A general strike in Greece, massive protests by the indignados in Spain, public transport strikes in Portugal (and Spain), and industrial action by aluminium, steel and public sector workers in Italy headlined this week.
By Tom Gill
On Saturday mass protests will erupt again in Portugal as the indignaosmovement that brought out a million into the streets of the country on September 15 – the same day there was another huge scale turn out into the plazas in Spain – join action called by the country’s largest trade union, CGTP.
And it’s not just in the Continent’s south. On Sunday mass demonstrations are expected in France, calling for a referendum over the EU Fiscal Compact, the ‘permanent austerity’ treaty.
The focus of popular anger is ‘Europe’s austerity madness’, as Paul Krugman puts it in his latest column in the New York times. But the protests also reflect a wider rejection of a political elite that is rolling back basic democratic rights, from protections at work to welfare support and gains for women and minority groups, and privatising as well as slashing public services.
A slew of economic data this week confirmed what is now patently obvious to anybody but the criminally insane (and economists) – austerity is not working. Eurozone business confidence fell to a three-year low and a number of other indicators across the continent pointed towards recession. Most damning for the architects of austerity, unemployment is rising in Germany, which was until now a mainstay for growth in the 17 nation economic and monetary bloc.
Overall, the eurozone economy stagnated in the first three months of the year and contracted 0.2% in the April-June period. Economists now expect another economic contraction in the third quarter. The European Central Bank meanwhile released data that showed lending to households and companies fell, and by more than expected, in August.
Yet Europe’s austerity madness continues. This week Spain, Greece and France pushed ahead with fresh programmes of spending cuts. In Greece, at least 11.5bn euros ( £9.1bn) will be axed from the national budget. In Spain there will be another 20 billion euros of cuts. In France, President Francois Hollande’s government is going for a 30 billion euro cuts package.
What do these huge but dry numbers mean in practice?
18 million unemployed across the Eurozone, for starters, to which another million will be soon added, according to a new report by Ernst and Young.
In Greece, a cuts package near agreed by the government will see wage cuts, a rise in the retirement age from 65 to 67 years, cut backs to pensions – lengthening the contribution period to get the minimum pension – cuts in benefits for the disabled and the sick, cuts to health benefits, cuts to unemployment benefits for workers temporarily laid off in the construction industry, in hotels and in other sectors, new cuts to spending on hospitals, and an average 12% reduction in the salaries of soldiers, policemen and judges.
In Spain, the “depression budget” as Socialist economy spokeswoman, Inmaculada Rodríguez Piñero, describes it, will see the wages of millions of public sector workers frozen for the third year in a row and pensions cut in real terms, and there’ll be no relief for collapsing health services, schools and social services. And the arts and culture will take a massive hit, with cuts hurting renowned institutions such as the Prado and Reina Sofía museums, another self-defeating move that will no doubt hit tourism.
Austerity has already resulted in over a million Spaniards queuing at the doors of charities for food handouts and other aid. That’s a tripling since 2007, according to Caritas. And it is not just in the south. In France poverty is on the rise particularly among the young, including students.
The health effects of mounting misery are being felt too. A quarter of Portuguese are now suffering from depression, according to a new study.
The perversity of austerity – which at its most fundamental level is about drastically curtailing the capacity and incentives for 320 million odd people to spend – was highlighted yet again this week. Despite all the cuts, it turns out that Spain’s spending is actually set to go up. That’s because of a soaring social security bill to pay benefits to the unemployed and interest rate payments on sovereign debt that have been driven once again by international speculators who are right in just one respect – without growth a country’s public finances will just go from bad to worse and so lending to Spain and other recession-hit countries is most definitely a risky business.
This is something that the new mechanism to ‘save’ struggling Eurozone states – the €500 billion European Stability Mechanism that forms part of the EU Fiscal Compact – will not fix. To the contrary. It will bury them deeper into the ground. The fund will swallow up about a quarter of the cuts Spain has just pushed through its own budget in order to save itself, and around a third of those planned in Portugal.
The reality is the latest round of EU centralising moves, from banking union, to ECB sovereign bond purchases and the EU Fiscal Compact that President Francois Hollande wants ratified in parliament next month – even at the cost of splitting his Socialist Party and deep divisions with his Green allies – are based on a huge lie. That greater integration and renouncing national sovereignty are essential to fix the Continents’ financial and economic problems.
Spain, Italy, Portugal and Greece don’t need an international rescue. Their own ruling classes have more than enough to bail their own nations out. In Italy, private wealth stands at 8.6 trillion euros, according to the Bank of Italy, or more than four times the country’s public debt mountain of around two trillion euros. If the wealth of the top 50% richest were taxed at a rate of 2%, that could raise more than 100 billion euros annually. A moderate tax on the top 1% could bring up to €15 billion annually into the state coffers. And then there’s the hundreds of billions in dodged taxes, facilitated by tax amnesties and tax havens that cash-strapped governments across the currency bloc like to talk much about, but don’t ever shut down.
Even Portugal, the poorest of EU nations, can dig itself out of its own hole if it wishes. The government caused outrage by proposals to raid the incomes of workers through a massive hike in social security contributions, a measure now withdrawn the mass protests earlier in the month. The government needs to save €4.9 billion in 2013. The CGTP trade union confederation knows how it could plug that hole and indeed beat that target. Its €6 billion budget proposals, unveiled last week, comprise a new 0.25% tax on financial transactions (€2 billion), a 10% surcharge on dividends targeting the largest shareholders (€1.7 billion), a higher, 33.33% rate of corporate tax for larger companies with turnover above €1.2 million to be implemented in a progressive fashion (€1.1 billion) and a plan to combat fraud and evasion, through deploying more inspectors, setting targets to reduce the black economy and by broadening the tax base (€1.2 billon). But that plan would of course mean Portugal’s 1% paying their dues.
There’s dozens of other costed proposals out there that could tackle Europe’s debt burden and provide plenty of funds for growth, jobs and public services without hurting raiding the pockets of working people.
Take Italy again and international missions like Afghanistan that are in place in the name of peace and humanity but are instead resulting in death and destruction. Withdrawing from these commitments would not only save lives abroad but save Italians €a tidy 616 million, according to campaign group Sbilanciamoci!, money that could be spent on improving their quality of life. Taking the axe to the military budget could yield €3 billion.
But these solutions don’t fit the priorities of the current crop of EU leaders (with the notable exception of socialist-led France where at least the government has moved to impose a 75% tax on the incomes of the very rich). Their number one goal is to protect the billionaires, the corporations and the banks. And so, amid on the penury for ordinary people, plans roll on for blank cheques– including the 100 billion euro bailout of Spain’s reckless bankers – underwritten by millions of ordinary Spaniards and their European brothers and sisters.
Opinion polls across the EU show a growing popular rejection of European governments and their neo-liberal policies. In Spain, almost three quarters of Spaniards disapprove of Mariano Rajoy’s handling of the country’s economy. More serious for Euro supporters, a majority in a nation that once was a bastion of support for the EU now think the Single Currency is bad for the economy. And if it can’t deliver on that, what’s the point of it at all? A question no doubt on the minds of a great many people in a Europe now in open revolt.