Magazine of Socialist Action in Australia

Eurozone crisis: Hanging together or hanging separately

Reading Time: 3 minutes

The worst capitalist crisis since the 1930s has led to increasing crises, turbulence and change in the world. The crisis has shattered the ‘eternal growth’ perspective put forward by the ruling classes during the economic upswing and undermined the legitimacy of capitalist governments and institutions.

In the development of the eurozone (which ‘celebrated’ its 10th anniversary in 2009) and the European Union (EU), capitalism found one of its most prestigious projects, symbolising ‘a new era of peace, harmony and prosperity’ in Europe.

By Danny Byrne, Socialist Party

However, the cracks which have grown in the EU/euro project in the last two years of crisis have served to falsify these claims and reveal the limitations and contradictions of the bosses’ EU project.

‘Rescue plan’

In the last months, Greece has been at the epicentre of eurozone turmoil, with its struggling economy stretching the capacity of the EU/eurozone structures to maintain the integrity of the project.

Bound together by the euro, the eurozone’s key capitalist governments feared the danger that Greek public finances (with national debt at well over 100% of GDP) represented for the currency’s collective health, raising even the prospect of disintegration for the euro.

The 11th hour agreement reached by eurozone governments on 25 March, which set out a ‘rescue plan’ for the Greek economy in order to assuage the currency markets, has been much applauded. However, even this agreement, termed “short-term remedial action” in the Financial Times (26 March), shed light on the limitations of the eurozone.

Only two-thirds of the rescue package agreed is to be covered by eurozone governments, with the International Monetary Fund (IMF) having pledged to cover the remainder, highlighting the fear spreading among capitalists internationally at the eurozone’s current instability.

The package was also agreed on the basis of a commitment by the Greek government – which has recently been shaken by three general strikes as the working class moves into struggle against its austerity plans – to pay sufficient heed to the EU and IMF’s diktats in brutally slashing the public services and living standards of the majority.

As the crisis in Europe develops, the question of the future of the eurozone project will be posed on many more occasions, with Greek-style situations developing in a whole number of countries.

Only last week, the prospect of emulating Greece hung over the Portuguese economy, which saw its credit rating downgraded by the Fitch agency, making it more expensive for the government to borrow money, as it grapples with a public deficit of almost 10% and growing national debt.

In Spain, Italy and Ireland also, the special depth of the economic crisis will send tremors running through the eurozone, as the EU’s much touted “Stability pact” (which stipulates that member states’ budgetary deficits should not exceed 3% of GDP) has been trampled on by the collapse of previously booming economies.


This situation underlines the analysis of the Committee for a Workers’ International (CWI, the socialist international organisation to which the Socialist Party is affiliated) since the EU and eurozone’s conception: internationally capitalism retains its predominantly ‘national’ base, and while seemingly smooth co-operation can be possible for a limited period of time under favourable conditions, a genuine convergence of European economies is impossible within a capitalist framework.

The development of the crisis has shown that Europe’s ‘stronger’ economies (France, Germany, etc) will not be willing to indefinitely prop up the so-called ‘PIGS’ (Portugal, Ireland, Greece and Spain) countries.

The coming months and years will see increasing crisis and turbulence as European capitalism – plagued on the one hand by national rivalries and imbalances, and on the other by the inevitable and mighty resistance of workers and young people, who continue to move into struggle across the continent – seeks to grope its way through the crisis.

Against the international offensive of capitalism and the EU, which aims to offload the cost of the capitalists’ and speculators’ crisis onto the backs of the working class, socialists propose the development of international, militant resistance. Resistance to the austerity programmes of capitalist governments, pushed by the EU, which are leading to mass unemployment and declining living standards.

We stand opposed to a European Union of the fat cat capitalists and in favour of a socialist Europe, in which the resources of society are under the democratic control of the working class and young people, to end the nightmare of the casino capitalist economies.


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