Eurozone on top of revolutionary volcano

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JUST when the eurozone bankers and capitalist class were congratulating themselves on beating the  reformist Syriza government of Greece into submission, an even bigger threat has emerged in Portugal.

This crisis, headlined in the press as representing a ‘watershed’ moment for the euro, is even more threatening for the EU than the crisis in Greece. The cause of the panic was the appointment this week of a ‘left’ anti-austerity coalition government.

The Portuguese elections, which took place over seven weeks ago, saw the ruling right-wing coalition government lose its overall majority. This coalition had faithfully carried out every one of the Troika-imposed austerity and privatisation demands since 2011, making Portugal the ‘poster boy’ for eurozone austerity.

Since the election, the right-wing President, Anibal Cavaco Silva, has used his constitutional powers to block the coalition of socialist, communist and green parties from office. Even when he was unable to sustain this defiance and was forced to swear in the anti-austerity coalition, he issued a direct threat of a political coup, warning that he, Silva, would sack the government if it violates eurozone deficit rules and the Fiscal Compact or ‘endangers the external credibility’ of the country, adding, ‘It is an illusion to think that Portugal can dispense with the institutions and creditors.’

This is a blunt warning of a return to military dictatorship if the government defies the dictats of the EU and Troika. The socialist-led coalition has been swept to power on a wave of popular hatred for all the cuts and privatisation demanded by the EU, cuts that have left Portugal with the highest level of income inequality in the whole of the EU and where one in five people are forced to live below the poverty line.

With its election pledges to increase the minimum wage (currently the lowest in Western Europe) and keep state assets like water and transport from being privatised, the socialist-led coalition will be in head-on collision with the Eurozone bankers’ Fiscal Compact, which demands these cuts to bring down its public debt.

Despite five years of EU-imposed austerity, Portugal is massively in debt. It is the most indebted country in the eurozone, including Greece, with public debt at 127% of GDP. The EU is demanding that this be cut to 60% of GDP over 20 years, something that could only be achieved by driving the working class into the ground.

The real crisis for the eurozone and the bankers is that they don’t have the big stick to beat Portugal into submission that they used against Greece. Unlike Greece, Portugal is not dependent on money from the eurozone rescue fund (EMS). It paid off its previous bail-out money last year and its huge debts are owed not to the EU but to foreign bankers who will go under if Portugal defaults.

In Greece, because of its debt to the EU from all the bail-outs to keep the country afloat, these bankers were able to use the EU to screw the money out of the Greek government by withholding future bail-outs until they agreed to put in place austerity measures to pay back both the EU, IMF and its foreign creditor banks.

Without the dictatorial control exercised by the EU in Greece they have, as one EU official stated, ‘no leverage’ to force the Portuguese government into submission. The prospect of Portugal defaulting on its debt and bringing down the eurozone along with the banking system is haunting the EU and the Troika.

In addition, the spectre of anti-austerity parties, like Podemos in Spain, being swept into power across Europe as the mass movement of workers against austerity continues to grow rapidly means that the eurozone is not so much at a watershed as sitting on top of a revolutionary volcano. The immediate issue for the working class is that these left-reformist parties are politically incapable of taking the necessary step of breaking completely with bankrupt capitalism and leading the working class to power through the socialist revolution.

That requires the building of revolutionary parties of the Fourth International across Europe to take the rapidly developing revolutionary situation forward to victory.