Grandiloquent verbiage about the European agreement, huge amounts, Sánchez received amidst applause from his ministers as if he were Caesar returning triumphant from Gaul… and two truths. The first one is that the access conditions to the funds establish a protectorate similar, if not worse, than the one suffered by Greece ten years ago; because in the end, the direct aid programs are conditional on a greater precarization of labor, a direct attack on pensions and the dismantling of Social Security. The second that as Vice President Calviño said, these reforms were already on the government’s agenda and the conditions will serve to implement them disguised as European imposition.
The reality of the agreement is that the state will receive 140 billion euros, the equivalent of 11% of one year’s GDP over six years. Of this amount, just over half, 72.700 million, will be direct aid and the rest will be loans.
The problem with the loans is that although they are interest-free, they worsen the state’s debt. And by increasing the debt, especially when the accumulated debt is already around the value of a whole year’s production, it increases the probability that the speculative markets will attribute to the Spanish state the possibility of not paying its bonds. This probability is measured as an extra in the cost of financing suffered by the state itself, an extra that is what the famous country risk approximates. That is to say, even if the credits do not bear interest, they increase the financial cost of the state.
Direct aid was provided for specific purposes, mainly linked to direct investment and support for private investment in digitalization and the Green Deal. In no case can they be used to cover running costs. And if they cannot be used for current expenses while financial costs increase, the inevitable conclusion is that credits are cutbacks.
On the other hand, direct aid, the other half of the package to which the Spanish government is entitled, is conditioned on an increase in the flexibility (=precarization) of the labor market and on the reform of pensions and social security. In other words, they go one step further than cutbacks and under an oversight that cannot fail to be problematic:
The price to pay for EU money is that the conditions will be very similar to those of a full bailout. The aid will be delivered in installments, and disbursement will be conditional on the implementation of the promised reforms. Any European government will be able to stop payments if it believes that Sánchez is not complying. The only difference is that there will be no visits to Madrid by the men in black of the troika. This is a de facto intervention of the Spanish economy from the EU, as Dutch Prime Minister Mark Rutte has demanded from the beginning
In short: spending cuts and a direct assault on living, working and retirement conditions. Calviño says, and through her mouth speaks the Spanish bourgeoisie, that we must see it as a great opportunity to transform our country that we should have addressed years ago. There can be no doubt that they have been waiting for this to happen for years, it is the road map of the Spanish bourgeoisie, now with foreign political reinforcement and funds to finance a comprehensive reorganization of the sources of accumulation, that is, a massive transfer of income from labor to capital.
A historical rebirth of the EU?
When France and Germany presented their original proposal, based on transfers and without explicit conditionality, we were told that it was a new beginning for the EU: the transfers, financed by debt taken by the EU as such, and directed by the Parliament and the Commission would have meant that the European conglomerate, far from being in question, was able to adopt the tools of a federal state to correct the territorial inequalities and cyclical debt crises in the less capitalized countries produced by the single currency. It seemed impossible and so it has been.
An implosion was narrowly avoided. At one point it seems that Macron even threatened to leave immediately and renounce a deal. He didn’t, but the result is a far cry from the federalization he had hoped for. The EU establishes a kind of joint protectorate over the recipient countries. And France is the fourth largest recipient. Even if it does not have the degree of dependence on Italy, Spain, Portugal or Greece, the possibility of maintaining its own policy within the EU has been greatly reduced. Any bargaining confrontation with one of the creditor countries can call its budgets into question at any time. If only a rival were to raise the complaint that the French government is not implementing pension reform deeply and quickly enough, direct funding would be delayed by at least three months. The question is not whether the French bourgeoisie will willingly endure that, but how long it takes for it to turn into a proliferation of dissent and political crises growing on its own territory and throughout the European South that it aspired to articulate.
It is true that the EU has emerged strengthened in its role as a mechanism for homogenization and for the imposition of conditions in accordance with the needs of capital. It is not surprising that both Lagarde and the German bourgeoisie are jubilant: not only are they going to keep a part of the internal European demand afloat, but they have expanded the investment opportunities for their capitals without productive applications in the central countries and in passing… the idea of a Franco-German axis, if it survives, does so under the clear subordination of France and its allies. The largest fractious state, Italy, is under the most precarious state and with a de facto protectorate even stronger than that of Spain.
But just as Rutte could claim that despite the transfers the EU has not changed its nature towards federalization, the idea that it can become a minimal political union, at the level of a political-military bloc, has clearly been left behind, barely concealed in the triumphal speeches. Orban, briefly underlined it with a We fought it out! on twitter. What they reversed is, simply, something as basic as the fact that the reception of aid would be conditioned to certain guarantees such as Rule of Law. It is difficult to think of a lower bar of political-institutional homogenization for the EU if it wants to equip itself with a bloc ideology.
And, underlining this political weakness, it turns out that while the summit, absorbed in internal negotiations, declined until September to adopt a position on Turkey’s progress in the Eastern Mediterranean and the Maghreb… the military development of the crisis has taken a qualitative leap with the approval by the Egyptian parliament of the invasion of Libya by its army.
The EU therefore survives as a tool for the joint imposition of the needs of capital in a common market, subordinating national capitals to others through market mechanisms stimulated by a shared currency and reinforced by credit mechanisms and specific transfers. But the more it reasserts itself as a conglomerate of capitals, the less viable it is as a basis for a possible imperialist bloc and the greater the political tensions with which it burdens its members. Each European rebirth reproduces the contradictions of such an imbalance at a greater level.
Balance from the workers’ perspective
- For the workers of the countries that have been affected, the credits really are cutbacks and the direct aid that they receive will only serve to accelerate the transfer of income from labor to capital.
- In the case anyone had hoped that the European Council could serve to prevent the escalation of war in the Mediterranean and the horizon of barbarism that it opens, they were deeply mistaken.