LAST THURSDAY, the 27 heads of the European Union held a video conference call to decide the EU’s economic response to the coronavirus pandemic.
The main item on the agenda was how to finance the huge bail-outs demanded by the banks and industry to prevent complete collapse in the face of a pandemic that has caused Italy and Spain to enter into a nationwide lockdown as deaths from the virus continue to climb and countries in the south face state bankruptcy.
One group of countries which included Italy, Spain and France – a country whose economic output has fallen by a third since last year and is facing bankruptcy itself – argued for the creation of ‘corona bonds’ which would be issued to every country in the eurozone.
A corona bond was seen as a way of pooling the risk between the terminally weak economies in these countries and the supposedly strong economies of Germany and the Netherlands. It would be achieved by selling these bonds on the market at an extremely low and uniform interest rate.
This was seen as crucial because Italy, Spain, Greece and other eurozone countries bankrupted by the previous economic crash of 2008 are only able to borrow at a high rate of interest, while Germany and the Netherlands are able to borrow on a much lower rate, making their debt repayments much cheaper.
The lion’s share of the money raised by selling the bonds would go to countries at greatest need while repayments would be much lower than if they issued their own national bonds.
This proposal was rejected out of hand by the governments of Germany and the Netherlands and other northern eurozone members who recoiled in horror at the thought of cheap borrowing being made available to anyone but themselves and providing cheap loans to countries they consider to be financially unstable with no austerity strings attached.
Germany demanded Italy look for a bailout through the European Stability Mechanism, a bailout that would come with the strings that were imposed on Greece by the Troika and which put Greece under the financial domination of the EU banks, who proceeded to loot the country and Greek workers mercilessly through a regime of savage austerity.
The conference broke up in acrimony with both sides at war with one another and the only decision being to put off making any decision for two weeks. The Italians especially should not have been surprised at this absence of solidarity from the EU.
Italy has been hit hardest by the coronavirus within the EU, with nearly 92,500 confirmed cases and over 10,000 deaths, but when they asked for urgent medical supplies under a special European crisis mechanism, no EU country responded, with Germany and France initially banning the export of medical masks and protective gear.
Italian workers will contrast this with the medical supplies and doctors being sent into the country from China and Russia.
The coronavirus pandemic has brought to a head the complete split and collapse of the EU with even pro-European Italian politician and former premier Mario Monte warning that the bloc of southern states will use their majority power in the European Central Bank to force through a massive policy of printing money to hand out and thus unleash a second ‘Weimar hyperinflation’ on Europe.
The coronavirus epidemic has ripped apart the facade of EU unity and exposed it before the working class for what it has always been – a union of bankers and bosses in a massive conspiracy against the working class.
The depth of this crisis has created a huge split and conflict between the bourgeoisie in Europe over who will be ‘last man standing’.
At the same time it is driving European capitalism into a war against its own working class to make sure that they and not the ruling class bear the brunt of the inevitable economic crash.
The only way forward for the working class of Europe is to build sections of the Fourth International in every country to lead a revolutionary struggle to overthrow this bankrupt EU and advance to the United Socialist States of Europe.