries has undergone considerable changes over the course of its not so long history, and the integration that is failing today has nothing to do with the promises of General de Gaulle or with the hopes that accompanied this process in 1970 -s years. It all started with the Franco-West German Coal and Steel Agreement, which was supposed to end a century-long conflict between the neighboring countries over the coal mines of Alsace and Lorraine. This coal, and not at all a dispute about the nationality of the inhabitants of the disputed territories, led to three major wars, two of which turned out to be world wars. The agreement ensured that steel companies in both countries would have equal access to these resources. Soon afterwards, the Franco-German Alliance grew into a larger integration project, the task of which was to free Western Europe, recovering from World War II, from too close US tutelage, without provoking new conflicts (security issues still remained with NATO and thus behind Washington). At the same time, the European social model, opposed to the more liberal American model, was supposed to become a kind of competitive advantage, including in relation to Eastern Europe and developing countries, where the influence of the USSR was rapidly growing.

This partly worked when the question arose about the integration into United Europe of the southern countries of the continent, which had liberated themselves from dictatorial regimes in the second half of the 1970s. Orientation towards the social democratic path turned out to be a guarantee against a more radical turn to the left, the real possibility of which was indicated not only by the revolutionary events in Portugal, but by the rapid growth of communist influence in Spain, Greece and in the still unstable Italy. At the same time, the new members of the Community, being relatively poor countries, turned out to be extremely attractive to investors. Capital began to flow south in search of cheaper labor.

The situation changed radically in the late 1980s, when the collapse of the Soviet bloc led to the end of “social competition” at the global level. In the new situation, capital sought to free itself from all sorts of “costs” imposed on it by the confrontation between the two systems and the pressure of the labor movement. Cutting wages in the name of fighting inflation has become a top economic policy priority.

The new state of affairs needed to be consolidated with new institutions. The Maastricht Treaty and subsequent documents actually recorded a transition from the principles of a welfare state to a neoliberal system. The dismantling of the structures of political democracy began, with popularly elected parliaments stripped of their powers in favor of the unelected bureaucratic institutions of the European Union in Brussels. Powers fell into the hands of the European Central Bank, independent of parliaments and governments, but tightly controlled by the financial oligarchy. The euro system facilitated the export of goods from more advanced industrial countries to the markets of poorer countries in southern Europe, suppressing local competitors there, and large fortunes were transferred to the safer banks of Germany and France.

The economies of the southern eurozone countries generated higher levels of inflation than the ECB allowed. Experiencing a chronic lack of money, residents and businesses of these countries began to resort to loans, which they received from Franco-German and Belgian banks.

The cheap labor of Greece or Spain was no longer attractive to German capital. Components produced by skilled German workers were now assembled in China.

Neoliberal reforms in former communist countries also became a factor of pressure on Southern Europe. There was also a cheap labor force here, disciplined, well educated, but not accustomed to fighting for their rights. It was possible to maintain the system in working order only through credit expansion, but the crash of 2007 came. Instead of easing the situation of debtors, the governments of the European Union, which are actually under the control of the largest banking houses, began to bail out creditors. This policy was accompanied, on the one hand, by the transformation of the banking crisis into a crisis of public finances, and on the other hand, it was accompanied by a new explosion of stock market speculation, because there was no benefit for financiers to invest funds coming from governments into the real economy.

Paradoxically, the crisis has led to a decline in living standards to such an extent that workers in European countries can already compete with the Chinese (while in the Middle Kingdom itself, business is complaining about rising wages, caused not so much by the “claims” of workers, but by the rapid rise in the cost of living in industrialized regions). It is simply impossible to restore the purchasing power of the population without the development of the domestic market and corresponding local production. But the industrial “restart” of Europe encounters an insurmountable obstacle in the form of the very EU institutions that were created by the Maastricht, Lisbon and other treaties, the European Financial Stability Pact and the regulation of the European Central Bank. We are no longer talking about just the collapse of the eurozone; the question is about demolishing or reconstructing the entire building that has been built over three decades.