/ 12 May 2012

Voters alter EU’s political landscape

The recent election in Greece has not produced a government with a strong enough mandate to push through yet more cuts to satisfy Athens’s international creditors.
The recent election in Greece has not produced a government with a strong enough mandate to push through yet more cuts to satisfy Athens’s international creditors.

Revolt against austerity is sweeping Europe. The election of President Francois Hollande has not only opened up the chance of a change of direction in France, but even in the citadels of fiscal orthodoxy in Brussels, Frankfurt and Berlin.
In Greece, Sunday’s electoral earthquake has all but destroyed the political establishment that dominated the country for 40 years.

From the Netherlands to Romania, governments are falling under the weight of cuts and tax increases required by the eurozone’s new permanent deflation treaty. In Ireland, the anti-austerity tide is swelling support for a no-vote in this month’s treaty referendum.

By rejecting the renegotiation of either the treaty or the impossible terms of Greece’s bailout, German Chancellor Angela Merkel has meanwhile turned the struggle over Europe’s economy into a battle for democracy. The Greeks and French have now unequivocally voted to reject a programme she insists they will have to swallow regardless.

And it is not difficult to see why they are rejecting it. Austerity is not working, even on its own terms. Cutting jobs and pay while increasing taxes is not reducing borrowing and debt, let alone leading to economic recovery. It is deepening recession, increasing debt, destroying jobs and squeezing living standards across the eurozone.

United Kingdom Prime Minister David Cameron and his deputy, Nick Clegg, this week took the opportunity of their defeat in last week’s local elections to insist there could be no “let-up” in their own austerity programme. It comes less than a fortnight after the country officially sank into a double-dip recession as cuts shrank the construction sector.

Of course, they also insisted they would “go for growth”. But as voters across Europe are about to discover, growth policies come in all shapes and sizes – from deregulation to public investment – and the inclusion of plans to make it easier to sack workers, announced this week, makes it quite clear which kind Cameron and Clegg have in mind.

But the victory of Hollande, on a platform of jobs, investment, higher taxes for the rich and the renegotiation of the fiscal pact, has already changed the political dynamic across Europe and weakened the German-led axis of austerity.
Even the finance mandarins are shifting ground: European Central Bank president Mario Draghi now talks about a “growth compact” and International Monetary Fund boss Christine Lagarde has just discovered that “fiscal austerity holds back growth and the effects are worse in downturns”.

But the political upheaval in Greece could have still more far-reaching consequences. Greece’s economic collapse, triggered by the crash of 2008 and deepened by European Union and IMF-enforced austerity, is a social disaster on the level of the United States depression of the 1930s. Real wages have fallen by 25% in two years, according to the Organisation for Economic Co-operation and Development.

Unachievable debt
It is hardly surprising that support for the governing parties that brought Greece to such a pass fell from 80% to 30% while left-wing parties that reject the EU and IMF cuts, privatisation and unachievable debt repayments surged ahead of both the discredited establishment and the nationalist right.

Although attention has focused on the fascist Golden Dawn party’s 7% vote, the biggest beneficiary of Sunday’s election was the radical-left Syriza coalition, which won 17%. Its leader, Alexis Tsipras, held talks this week on the unlikely prospect of forming a government without new elections.

For the past four years the crisis has culled incumbents without discrimination, from the Republican George Bush and conservative Nicolas Sarkozy to Labour’s Gordon Brown and the Spanish socialist José Luis Zapatero. Meanwhile, the far right has advanced across Europe by preying on anti-migrant insecurities and posing as anti-establishment outsiders. Austerity is now being challenged by parties of the left that reject a failing neoliberal system and are retaking social territory that should never have been abandoned.

Marine Le Pen’s National Front outpolled Jean-Luc Mélenchon’s Left Front in France’s presidential elections. But it is not Geert Wilders’s Islamophobic Freedom Party that has gained most from the collapse of the pro-austerity Dutch government – it is the radical Socialist Party, now coming first or second in opinion polls with up to 20% support.
As the cost of the establishment’s austerity deepens, the polarisation between left and right is portrayed in much of the media as the rise of “extremes”. But it is both absurd and repugnant to equate racist or xenophobic nationalists, who have kept supposedly centrist governments in power from Denmark to Italy, with leftist parties rooted in social movements that stand for a progressive political and economic alternative.

There is also not anything “extreme” about an organisation such as Syriza that rejects a programme of social and economic destruction, which is in every sense extreme – and calls for negotiation.

Pro-market consensus
Mainstream political choices and debates have become so narrow over the years of pro-market consensus that the reappearance of genuine alternatives is apparently too shocking to absorb.

The expectation now is that Merkel will block attempts by Hollande to renegotiate Europe’s austerity treaty, but instead agree to add a vaguely worded growth pact (as happened in the run-up to the creation of the euro in the 1990s) that would allow extra European Investment Bank lending and infrastructure projects.

If the French Socialist president was then to drive through the kind of cuts implied by his plans to balance the budget by 2017, the risk of fuelling a resurgent and toxic right on the back of social disillusionment is obvious in the context of a continuing eurozone crisis and slump.

The future of the eurozone now depends on what happens in Greece and the risk of market contagion. Some on the Greek left hope to strengthen their bargaining hand with the EU and IMF in new elections. Others are sceptical as the likelihood of default and exit from the euro looms ever larger.

Greece is a harsh case in which the political battle is now on between radical options of diametrically opposed kinds. But people across Europe are profoundly disillusioned with a market-driven order that has failed to deliver. If the left does not offer a real alternative, others certainly will – with ugly consequences. © Guardian News & Media 2012