EU 750 billion euros ‘Recovery Fund’ nothing more than a Trojan Horse for austerity


LAST Tuesday the emergency summit of leaders of the EU 27 member states finally agreed to a 750 billion euros pandemic recovery fund after five days of arguments and wrangling between the northern ‘frugal states’ and the mainly southern states whose already frail economies have been destroyed by the coronavirus pandemic.

This ‘deal’ was greeted as a triumphant victory by Italian prime minister Giuseppe Conte who boasted it ‘would change the face of Italy’.

The deal, which has caused such euphoria in the Italian government, is an agreement to allow the European Commission to undertake large-scale borrowing on the commercial markets for the 750 billion euros.

350 billion is to be handed out to countries as non-repayable grants according to the economic damage caused by coronavirus.

Under these criteria, Italy hopes to be in line for grants of 65.5 billion euros, Spain 59bn and France 37bn.

It was hailed as a last minute attempt to ward off the anger of workers across southern Europe towards the EU and dampen the threat of workers and youth rising up against having their lives destroyed as capitalism crashes into recession.

According to Pascal Lamy, a former head of the World Trade Organisation, ‘In historical, symbolic and political terms this is a huge step forward by the European Union. It will give the pro-European constituency in Italy and other states a lot of ammunition against their critics – provided that in two or three years’ time voters have actually seen the colour of the EU’s money.’

In fact, EU voters will never see any of this money. Instead, what the capitalist class of Europe and their political parties intend is to use this deal to drive austerity across Europe.

In order to get grants, countries like Italy, Spain and France will have to place themselves under the scrutiny and authority of Brussels and the European Commission. They will have to produce strategies on ‘turning’ their economies around.

One of the leaders of the ‘frugal nations’ Dutch prime minister Mark Rutte said, after the deal was signed off, that Italy would have to ‘embark on the path of difficult reforms’ including cuts to workers’ pensions as part of a massive austerity regime presided over by the EU Commissioners.

The entire deal has been rightly denounced as a ‘Trojan Horse’ for bringing in rule by the bankers and bosses over nation states – in the same way that the Troika seized command of Greece to impose vicious austerity and mass privatisation on Greek workers.

Central to this deal, and the reason why it was finally passed, is the inclusion of an ‘emergency brake’.

This allows a single country to halt recovery fund hand-outs to any country to make sure its governments adheres strictly to austerity reforms.

While the reformist governments in Italy and Spain were celebrating this deal, the capitalists were over the moon at the prospect of the EU forcing austerity on workers.

In Spain, business leaders welcomed the fact that the EU would force the socialist government to renege on its plans to rescind labour reforms passed in 2012. This will make it cheap for the bosses to sack workers and will force cuts to the country’s pension system.

In France, president Macron will seize the opportunity as another weapon to use in his drive to force through austerity in the teeth of opposition from French workers and youth.

This rotten deal – which although seemingly large is just a drop in the ocean given the scale of collapse of European capitalism – according to the Bank of America does ‘not move the macroeconomic needle’ – these grants don’t even kick in until June next year.

What is clear is that this deal will not rescue capitalism from the hatred and anger of the European working class which is determined not to be dragged down into the gutter to rescue a bankrupt and collapsing capitalist system.

The only way forward for the working class of Europe is to put an end to the capitalist EU and go forward to building a united socialist states of Europe.