Once the faked euphoria campaign ends, with the papers and the data in hand: will the European Recovery Fund alleviate the crisis? Will it prevent us from suffering another ten years of precarity-inducing reforms, falling wages and austerity?
Financing needs will grow on account of what the state is failing to raise due to the reduction in economic activity. According to the IMF the Spanish deficit could rise to almost 14% in 2020. The estimates of the Airef, the Spanish fiscal authority in matters of deficit, give a range between 11 and 14% as well. Greece and Italy cannot expect faring any better than Spain.
But the pressure to balance the accounts and reduce deficits is essential in the euro’s extractive architecture. It is not going to decrease and it seems that it is one of the few things that all presidents and prime ministers agree on: in 2021 everyone is going to impose deficit reductions.
Will European funds at least bring relief? According to the Governor of the Bank of Spain the financing needs due to the crisis are much higher than those covered by this fund. The data that have been published take it for granted, being generous the fund only covers 10% of the financing needs of the state until 2026, year in which it is necessary to begin to pay the credits back.
What about direct subsidies? Don’t all those millions the state will receive without having to pay back help? Yesterday Yanis Varoufakis, former Greek Minister of Economy, proposed an estimation of the net subsidies, i.e. the difference between what the countries will receive as direct subsidies and the money they have to contribute to the fund.
Italy has allocated around 80 billion and Greece 23 billion euros. However, each member state must take on part of the new EU debt of 750 billion. Italy, for example, is responsible for just under 13% of this debt, while poorer Greece is responsible for 1.4%. Once we subtract these new debts, Italy’s and Greece’s net donations amount to just over 30 billion euros and 12 billion euros respectively, or 0.6% and 2% of annual GDP between 2021 and 2023. Compared to the prospect of austerity equivalent to 9% of GDP, which will be required to balance their budgets, these are negligible sums.
That is, as the former Greek minister and the Bank of Spain point out, the volume of net subsidies makes the fund macro-economically insignificant. In reality, a way of dressing, without too much sweetening, a new campaign of austerity… and what is more important, a much more aggressive one than that of ten years ago. With the figures that are falling day by day, about tourism, industrial prices, mortgages, business accounts or closures, any campaign of austerity can only mean even faster increases in unemployment and even stronger overall wage declines than during the previous recession… and these declines were no small thing.
The money in the fund of recovery is conditioned to reforms. It is true that, as Vice President Calviño has said, these reforms were already on the government’s agenda and the conditions will serve to implement them disguised as European imposition. The employers’ association (CEOE) and the corporate bourgeoisie were soon clear about this by establishing a new roadmap. The reforms are nothing but massive transfers from labor to capital. The European Council stressed again and again that the reforms that can be financed are: the green deal, digitalization, making the labor market even more flexible (=precarization) and eliminating the social security deficit.
Reforms on pensions and labor are an obvious direct attack on workers. The green deal by itself would mean the biggest transfer of income from labor to capital since world war II. And to digitalization they attribute a tremendous productivity gain… at the cost of the total income received by the workers: to be able to produce the expected amount with 7 million fewer jobs. In other words, transfers from labor to capital in massive volumes and on all fronts.
Summarizing: The low volume of the recovery funds turns them into a mere cover of the austerity promoted by the EU, with all that it means for the workers as a forced reduction of the general exploitation costs of the labor power: less healthcare services, education, social cohesion, etc. But this austerity would remain a mere appetizer for the general offensive against workers’ conditions implied by the reforms aimed at by this recovery fund.