THE media were out in force at the end of last week to hear German Chancellor Angela Merkel reveal details of a bail-out package to rescue the bankrupt Greek state and save the euro from disintegration.
The agreement, which was finally announced on Friday, involves the 16 eurozone states and the International Monetary Fund (IMF) providing bail-out funds when Greece is unable to raise credit on international bond markets. By May, Greece has to find 16bn euros (6% of GDP) just for debt repayments.
Under the deal, when called upon, the eurozone countries are supposed to grant coordinated bilateral loans, alongside the IMF providing a third, totalling in all 22bn euros.
Merkel tried to put a gloss on the panic measure by declaring that it showed ‘Europe’s capability to handle things’ and that this would ‘do something for the stability of the euro’. It was insisted that the ‘safety net’ for Greece would only be used as a ‘last resort’.
French President Nicolas Sarkozy had wanted a purely European bail-out plan, but Merkel insisted that Germany would not accept this and that Greece would have to go to the IMF for some funds to repay debts.
What provoked Merkel and Sarkozy to quickly make their public proclamations was not merely the crisis in Greece, but the huge drop in the exchange rate of the euro against the dollar as a result of eurozone member Portugal facing a similar debt meltdown.
Last Wednesday, the international credit agency Fitch downgraded Portugal’s credit rating from AA to AA-. As in Greece, the Portuguese government has already imposed public sector pay cuts, but it has been forced to bring forward another austerity plan tomorrow.
The fear that both Greece and Portugal will not repay their debts and will default sent the euro crashing last Wednesday. The currency has fallen 12 per cent against the dollar this year as a direct result of the precarious state of government finances not only in Greece and Portugal, but growing alarm over similar situations developing in Ireland and Spain as well.
The crises of the euro and the EU have not gone away. The immediate disintegration of the euro has been put off, only to resurface soon in a more explosive and destructive form.
This is the case because two mutually antagonistic historic forces are in operation, representing the past and the future, the capitalist nation states of Europe and their bourgeois governments, and the working class.
The differences which surfaced between Germany and France over the Greek bail-out, with Merkel wanting an IMF involvement and Sarkozy opposing it, exposed their national antagonisms. The German bourgeoisie does not want to hand over the wealth it has screwed out of the working class to the poorer and weaker bourgeoisies of countries like Greece, Portugal and Ireland.
The German and French ruling classes are, of course, agreed that the working class in countries like Greece and Portugal must be made to pay for the crisis. The EU has forced Greek Prime Minister George Papandreou to bring in at least four austerity plans in as many months. Portuguese premier Teixeira dos Santos is unveiling a second dose of austerity for workers there tomorrow.
Another reason Merkel does not want to give cash to Greece is that she knows this will have to come out of the living standards of German workers. She fears that such a move will bring millions onto the streets in Berlin, with scenes like those already witnessed in Athens, Dublin and Lisbon.
The crises of the euro and EU reveal that a united capitalist Europe, dominated by bankers and monopolists, is a reactionary pipe-dream destined for the dustbin of history, along with anachronistic nation states.
The working class is showing that it will not be made to pay for the capitalist crisis and to keep the euro afloat. This is seen in the mass strikes and huge mobilisations in countries like Greece, Portugal, and France, and an escalation of struggles in Britain, Germany and Italy.
These revolutionary developments must give rise to the struggle for workers’ governments and the creation of a United Socialist States of Europe.
The most urgent task confronting workers today is the building of revolutionary parties, sections of the Trotskyist International Committee of the Fourth International, to lead this struggle to victory.
