When what is possibly the worst economic crisis since the 30’s got going in 2008, a lot of people looked back into history. They pointed out that when the Wall Street Crash happened in 1929, it took a couple of years before we really began to see political implications, like the rise of Hitler or the Spanish Civil War.

In recent weeks a wave of protests and strikes has engulfed Southern Europe, bringing people on to the streets of Greece, Spain and Portugal. It looks like for some countries at least, we won’t have to wait much longer to see consequences of financial meltdown.

The Euro as a currency is in crisis as a result of what’s happening. The fate of countries like Greece puts serious doubts on its long term viability.

Many people support the European Union, because they think it is a big club where everyone helps each other out and prevents wars. The EU’s own rhetoric has often talked about solidarity across Europe. But the response to the financial crisis in Greece has shown that the EU is no different than any other part of the capitalist world-the strong exploit the weak, and the powerful have no interest in solidarity with those who are relatively powerless.

The biggest power in the EU is Germany. The German elite have learned from history, and since the war they’ve wanted two things: sound money and European integration. In the 30’s hyperinflation made the German Mark worthless, causing misery for everyone and spurring the rise of the Nazis. And following the destruction of the war, the only way France and Germany could ever hope to match up to the global power of the US was by teaming up.

These two objectives came together with the establishment of the Euro, the aim of which was to give Europe a strong currency that could stand up to the dollar on world markets. But the idea was also that the Euro would help political integration, with the EU becoming more like a state of its own.

But closer integration has proved difficult, and in the meantime the EU has mushroomed outwards to take in a bunch of countries in Eastern Europe. Now 16 different states, many with very different economies, are tied together economically by using the Euro. Some of these countries, like Germany or the Netherlands, export a lot of products and as a result have surplus money. Others, like Greece or Spain, have huge debts. In the past, if a country had a surplus the currency would increase in value, making it more expensive to buy their products. If another had a deficit, then its currency would fall in value, having the opposite effect. This is the way, traditionally, that imbalances got sorted out.

But now, with so many countries locked into one currency, it’s nearly impossible for a national government to take action to try and deal with an economic crisis. Richer countries like France and Germany have been able to pump some of their own money into the financial system, but the banks and capitalists don’t trust the poorer countries like Greece, and won’t let them do the same.

Germany has the second largest trade surplus in the world, after Saudi Arabia. It exports a lot more than it imports. Its relationship to the rest of Europe is a bit like China and the US-Germany provides goods and finances, and the rest of Europe buys those goods and takes the investment. The difference is that other European countries aren’t nearly as economically powerful as the US. Germany has invested and traded heavily with poorer countries like Greece, Spain and Portugal. These countries companies just can’t compete with German ones.

On top of this, it’s now clear that there was a lot of bullshitting going on by European governments in order to keep the Euro working, and get more countries as members. An investigation is being launched into how the former Greek government conspired with banks to hide the true extent of their debts. But more generally, many of the European governments have been breaking their own rules and covering it up.

This hasn’t been money that has been spent to the advantage of workers, but is the result of massive corruption and mismanagement, along with huge tax evasion by the wealthy. Without cooking the books like this, it would have been impossible for countries like Greece to join the Euro.

Before the crash, governments were able to cope with their debts by playing financial games and borrowing more money. But that option is closed off now for most of them after the collapse of the financial system, and several countries are left with huge debts that are causing a huge problem for the Euro. The worst problems are in the countries that have been rudely dubbed “PIIGS”-Portugal, Italy, Ireland, Greece and Spain.

In these countries the governments are now forced to desperately try and cut spending, meaning wage cuts, job losses and general misery, whilst at the same time raising taxes. In other words, they are trying to force the working class to pay the cost of the crisis that was created by financial speculators, banks and badly-managed governments.

In Greece, the government has a few months to raise £20 billion through cuts. If it doesn’t they could face the serious possibility of a Euro member going bankrupt. The German and French governments have been less than willing to come to the rescue, although they may yet be forced to. In the meantime the government is trying to force through an unprecedentedly harsh package of cuts.

The good news is that the Greek working class is one of the most militant in Europe, and is refusing to accept the government’s programme without a fight. From midnight tonight (Wednesday) Greek workers are walking out to start their second national strike. In previous strikes protestors have been fighting in the streets with riot police, and attempted to storm the parliament.

In other parts of Europe resistance is starting to heat up as well. In Portugal civil servants shut down courts, schools and hospitals in protest at government wage freezes. In Spain, where the government wants to raise the retirement age from 65 to 67 to keep people working longer, tens of thousands have been on the streets protesting. And in Ireland 4,500 porters, caterers, security guards and other low paid workers are set to go on strike against wage cuts in Dublin hospitals.

In the UK, with the PCS already on strike and the prospect of more savage cuts after the election whoever wins, it couldn’t be more important to learn about what’s happening across Europe. We aren’t yet looking at a real revolutionary situation, but there’s no doubt that if we let European governments implement their plans it will mean poverty and misery for the European working class on a scale not seen since the 1930’s. The only way we can stop that happening is by defeating our governments across the continent, through mass action, strikes and people on the street. There’s an urgent need to link up the struggles across borders and understand the international nature of what’s going on, and Leftfield will do its best to keep you informed in a clear and understandable way in the months to come.

Footage of last month’s general strike in Greece.

This entry was posted on Wednesday, March 10th, 2010 at 4:21 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.