Single currency: for the few
The "core" countries of the European Union will explores this unprecedented pooling of adopt the Euro as their common currency, before sovereignty by advanced capitalist countries., the end of the century. François Vercammen and suggests responses for the left
ECONOMIC RECOVERY
"Before the end of this century, the European Union will have a single currency, strong and stable," claims the European Commission. *This is what the peoples of Europe and their leaders wanted when they signed and ratified the
AND I HAVE
7.8 MILLION JOBS... Maastricht Treaty".! What an indication of the spirit of modern despotism, the wishful thinking and the disdain for the population which characterise the self-proclaimed elite of Europe.
The introduction of a single currency by a series of developed capitalist countries with a long tradition of sovereignty is unprecedented.2 Behind the Commission's optimism, the difficulties are enormous.
The single currency might look like the logical extension of the single market already in operation. A common currency would certainly facilitate the comparison of goods from different countries, and help the consumer make a rational choice. The circulation of goods and services would increase.
Take this example. A British tourist leaves home with £100, which s/he changes into each local currency as s/he travels round the European Union. S/he would return home with less than £50. The rest would be eaten up in bank commissions.
This is all true. But it is only part of the story. After all, money is not just a mechanism allowing the circulation of commodities. It itself is a commodity, with a fluctuating price (the exchange rate). Money is also a basic tool of national states and their governments, a key component of fiscal policy. Looking closely at these two characteristics of money, the move to a single currency seems quite different...
Money is bought and sold at a market price (the exchange rate). The world-wide volume of currency sales in just three days is greater than the volume of commercial transactions (sales of goods and services) in a whole year.3
Many governments have now liberalised the import and export of currency. The sheer size of speculative transfers of currency can turn the social relations in such a country upside-down with a few keystrokes.
The management of the national currency is one of the key attributes of a state. It is part of monetary policy, which influences that state's general fiscal policy, public sector provision, budget and social security. Control over the national currency is part of the day-to-day management of the
THREE OF THEM. step, given the great differences in the various economies, and the entrenched, specific structures of the state in each country.
For this reason, the Maastricht Treaty has fixed "convergence criteria"4 to ensure the harmonisation of monetary policy. For example, the public deficit should not exceed 3% of GDP, while the public debt should not exceed 60% of GDP. Other criteria fix rules for inflation, long term interest rates, and stability between the various currencies.
Things are not going well. According to EU statistics, there is greater monetary instability than at any moment since the Maastricht Treaty was signed back in 1992 Only two countries now meet the convergence criteria: Germany (the biggest member state) and Luxembourg (the
Trade union membership
As a percentage of total workforce
1970
1980
France
22.3
17.5
Germany (West)
33.0
35.6
Italy
36.3
49.3
Sweden
67.7
79.7
Britain & N.Ireland
50.4
44.8
USA
23.2
22.3
Source: Perspectives de l'emploi, OECD, 1994 class struggle. It affects the division of wealth, the formation of
1990 salaries, price policy,
9.8 collective bargaining
32.9 agreements and so on.
38.8
Replacing national
82.5 currencies with a new
39.1 single currency is an
15.6 extremely voluntaristic smallest). Ireland meets all the criteria - except the limit on the public deficit. At this rate, when the EU decides which countries can adopt the Euro (in 1998), only a few countries will be eligible. The Euro will certainly not become the currency of the European Union as a whole. GROWING INSTABILITY
This reality has important economic and
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THE CURRENT HAS CREATED OVER
* European Monetary Union political consequences. First of all, it demonstrates the failure of Maastricht. In other words, the central goal, in the name of which the employers and governments of all the EU countries justify their economic and social policies, has not been reached, and will not be reached on time. It is no longer credible.
Since it will not be the currency of the entire EU, none of the "indirect" benefits claimed by "Euro" supporters will accrue. The "common" currency will not be a 'currency of reference' able to complete with the dollar. Nor will it represent a tool for an EUlevel socio-economic policy. Nor will it create a new, large zone monetary policy. In fact, the introduction of the Euro will probably increase tension between the "core" countries and the others.
The real criteria for participation in the common currency will not be economic, of course, but political. If the Euro is to have any sense, it will have to be adopted simultaneously by Germany, France, Belgium, Holland and Luxembourg
This would, of course, increase the monetary instability between the new core group and the Italian lira, British pound, and Spanish peseta. What will stop these countries continuing to devalue their currencies, in order to increase exports? The December 1995 Madrid Summit of European leaders agreed, in principle, to a currency stability system similar to the ill-fated European Monetary System.6 This would oblige non-Euro countries in the EU to maintain their currency's exchange rate within a narrow band against the new Euro. Countries which leave the band (because of financial or speculative pressures) would be obliged to take measures to re-enter it. LEGAL QUESTIONS
The European Union is supposedly made up of all the countries which have signed the Maastricht Treaty. What will be the "community" (supra-national) value of decisions made by the Euro-zone countries and the autonomous Central European Bank? And what will be the effect of the existence of this Euro-zone on the socioeconomic relations within the common market? How will it affect the chances of the "outside" countries [like Britain] to join the core countries in the future? 1999: A FATAL MOVE
In the mean time, a new element has emerged: serious resistance from youth and workers. The "social fracture" Jacques Chirac talked so much about has arrived!
14 International Viewpoint February 1996
The French movement of December 1995 was not the first in the series. Resistance in Italy, which began in July 1992, has been in many ways wider, stronger and deeper than the events in France at the end of last year. Belgium too had a significant strike wave, which peaked with a "total" 24 hour general strike on 26 November 1993.
But France's geographical position and economic weight, the country's key role in European integration, and the specific traditions of the workers' movement all gave a particular importance to the December 1995 strikes in the French public sector. Especially now, as we enter the 'final sprint' towards monetary union. In France, social resistance became highly symbolic: Europe's first general strike against the Maastricht Treaty!
Such resistance will become stronger across the region. Events in France offer a new socio-political framework for the public sector labour forces in France, Italy, Belgium and Luxembourg: all of whom are currently in dispute with their employers and the state. The determined resistance in Britain against the (disastrous) privatisation of the railways and water supplies is another such sign.
European Union faces two new obstacles. The 1986 Single Market Act, which led to the creation of the Single Market' in 1993 is the framework which has allowed simultaneous and co-ordinated attacks on the public sector in a range of domains (privatisation, deregulation, employee privileges) in all the countries of the Union. Attempts to split the public sector into autonomous 'parcels' has not prevented co-ordinated attacks on the work force and on the notion of public service in general. The result is that attacks on the public sector have become the reference point for social resistance as such.
The possible introduction of a unified currency in some EU countries depends on the economic situation in 1996-7. Results in this period will be used to as a measure of the 'progress' made by each country in each of the "convergence criteria". If 1996-7 is a good year for the capitalist economies, there may be room for manoeuvre. But if the current miserable situation persists, applying the Maastricht criteria would be to throw oil on already tense social relations. Because it would mean spontaneous and cumulative increases in the deficits, a slowing-down of economic activity (which means more unemployment, so more social security payments, and less social security contributions.) Consumption could only fall as a result of the contraction of social demand.
In such a context, maintaining the reduction of public deficits as the top priority could be a real fatal move. All the reports made to show how this or that country could meet the key convergence criteria of reducing its deficit to less than 3% of GDP come to the same conclusion: an enormous attack against the working class, and a serious deterioration of the economic recession, due to the reduction in the buying power of the workers.
That leading German social democrat Helmut Schmidt used to say that "today's profits are tomorrow's investment, and the jobs of the day after tomorrow." It seems that today's credo is "lower deficits means lower interest rates means more investments means more jobs." The second phrase is no more true than the first one was. In reality, business profits are only partially recycled as investments in the productive sector. An even smaller proportion goes into the kind of expansive investments that create jobs.
Europe and the market economy are bankrupt. That's the conclusion that large layers of the population are coming to. This is a major reason why the resistance has been so massive. Why those on strike have been so determined. And why public opinion has been so sympathetic to the strikers. We should ask ourselves: is the bourgeoisie ready to unleash a social war in conditions like these? THE BOURGEOISIE HESITATES
The ruling classes of Europe are sure that the Euro is a good idea. But they are no longer absolutely sure that its introduction is feasible. Getting ready for the Euro means breaking down the welfare state in every country of the European Union. But how then to realise the political integration of Europe? Modern Social Democracy and the European Parliament were supposed to bury forever any ideas of an alternative socioeconomic model. "Il n'y a pas d'alternative" ("There is No Alternative") screamed the Financial Times (a newspaper, famous for its anti-Maastricht convictions).
Bankers are one sector of the boss class increasingly nervous about Maastricht. They don't just see their Bureau de Change profits disappearing. They sense the beginnings of a huge process of
European Monetary Union *
LUDIENTES SISTE
ONTRELAPOL deregulation and restructuring within the new Euro space. Even those industrialists who do business in both the potential EURO core countries and the rest of the EU would prefer to go more slowly. Because if the new Euro appreciates in value, and the other countries of the EU opt for competitive devaluations, these exporting companies will face more unstable conditions with the EURO than they do
Neither Britain nor Italy will find themselves in the core countries, though for quite different reasons. Both countries try to spread panic about the dangers of a "German Europe". Part of the French ruling class shares these fears, but has decided that the only means to contain the Bundesbank is to steam ahead with Maastricht and monetary union.
German Finance Minister Theo Waigel portrays himself as a Maastricht fanatic. But underneath, he may yet prove to be a Eurosceptic. Waigel is the author of the Stability Plan adopted by the EU at its Madrid Summit in December 1995. This plan
• reinforces a very strict interpretation of the convergence criteria established at Maastricht.
• proposes that an agreement like the current European Monetary System be created to govern the relationship between the Euro zone and the other EU currencies.
• reduces the 'norm' for maximum budget deficits from 3% of GDP to only 1%, with compulsory fines for offending countries!
In other words, Waigel is imposing a Maastricht Two plan on the European Union, before Maastricht One has been realised! This suggests that he is convinced that some countries will indeed meet the original Maastricht criteria by 1997-8. But it does nothing to guarantee monetary stability and social peace after the introduction of the Euro. Austerity policies will continue as before. You have been warned!
Monetary union is based on iron rules. It removes monetary and budgetary control from the hands of the rulers of each member state. But it entrusts them with the management of the "local" class struggle. And the austerity imposed is already confronted with growing social tension. The Madrid accord has pushed each EU government that little bit closer to a major confrontation with its public sector work force.
If the bourgeoisie is to fight, they will want to win as quickly as possible. Margaret Thatcher's victories in Britain in the 1980s might seem to be a good model
### NON L'ASPHYXIE
TRIRE Students demonstration in Paris (December 1995) for them. Except that Thatcher did her dirty work before Maastricht came into force.
The bourgeoisie also recognise that if any major country makes concessions in this new convergence period, the whole Maastricht-single currency scenario will be delayed or derailed.
A number of politicians are agitating for delays in the Maastricht timetable. Former Interior Minister Charles Pasqua argues that France needs some economic stimulation, inventive social programmes, and better coordination of reforms with trade union leaders. He combines these measures with a nationalist and security-obsessive stance which offers a populist-Bonapartist solution to France's malaise.
Pasqua has few takers among the elite or the media barons. After all, his plan implies a rupture in long-term foreign policy strategy. And the consequences, for France and for the European Union, are impossible to forsee. Nevertheless, if the social movement picks up again, Pasqua may prove more attractive than Chirac or Juppé for a nervous bourgeoisie.
Theo Waigel's policies are the complete opposite of Pasqua's. The German Finance Minister refuses all social concessions, and insists on maintaining, even sharpening the Maastricht criteria. But, faced with the same difficulties (expressed through "D-Mark nationalism") Waigel comes to the same conclusion as Pasqua: it would be better to lengthen the timetable for full European monetary union.
Monetary union raises questions about the institutions of the new Europe. A Franco-German agreement has set the tone: reinforcement of the weight of the larger and richer countries, particularly Germany;
FORISTERTE
and reductions in the powers of the European Commission and European Parliament (which has always been virtually powerless). These powers would be transferred to the European Council, which brings together direct representatives of the governments of the member states.
This is a clear retreat for the supporters of a supra-national European state. It will allow some kind of compromise with Britain.
The Spanish presidency of the EU, which finished on December 31, 1995, confirmed the final details of preferential trade accords between the EU and Eastern Europe and the ex-USSR, Mercosur (Argentine, Brazil, Paraguay, Uruguay), the USA and the North African and other Mediterranean countries. A SOCIALIST ALTERNATIVE
There are four essential elements to any socialist alternative strategy in Europe.
• There is no Social Europe
One thing the ruling classes of Europe do agree about, is that anti-social policies must be continued. There will be no social Europe after all. Only our trade union leaders still read and debate the mountains of pages of resolution, scenario and draft treaty which are still produced on this theme.
What welfare state does and will exist, exists at the national level only. It is being dismantled. This dismantling is made easier by the lack of convergent social legislation in the various member states could at least partially oppose the logic of the single marketplace.
There is a legislative basis for developing a European social policy. But
International Viewpoint n° 274 15
* European Monetary Union the European Union has clearly decided not to do so. The little that remains is an alibi.8
• Mass unemployment
The balance sheet of the policies of the governments of the member states, and the European Council, is clear. White Books and Green Books from the European Commission proclaim that the struggle against unemployment is a top priority. But the key text, Delors White Book of 1993 is