Jan. 1 — The European capitalists created the European Union to encourage the exchange of goods, services and capital. Its greatest beneficiaries have been the big banks, especially those based in Germany and France. It grew to include 28 states with 24 official languages and 507 million people and significantly increased the profits of the big capitalists in each country, even though the EU’s existence imposed limits on national sovereignties.
In almost all the countries in the EU, citizens of other EU countries are allowed to live and work without restrictions.
The so-called bailouts of Greece and the impending bailouts of Italian banks have in essence bailed out the French- and German-based banks that have major positions in the securities of Greek and Italian banks.
According to Nobel economist Joseph Stiglitz, in 2014 the EU was the world’s largest economy; by 2015, it had slipped back slightly behind the U.S. (From his book “The Euro: How a Common Currency Threatens the Future of Europe”) Calculations for 2016, though incomplete, should show a major drop in goods and services produced.
In 2014, one euro at its highest bought $1.33. By the end of 2016, one euro traded for $1.04. While only 19 out of the 28 EU countries use the euro as their official currency, which amounts to 337 million Europeans, the currency is officially used by EU institutions and four other European countries. It is second to the U.S. dollar as a reserve currency throughout the world. It began circulating Jan. 1, 2002.
The Greek economy is about 27 percent smaller than it was in 2008 and is still shrinking. (Forbes, Dec. 28) Almost all of the three “bailouts” that the Greek government has received since 2008 have gone to pay debt service, that is, to subsidizing German and French banks that lent Greece money. Very little was used to preserve the Greek people’s living standards. The EU didn’t even reduce the interest the Greek government had to pay to borrow — which was 22.5 percent in 2012, according to Stiglitz.
Greece’s debt is around 315 billion euros, which is 180 percent of gross domestic output this year, according to the latest EU data. The International Monetary Fund, no friend of the poor and oppressed, has made it clear that Greece won’t be able to pay off its debt if banks don’t reduce the total.
Leading up to a general strike at the beginning of December that all the Greek unions supported, the General Confederation of Greek workers issued a statement: “We are reacting to repressive austerity, poverty and destitution. … Once again we face absurd demands by [Greece’s EU-IMF] creditors.” (AFP, Dec. 8, 2016)
Greek unemployment was officially figured at 23.1 percent in September 2016 and has gotten worse since then.
The new budget that the general strike was called to protest contains around 1 billion euros from new taxes on items like cars, fixed telephone service, pay TV, fuel, tobacco, coffee and beer. Public spending on salaries and pensions will also be cut by 5.7 billion euros.
These figures reveal the deepening misery of the Greek people, forced into hunger and homelessness to pay the big banks.
Banca Monte dei Paschi di Siena SpA (BMP), the oldest bank in the world and the third largest bank in Italy, is in danger of foundering if it isn’t bailed out. Not just BMP but other banks, too, are probably shaky.
Wolfstreet, a website concentrating on the seamy side of Wall Street, pointed out in July: “The total exposure of French banks … to Italian government debt exceeds 250 billion euros. Germany holds 83.2 billion worth of Italian bonds. The other banking sectors most at risk of contagion are Spain (44.6 billion euros), the U.S. (42.3 billion), the UK (29.8 billion) and Japan (27.6 billion).”
JPMorgan Chase, a major U.S. bank, has won a very profitable contract from the Italian government to organize and manage the bailout of BMP. It is generally conceded that if a major bank like BMP fails, contagion could take down many more banks, if not the whole Italian banking system and, with it, banks throughout the eurozone.
The euro’s creation and institutions like the European Central Bank, which was designated to manage it, reinforced French and German economic domination of Europe. Rather than sustaining and improving the living standards of all European workers, it has turned into a tool to increase their exploitation and oppression.
Workers’ struggles should have no borders. On the other hand, the national bourgeoisies of Europe have erased some of their borders to better control their workers.