Bzw7mfhs 1436794139

How Europe turned its back on Greece in the pursuit of profit

EPA/Etienne Laurent

How Europe turned its back on Greece in the pursuit of profit

EPA/Etienne Laurent

After five years of imposed austerity, Greece is on its knees. GDP has declined by 25%, unemployment has hit 26% (and youth unemployment more than 50%). And yet, all the EU has to offer is more austerity in exchange for a third bailout agreement.

Pension reform will be part of the deal agreed at the marathon meeting of eurozone leaders on July 12, as is further privatisation and labour market liberalisation. EU agents will be given oversight of Greek government spending, including a new independent fund that will monetise €50bn in state assets to repay debts.

Greece has essentially been pushed into accepting more of the same, even after voting to reject the terms on offer from Europe in a national referendum. There is no sign of European solidarity in this deal. It is a punishment handed down to Greece for daring to say no to austerity.

The EU was established on the principles of cooperation and mutual support – and many are now wondering what has happened to those aspirations. But solidarity fell by the wayside some time ago in Europe. This is just the most recent example of how European integration today is about profit maximisation for capital – not about cooperation between European people.

Good intentions

When the EU was established in the 1950s, it was based on mutual economic support in the reconstruction after World War II. Politically, it was intended to ensure that France and Germany, in particular, would never again go to war against each other.

The initial success was impressive. France and Germany quickly moved from being arch enemies to the axis of further integration. The whole EU prospered economically so much, in fact, that other countries were quick to seek membership too.

Greece joined in 1981, and Spain and Portugal followed in 1986. In all three cases, significantly lower GDP levels made clear that they were not economically ready.

Greek PM AlexisTsipras emerges from the eurozone meeting. EPA/Stephanie Lecocq

Yet the others accepted them as new members because they felt it was important to provide these young democracies, which had just overcome military dictatorships, with political support and stability. Solidarity overrode economic concerns.

From the mid-1980s onwards, economic integration deepened with the internal market project as well as Economic and Monetary Union including the introduction of the euro – but, at least initially, solidarity with less advanced regions was not forgotten.

The 1993 Maastricht Treaty included the so-called cohesion fund, which was specifically intended at the time to support Ireland, Greece, Portugal and Spain in their efforts to catch up economically with the more advanced EU members. Equally, further economic integration was supposed to go hand in hand with the development of a social dimension, guaranteeing minimum social and workplace rights across the EU.

The age of profit maximisation

The 1990s marked a clear break away from solidarity in the EU. Even though some progress was made in areas such as parental leave, the social dimension of the EU was never fully developed. Broader, neoliberal restructuring quickly started to dominate.

Full employment was mentioned in the 2000 Lisbon Strategy, but this was to be achieved mainly through supply-side measures such as training, not through state investment in the economy.

Several decisions by the European Court of Justice during the 2000s further undermined the social dimension. In the so-called Laval case, for example, the free movement of services across borders was prioritised over the right of Swedish workers to blockade a construction site where 14 Latvian workers were employed on wages of around 40% less than their Swedish counterparts. Supporting the profitability of the company was considered to be more important than social justice, minimum standards and the right to strike.

Then, in 2004, eight countries from Central and Eastern Europe joined the EU together with Cyprus and Malta. These countries were economically even further behind the EU average than Greece, Spain and Portugal had been in the 1980s.

Instead of providing extra support, the EU imposed a more radical, market-oriented variant of neoliberalism onto the new members than for existing members. As it enlarged to the east, the EU did not offer substantial financial aid, the free movement of labour, or the full amount of subsidies available to farmers within the Common Agricultural Policy. Having just overcome Communist, authoritarian regimes, there were no forces in Central and Eastern Europe able to demand compromises – just as had been the case for Western Europe after World War II.

In its external, free-trade policy too, the EU moved away from relations of special support for developing countries. For example, the Lomé Conventions included preferential arrangements for countries from Africa, the Caribbean and the Pacific. In 2006, however, this was replaced with the new free-trade strategy, Global Europe, which demanded full reciprocity in market opening from developing countries and emerging economies alike. Again, solidarity was replaced with a focus on profit maximisation.

Given this history, the lack of solidarity being shown towards Greece now should not come as a surprise. For quite some time, EU policies have been dominated by neoliberal restructuring and a focus on profit maximisation for capital.

When the eurozone crisis hit, it quickly became a justification for austerity, undermining of trade union rights (see, for example, the erosion of collective bargaining in Portugal), privatising state assets and public sector cuts. The purpose was to shift the general balance of power in society towards capital.

The idea of solidarity has been lost in European integration. Neoliberal capitalism has no room for solidarity with workers, no understanding of the importance of social justice and equality in society. Neoliberal capitalism does not consider balanced development across the EU an important objective.