There is something very strange about the economic depression into which so many European countries are now sinking. Britain is now officially in a double-dip recession, something this column predicted more than a year ago, when the coalition government was confidently assuring us it wouldn’t happen. The pundits of the EU, the European Central Bank and the IMF are now, at last, talking about the likelihood that Greece will be forced out of the Eurozone, something they assured us a short while ago would never happen. Spanish banks, weighed down by billions of euros of toxic debt incurred by financing a massive construction boom that has now bust, await bailouts from a government that cannot afford to pay them without itself receiving further billions from a European Finance Stability Facility that itself has insufficient funds to pay. In Spain and Italy youth unemployment runs at 50+% and 40% respectively. Greece has no elected government until after another election in June which is likely to result in another majority for parties that reject the draconian austerity measures the EU and IMF say are “essential” and non-negotiable. Accepting further austerity will deal the death blow to an economy teetering on the brink of collapse, and plunge the Greek people into a state of immiseration unknown today outside third world countries. In Italy, as unemployment surges, companies such as Fiat, lay off thousands of workers to relocate their plants in Poland where labour costs are cheaper. As in Greece, an unelected government of technocrats has no solution other than the familiar package of ever deeper cuts and privatizations that have already failed everywhere else. Managing director of the IMF, Christine Lagarde, authentic voice of this failed policy, tells the Greeks that she has no sympathy for them and that it is “payback time” for their failure to pay their taxes. This from an organization that has for decades demanded as the condition for “aid”, the privatization of state industries and slashing of welfare provision in the poor African countries whose deprived children’s lack of education appears to concern Lagarde so much. And, while much is made of Greek tax evasion, to which the overseers of EU fiscal policy turned a blind eye on Greece’s admission to the euro in 1992, we hear little from them about the multi-trillions world-wide lost to national treasuries through the illegal tax evasion and dubiously legal tax avoidance practiced by the super-rich who employ well-paid lawyers and accountants to advise them on how best to avoid the responsibilities that for the rest of us are unavoidable. There is now a palpable sense that the storm that has been gathering for several years is about to break upon us. Some wit described the likely future as something between a “catastrophe and armaggeddon.”
What is it that seems so strange about what is happening? Looked at from the standpoint of those least affected by the depression, things can still have the appearance of normality. In Britain, for instance, particularly if you live in London or the south-east, if you still have a job and can afford your rent or mortgage repayments, or if you are retired on a reasonable pension and have paid off your mortgage, “austerity” is what is happening to others, not to you. The worst of the cuts have yet to fall so it is possible to entertain the illusion that things are not so bad; the growing numbers of empty, boarded-up stores and business premises on the high streets may be worrying but as long as it’s not your business that has gone down, you may be inclined to think that things could be worse. Indeed they could, and they certainly will be.
What is strange is the contrast between the very real economic crisis that is engulfing much of Europe and the cultivation in much of the British media of a mood of joyful celebration which, it is expected, will soon sweep the country. First comes the queen’s diamond jubilee and then the Olympic games, hosted this summer in London. The bunting has already appeared as if by magic and the expectation is that everyone with an ounce of respect for her majesty’s “sixty glorious years” on the throne, will next week participate in street parties and raise their voices to implore God to save her. As during the great depression of the 1930’s, now once again in this great depression, the mystique of monarchy is brought into service as a distraction from the darkening thunder clouds threatening to engulf “small countries about which we know nothing”. The right-wing brand of euro-scepticism, much in evidence in the Tory party, has grown out of the little-Englander nationalism that has never considered Britain (and England in particular) to belong to Europe. This creates the impression that because the UK isn’t in the eurozone, what happens “over there” will not affect us. But if Greece is kicked out of the eurozone the consequences elsewhere, including Britain, will be incalculable. Even if the contagion can be contained, which is highly unlikely, the 50% of Britain’s exports that go to the EU, will be drastically affected. The British economy is already back in recession and the collapse of the EU export market will snuff out the tiny flicker of recovery some claimed to have detected. If, following Greece’s departure from the Euro, the contagion spreads to Spain, Italy and Portugal, then the eurozone, and needless to say, the euro, in their present form at least, are finished. There is no way that the European Financial Stability Facility (EFSF) will be able to bail out countries with economies the size of Italy’s and Spain’s. There is no convincing evidence that the leaders of the European Central Bank, the EFSF or the IMF have any idea what to do in such a crisis. This would (will?) be a systemic failure on an unprecedented scale. And the crisis will be global, not simply European.
An indication of how serious the situation is may be seen in the havoc being played in parliamentary politics and elections in Europe. This has been most dramatic in Greece where the traditional parties of the “centre” were swept aside in the May elections. The tremendous performance of the Coalition of the Radical Left (Syriza) which gained 16.76% of the vote made it impossible for the two main pro-austerity parties, the rightist New Democracy and Pasok to form a coalition government. The EU elites are now concentrating all their efforts to prevent Syriza from emerging from the new elections scheduled for 17 June as the largest party. If that happens the pro-austerity parties will be defeated and the Greek political scene will be thrown into turmoil. The crisis in Greece exposes more clearly than ever the fraudulence of the EU elites’ democratic credentials. They are not prepared to accept the outcome of parliamentary democratic procedures unless they endorse the strictures imposed from above by unelected officials. This has been seen in the initial outcomes of referenda on the Lisbon Treaty. If a country votes the “wrong” way, then they must be made to vote again and again until they vote the “right” way. For the Greek people it is now a question of the devil or the deep blue sea. Essentially the EU elites and the IMF are threatening them with the immediate withdrawal of life support unless they opt for a somewhat slower death by starvation. It is to be hoped that they will not succumb to the threats. If Syriza emerges as the largest party and is able to form a government, it is by no means certain that Greece would be forced out of the euro. Syriza’s leader Alexis Tsipros is likely to hold his nerve and may well consolidate and extend the support for his alliance. A game of bluff is being played in, and with, Athens. Merkel may be “standing firm” in Germany’s determination to withhold all further EU “aid” and cut Greece adrift from the euro if the Greek people vote the wrong way in the forthcoming election, but the rapid contagion that would spread to other eurozone countries would not leave Germany unaffected. The prospect of German export markets in southern Europe drying up should be concentrating minds in Berlin as well as in London.
In Britain the beleaguered coalition politicians are hoping that the jubilant chorus of fawning drivel churned out by most of the media for the diamond jubilee, followed by the razzamatazz of the Olympic Games, will take people’s minds of “politics” – by which they mean, primarily that attention will be distracted from the revelations emerging from the Leveson inquiry. By the time this column appears events on that front may well have developed dramatically. For the time being a few comments will have to suffice.
The terms of reference of the inquiry were dealt with in Letter from the UK on 13 May. Cameron must now regret his rashness in setting it up. Governments all seek to guard closely their most important secrets. In this case, the coalition does not want the wider public to know just how closely they have been linked to those who wield power in the corporate capitalist world; how eagerly they have sought to do their bidding and serve their interests. To lay bare this identity of purpose and policy runs the dangerous risk of revealing the sources of real power in Britain and globally. Such revelations can only contribute to the already widespread distrust of all professional politicians and to cynicism about parliamentary politics in general. It might lead too many to conclude that parliamentary democracy itself is little more than a charade and that real power lies, not in parliament, but elsewhere, beyond the reach of democratic procedures. And that would never do, as it might lead people to turn a way from Westminster politics and politicians and seek more radical alternatives.
For the government the problem with the Leveson inquiry is that they cannot control it. And the problem for Cameron and his ministers is that it is exposing the rot at the centre of the system. Its deliberations are televised for all to see. And with every passing week the inquiry reveals members of the power elite stripped bare; exposed are the close relations between government ministers, their aides and those at the top of Murdoch’s News Corp, all operating with contempt for the guidelines and regulations within which they are supposed to operate. The inquiry is exposing as rarely before just how rotten the system is. During the past four years, since the onset of the Great Financial Crisis, we have had an object lesson in where economic power really lies in one of the most socially unequal countries in the world. Now, in part due to what is happening at the Leveson inquiry, the veil has been lifted on the inner working of the Con-Lib-Dem government. It is to be hoped that the lessons learned will be turned to good effect and lead to the building of a mass resistance movement in the months and years ahead. It is sorely needed.