New Year cheer is in short supply judging by the latest statements from European leaders. Germany’s chancellor Angela Merkel, France’s president Nicolas Sarkozy and Italy’s president Giorgio Napolitano all began the year by warning of more pain to come.
Merkel declared that “the next year will undoubtedly be more difficult than this one”. Sarkozy struck a similar note, describing 2012 as a year “full of risks”.
Napolitano was even bleaker. “Sacrifices are necessary to ensure the future of young people,” he said. “No one ... can today avoid the commitment to contribute to the clean-up of public finances in order to prevent the financial collapse of Italy.”
Their statements partly reflect a sense of panic in Europe’s ruling class. The global debt crisis has intensified and is threatening to tear apart the euro project.
There is also an ideological dimension. Merkel, Sarkozy and co are determined to restore the euro’s fortunes by pushing through a pan-European austerity programme.
They know those plans will create misery for millions of people. And they know that mass resistance could scupper them. That’s why they are so keen to present austerity as a necessary evil rather than a choice.
Italy is a case in point. European elites lost faith in the ability of former prime minister Silvio Berlusconi to run the country. They forced him to resign last November and replaced him with Mario Monti—an unelected “technocrat”.
Monti pushed a 30 billion euro austerity package through the Italian parliament at the end of last year. He claimed it would bring Italy back “from the edge of the precipice”.
The bond markets seemed to approve, cutting the price of short term loans to Italy by half.
But the markets are still nervous about Monti’s abilities to take on the working class. Now they want further “labour market flexibility” measures. Italy’s trade unions have promised to fight back.
Greece is already seeing what austerity means in practice. There have been shocking cases of desperate families putting their children into care because they could no longer afford to feed or clothe them.
But resistance in Greece is also gathering pace. The first strikes of the year started on Monday of this week. Doctors and pharmacists walked out against planned healthcare cuts. The doctors are set to strike for four days, treating emergency cases only.
Europe’s leaders are terrified at the prospect of Greek-style resistance spreading across the continent. This would derail the joint French and German plan to put a lid on the euro crisis by further centralising economic policies across the eurozone.
This centralisation—billed as “fiscal union”—entrenches the power of Europe’s stronger economies. Economist John Grahl, writing in the Guardian, described it as “an authoritarian structure that would subject the weaker states to permanent and extremely intrusive surveillance”.
Here in Britain, David Cameron received a superficial boost in the polls when he used Britain’s veto against the fiscal union plans. But France and Germany are proceeding anyway. Cameron still wants to impose cuts too.
In his new year message, Cameron tried to justify his cuts by claiming they would offer “some protection from the worst of the debt storms now battering the eurozone”.
But Britain isn’t immune from the eurozone crisis.
Just before Christmas, credit ratings agency Moody’s issued a critical report into Britain’s sovereign (state) debt. It said the combination of Britain’s poor domestic economic outlook and the eurozone crisis threatened a downgrade of the government’s “triple A” credit rating.
The ruling class wants austerity as a “one size fits all” solution—and we need resistance in response.
In Britain the crucial front for that resistance is the mass strikes over public sector pensions. Building on those strikes is our surest means of making the ruling class, instead of our class, feel the pain for their crisis.