This crisis is also the product of the underlying realities of the European Union’s “ever greater union.” It was purportedly set up to benefit all, but is in fact a marriage of unequal competing capitalist regimes that assures continued profits for Berlin’s bosses and other northern rulers at the expense of the peoples of Greece, Italy, Spain and other weaker economies in southern Europe.
This inequality, exacerbated by the world capitalist crisis, pushed the Greek rulers’ swollen national debt to the point of disaster. The government’s insolvency, deepened by relentless pressure for payment on Greek bonds in the hands of banks and private profiteers, threatened to shatter the EU.
The EU, European Central Bank and International Monetary Fund provided aid, but demanded the Greek rulers carry out ceaseless attacks against the workers and farmers to make them pay for the crisis.
EU officials approved another $9.7 billion in financial assistance to the Greek government July 7, once again postponing a looming debt default crisis that could have threatened the survival of the 28-member European Union.
The action, taken by the board of directors of the European Stability Mechanism, unmasks the myth promoted by liberal capitalist politicians that the EU is a stable, “progressive” counterweight on the world stage to protectionist Washington under the administration of President Donald Trump.
The emergency financial assistance permitted the Greek government of Prime Minister Alexis Tsipras’ Coalition of the Radical Left to immediately turn around and pay $7.9 billion due to the IMF and the European Central Bank, which hold most of its almost $367 billion debt.
On its knees, the Tsipras government pleads that “we expect our partners to respect the sacrifices of the Greek people” by permitting Greece to sell bonds on the EU bond market. Speaking for German bondholders, Chancellor Angela Merkel is opposed to any concessions. Tensions between Berlin and Athens are rising.
“The government and people of Greece,” said ESM Managing Director Klaus Regling, “should continue on its path to rebuild a competitive economy and regain investors’ trust.”
Millions of Greek workers and farmers know from their own bitter experience that Regling’s bureaucratic doublespeak translates into an order to the Tsipras government to intensify its “austerity” drive that has devastated the lives of Greek workers and farmers.
Over a seven-year period the Greek economy has shrunk by one-fifth. Official unemployment stands at slightly less than 25 percent, but the fact is half the working population has been driven out of the labor market. Over 45 percent of young people are unemployed, forced to live with their parents, unable to be independent, marry or buy a home.
The percentage of involuntary part- time jobs has risen from 45 to 72 percent over the last 10 years. Pensions have been slashed, schools and hospitals closed, the public health system is in shambles. From 2009 through 2015, average wages dropped by 20 percent.
One price of the latest bailout was government assurance of further pension cuts in 2019.
EU’s fatal contradictions
Despite the hype, the establishment of the European Union was never about initiating an era of European postwar “peace and prosperity.” In the aftermath of World War II, as U.S. capital expanded rapidly with little competition, French and German capitalists and others began discussion of establishing a joint protectionist bloc to gain a stronger competitive position in world markets, leading to the establishment of the EU in 1993.
But the EU was born with a fatal built-in destabilizing contradiction. The capitalist rulers of each member nation protect their profits and privileges, including against their EU partners.
The sharply different levels of economic and social development between industrial powerhouses like Germany and France and lesser-developed countries like Portugal, Italy, Greece and others push the union apart. Berlin is dominant, with the most productive and developed industrial base and consequently the economic and political clout to dominate the economies of the lesser-developed countries in the EU. German capitalists sell. Greeks buy, and go into debt to pay.
All these contradictions have come to the fore under the pressure of the economic crisis, threatening to unravel the EU. Talks began June 19 between Brussels and London on the withdrawal of the U.K. from the EU, a result of last year’s Brexit vote.