Social democrat mission) in a way which indirectly extolls our own institutions. The political dangers leaders back cuts of the Maastricht project can best be combatted by starting from the manoeuvres and attacks that each government is undertaking today against its own people. Governments
"THEY looked like two songbirds sitting together on a branch know very well how to hide behind so-cal-
— and with about the same brain power".
This was one Swedish writer's comment on the September
But let us not forget that the European
20 press conference of at which the "two blocs" in Swedish
Council, representing each government by a politics announced a "historic agreement". The two live birds mechanism of a confederal type, decides the essentials. This is a good example of the criin question were Conservative Party leader Carl Bildt and sis of decomposition of bourgeois parlia-
Social Democratic Party leader Ingvar Carlsson.
mentarism: the secrecy of the Council's
After a weekend of panic negotiations, Sweden's mighty deliberations allows governments to take
Social Democratic Party (SAP) agreed to the biggest austerity significant decisions and then attribute them programme in the country's modern history.
to a strange abstraction, the Community administration — a convenient way of camouflaging the increasing power and authoritarianism of the executive in each individual state.
In France, the campaign for a leftwing
"no" had a very propagandist content. This is the price to be paid for the deterioration of the relation of social forces and the great difficulty of giving a concrete idea of the
Europe that we wish to construct. The weakness of the social movements and the diffi-
Aa culties of internationalism do not allow the
International Viewpoint # 236
DICK FORSLUND
VEN by some in the SAP itself,
E this is seen as a catastrophic capitulation to the right and the international money traders and loan sharks — coming one week after
Carlsson denounced the "dictatorship of the market" in a rhetorical outburst against government policies.
Now, however, he has agreed to a cut in the government budget of more than 40 billion krona (SKR — about $8bn) -equal to 2% of the country's Gross National Product (GNP). For many workers, pensioners and the poorly paid this means a significant deterioration in living standards.
The panic and the resulting "national
against a background of high interest rates which are hitting households and bankrupting many small and medium-sized busi-
October 12, 1992 unity" was caused by a sudden and massive run on the Swedish currency in the two weeks preceding the referendum on the Maastricht Treaty in France. This forced the Swedish central bank, the Riksbanken, to borrow 16 billion ECU (120 billion SKR) and put short term marginal interest rates up to a fantastic 500% for a few days.
Hundreds of thousands who took out big loans to buy apartments or maintain consumption in the 1980s are now faced with massive interest payments. Even after the moment of acute crisis and the austerity package, on September 23 the interest and a year of the new rightwing government's austerity policies.
Leftwingers in the unions pushed for such a demonstration four months ago. However, the union leaders were not to know, when they called it in May, that when October arrived they would confront not only the four-party government coalition but also "their own" party, the SAP -LO chairperson Stig Malm is also a member of the seven-person inner circle of the SAP.
SWEDEN
He has thus effectively put his signature to the chainsaw package, and must now protest against himself. Three weeks before the demonstration, Stig Malm is busy answering journalists' questions about what he will say on the big day, proclaimed as "the day of justice"
Meanwhile at a local level, the LO is busy building the demonstration, appealing to the workers to "go out in the streets and say what you think". The LO leadership thus finds itself in a somewhat delicate position. *
Where has all the on an ordinary loan for an apartment is at
24.5% compared to 12.5% a year ago, while, even three days after the Grand money gone?
Deal, the Riksbanken is still protecting the krona with a short term marginal interest rate of 50%, as against 16% two weeks
"THE Swedish banking system is on the verge of collapse".
This was the headline of Dagens Nyheter, Sweden's biggest
It is thus clear that, despite the draconian onslaught on welfare, the "market" is still daily, on September 13, giving a message that did nothing not satisfied, believing that Sweden will to ease the pressure on the Swedish krona.
still devalue - or that the Germans will revalue the deutschmark upwards.
After a week of condescending media explanations to the "ignorant" public about what "the market" demands, signs of public anger and disbelief are beginning to appear.
The package is to be voted on at the opening of the autumn session of parliament on October 6. On the same day the blue collar workers' trade union confederation,
LO - which is tied to the social democracy and has over two million members — is scheduled to hold a demonstration against rising unemployment (currently at 7%, the highest rate in Sweden since the 1930s)
The chainsaw package
THE CUTS package includes:
DICK FORSLUND
T HE turbulence around the krona
(SKR) was triggered by a decision by neighbouring Finland to let its currency float (and thus fall freely). The money traders expected that the Swedish currency would follow suit and started to sell SKR by the billion - which in itself tended to force the Swedish government to devalue.
In fact, there are many perfectly acptable "bourgeois" reasons why the SKR does not deserve devaluation. The inflation rate is 2% — among the lowest in Europe.
The trade balance is positive for the second year running, with Sweden in the black by SKR 40bn or more this year. The budget deficit for 1993 is estimated at around 3.4% of Gross National Product (GNP). While this is higher than in some other European countries, if the total public debt is counted in relation to public assets you get a net asset corresponding to 1.5% of GNP. The European average is a
One reason for the sudden frenzy is the frenzy itself. In one day in Sweden it is estimated that goods and services to the value of three billion krona are produced; meanwhile on the international currency markets the equivalent of around 2,000 bil-
• A rise in the retirement age from 65 to 66 - at a time when there are 315,000 unemployed and a further 200,000 on government training programmes. Youth unemployment is running at
• A freeze on pensions and subsidies to families with children;
• An increase in petrol prices of one krona a litre;
• Cuts in subsidies on housing, and new energy taxes that will be passed onto rents. As soon as the package had been announced, the landlords' association made known its demands for forthcoming negotiations with the tenants league: 1,000 krona more for a three room apartment — an increase of about 20%.
• The introduction of one day's unpaid leave for sickness or to look after a sick child. This is combined with a three year plan for changing the whole sickness insurance system and insurance for injury at work. It is to be transferred from the state (where it is financed by special charges on employers) and will be subject to negotiations between unions and employers. The change has been applauded by the employers' association, the SAF, who of course, expect that the employers' fees will be lowered.
This austerity package, if voted through in October, will come nesses. * lion krona change hands in a day.
Since the start of the 1980s, this market has swollen to become one of the great economic forces. It usually pays little attention to small currencies such as the Swedish krona or the Finnish mark. But if some dozens of moneyholders decide to move their assets from one pocket to another, and if big business in the country concerned goes along with this then a currency like that of Sweden will start to reel.
The SKR has suffered speculation six times in the past two and a half years. Each time, the Riksbanken has increased interest rates to bring the billions back. In order to ensure a good result, the central bank tries to increase rates by too much rather than too little. After this has happened a few times a speculator knows he can earn millions just by moving to the German deutschmark (DM) and then being one of the first to move back again as the Riksbanken is forced to react - the speculator cannot
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5
International Viewpoint # 236 • October 12, 1992
SWEDEN / FINLAND lose. If Sweden gives up and devalues then he wins by cashing in his DMs as more SKRs. If Sweden does not devalue then he wins anyhow by moving back to SKRs at exceptional rates of interest.
And Sweden cannot devalue for two reasons. One is well known, while the other leaked out during the present crisis. The well-known reason is (or was) that devaluation means Goodbye to the European Comtem - the same amount as is to be saved by the crisis cuts package. And this CrISIs is not over yet.
And this is the second reason why the krona cannot be devalued. Swedish central and municipal governments have foreign loans for SKR 550bn (July) to cover their deficits. They have also borrowed heavily from Swedish banks. A devaluation ot
10 % would debts of SKR 55bn. This would end the death struggle of the banks with a gentle push over the cliff.
In the days after the crisis package, some commentators pointed out that the enfeebled condition of the SE bank was one rea son for the unenthusiastic response of "the markets"
This bank is suspected to have around half of these foreign loans. Through a SKR 1bn loan it is the main owner of the Gotha
Now, shall we munity (or its inner negotiate?