Fighting Left Alternative Desperately Needed
Apart from geographical and cultural similarities, Southern European countries also share, as a key feature, a combined and uneven capitalist development. This laid the basis for structural divisions along broad North-South lines, both at European level and within the countries themselves, with strident socio-economic gaps between different regions (e.g. North-South Italy). These divisions were consolidated and deepened by the process of European integration and the Eurozone in particular. This was most clearly reflected in the Eurozone crisis that started a decade ago, which particularly — although not exclusively (e.g. Ireland) — affected Southern member states. The new EU-wide economic crisis — built upon conditions that were in place before the start of the COVID-19 pandemic — will bring back to surface those divisions in an even cruder fashion along clear class lines. In face of this, the best response will be the international solidarity and coordinated struggle of popular classes across the continent.
The Eurozone and the Southern “periphery”
In any Marxist analysis, the key antagonism is that between capital and labor. At the same time, Marxists also point out and oppose the relations of domination between more and less advanced countries. Under capitalism, the former will always seek, and often succeed, to take advantage of the latter, as hundreds of years of colonialism and neo-colonialism show us. The competition inherent to the profit system makes impossible any genuine, long-term cooperation between nation states. The project of “European integration” is no exception.
Behind the ideological narrative of peace, prosperity and fraternity lie the profit interests of capitalist classes, particularly those from “core” countries like Germany, France, the Netherlands, Finland or Austria. This happens at the expense of “peripheral” and “semi-peripheral” countries in the East and the South of the continent, as they become open markets and reservoirs of cheap labor to boost profit maximization for big capital. Of course, the austerity, privatizations and race to the bottom in terms of wages and taxes that the neoliberal architecture of the EU entails simultaneously undermines the living standards of workers in the “core” countries while also benefiting capitalists from “peripheral” countries.
The EU is, therefore, a paradigmatic case for the interaction between class and international divisions, which Lenin wrote about over a century ago: “On the threshold of the twentieth century we see the formation of a new type of monopoly: firstly, monopolist associations of capitalists in all capitalistically developed countries; secondly, the monopolist position of a few very rich countries, in which the accumulation of capital has reached gigantic proportions.”
These divisions are historically rooted in the uneven and combined development in Southern Europe. Here, capitalism developed later than in Northern countries, with strong vestiges of the feudal system up until late in the 20th century (landowning class, the Church etc.) and generally weak national bourgeoisies, which could not compete on a par with the more mature and consolidated capital from Northern states. This gave rise to a division that became blatantly clear with the Eurozone crisis that started a decade ago. While that crisis was blamed by the EU and national establishments on the “laziness of Southerners” and their “bloated welfare systems”, its causes were linked to the neoliberal design of “European integration”.
Firstly, neoliberalism replaced the previous mainstream policy of wages growing proportionally with productivity with one of wage stagnation. This was meant, of course, to give an immediate surge in profits as well as to boost exports. Such an approach was taken in Germany, in particular, but also in Scandinavian countries, Belgium, the Netherlands and Austria, giving them an advantage on the export markets.
Secondly, this was coupled with the “opening of the markets” in Southern countries, which allowed the Northern giants to dominate key sectors of those economies and shut down the competition. This further strengthened their industrial and technological advantage, which helped them increase their market share at the expense of other Eurozone member states. Hence, Southern countries’ trade and current account deficits increased, losing big chunks of their international market share. Moreover, in the wider context of neoliberal globalization, many Southern economies were more reliant on industries based on low wage manual labor, which meant they were disproportionately affected by the process of delocalization of production.
Thirdly, member states lost their monetary powers once they joined the Eurozone, powers which in the past had enabled them to limit or decrease their deficits, by devaluing their currency or simply printing more money. On top of that, the rules of the European Central Bank forbids it to help governments finance their deficits and manage the interest rates on their debt. This left national governments to the mercy of the international bond markets. At the same time, these governments often also used this straitjacket imposed by the EU as an opportunity to justify cuts to public spending.
Fourthly, as deficits surpassed the 3% limit of the GDP set by the Maastricht Treaty (which was the first step in the creation of the Eurozone), Southern member states entered a vicious circle with banks from surplus-based core economies at the other end. In 2008, before the Eurozone crisis as such started, those banks held 65% of Portugal’s debt, 66% of Greece’s and 67% of Spain’s. Even so, most of these countries reached comparatively higher debt levels only after the start of the crisis, when they bailed out the banks by borrowing even more money.
Of course, all this being said, while countries like Italy and Spain can be considered as “semi-peripheral” in the context of the EU project, they are in fact imperialist powers far from peripheral in the wider sphere of global capitalism. Moreover, Southern Europe’s national capitalist elites are in no way to be absolved of blame for the disastrous situation which has been inflicted on the masses of their countries. There should be no doubt that the solution to the crises facing the populations of Southern Europe lies not in the strengthening of any national or regional capitalism relative to its competitors, but in a continent-wide internationalist struggle against all capitalist elites.
The answer of the capitalist status quo to these problems was the shock therapy of austerity, which proved to be an economic and social catastrophe, to the extent that even IMF economists eventually conceded that “the increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting”. It is well-known that, across Southern Europe, these developments led to mass anti-austerity movements, general strikes and the electoral rise of new reformist left parties such as SYRIZA (Greece), Podemos (Spain) and the Left Bloc (Portugal).
However, the programmatic, strategic and organizational limits of these parties ultimately prevented them from offering the kind of socialist alternative necessary to tackle the aforementioned structural problems and their effects. In 2015, SYRIZA capitulated on its moderate reformist program only six months after coming into government, implementing further austerity and other neoliberal measures for the remaining of its mandate and thus paving the way for the right’s return to power; not dissimilar to the situation in Cyprus, where AKEL has failed to provide an alternative to the neoliberal, pro-austerity status quo. In Spain and Portugal, Podemos and the Left Bloc respectively have ended up junior partners for social democratic-led governments, gradually losing their appeal as left alternatives. Moreover, in Italy, a new left formation failed to emerge altogether, due partly to the past bankruptcy of the main left party, Rifondazione Comunista, and partly to the rise of the populist Five Star Movement, which managed to capture some of the anti-establishment mood in society. All these failures will inevitably bear an impact, at least in the immediate period, on how that mood will be channelled politically in the context of this new economic crisis.
COVID-19 and global recession
It may be tempting to blame the “the deepest global recession in decades”, which only this year will see a 5.2% contraction in the world GDP, solely on the pandemic, as a recent World Bank report does. However, while COVID-19 could have triggered a crisis even on its own, this crisis will be even bigger due to conditions that have been building up for several years, with levels of public and private debt even exceeding, already since early 2019, those from the previous financial crisis. At the EU level, the contraction of the GDP is estimated to be even higher this year, 7.5%, with 7.8% in the case of the Eurozone alone.
As an attempt to boost economic recovery, the member states and the Commission have agreed, after months of tough negotiations that reflected the aforementioned contradictions, on an economic recovery plan of roughly €750bn. The two main beneficiaries of this plan are said to be Italy and Spain. However, following the pressure of the so-called “frugal” countries (Austria, Denmark, Sweden and the Netherlands), only about half of the money will be given as grants, compared to the 500 billion initially proposed. This will come with conditionalities aimed at “reforming” these economies, which will be overseen by the European Commission, with other member states allowed to have an input and even block the transfer of money in case the “reforms” do not take place accordingly. We all know what that means in neoliberal jargon: further austerity (particularly with regards to workers’ rights and pensions) and privatizations, as pointed out in a previous article on our website. While there is also talk of digital and green economy reforms, that is still very vague and, indeed, the idea of EU-wide green and digital taxes was predictably abandoned in favor of a much more modest tax on plastic waste.
Of course, workers, youth and the middle classes in Northern member states will also suffer from this new economic recession, particularly workers on precarious contracts and those in export-based industries, as well as workers in public sectors likely to be targeted by spending cuts. Nevertheless, Southern member states — and those from Central and Eastern even more so — are particularly vulnerable to this new economic recession, as illustrated below.
The sluggish economic growth in Spain already started to slow down last year, as a sign of the incapacity of capitalism in general to return to the pre-financial crisis levels of growth. The severity of the pandemic will affect the economic situation even more so than the EU average, with the Bank of Spain estimating a 15.1% fall in the GDP this year alone! To put this into perspective, in the previous crisis the GDP dropped by 9.5% over a period of 6 years.
Apart from the pandemic as such, the structure of the economy also helps explain these grim prospects, as 72% of all jobs are in SMEs (compared to 66% the EU average) and tourism accounts for no less than 12% of the GDP. Most importantly though, the direct fiscal stimulus as of September 10 has been rather limited (not including the upcoming EU recovery funds), of only 3.5% of the GDP, compared to 6% in France, 6.7% in the Netherlands and 8.9% in Germany (not including stimulus by regional authorities), which once again reflects the deeper imbalance between deficit — and surplus-based economies outlined above.
At the same time, Spain’s debt is likely to surge to 120% of the GDP, from 95% at the end of 2019, while unemployment is said to hit 20% this year, albeit still less than a decade ago (25%). All this will only aggravate the living standards of ordinary people, with the recently introduced €3 billion universal basic income scheme being utterly insufficient to counter that. Indeed, the current PSOE-led government — whose avowed neoliberal finance minister, Nadia Calviño, has just been appointed as the new head of the Eurogroup — seems keen to implement any austerity measures that the EU is likely to demand in return of financial stimulus. More worryingly, in a recent interview, the leader of Podemos, Pablo Iglesias, celebrated the deal agreed by the EU leaders as a break with austerity and neoliberalism, thus sowing illusions in what is likely to entail, in fact, further austerity and neoliberal measures — a reflection of the deeper illusions in the reformability of the EU and of capitalism more generally.
With the main left political force, Unidas Podemos (the alliance between Podemos and the smaller, slightly more radical Izquierda Unida), part of this government and unlikely to step out any time soon (less unlikely perhaps in the case of Izquierda Unida), and with the trade union leaders following the line of “social peace”, there is a danger that the existing left will not be able, in the immediate period, to channel the popular anger that further austerity will generate. Instead, the latter might mainly benefit politically the far right populists from Vox, although in regions with significant independentist movements (e.g. Euskal Herria) left nationalist forces (e.g. BILDU) might be in a better position to make gains. This poses quite sharply the urgency for a new left alternative to develop and become a new pole of attraction for workers, youth and activists. The militant mood in certain sectors (education and public healthcare but also precarious jobs), likely to intensify in the autumn, the dynamism of feminist and anti-racist movements, as well as the recent breakaway of the Anticapitalistas group from Podemos with the declared purpose of building a new left project rooted in the mass movements — all are positive factors likely to play a role in this process of reconstruction.
The Bank of Portugal projects a recession of 9.5% of GDP in 2020. Public debt will probably rise to 135% of GDP. The PS government led by Antonio Costa estimates that public deficit will reach 7% this year. This will completely cancel out the so-called success of the “soft austerity” policies of finance minister and Eurogroup president Mario Centeno, which had brought Portugal’s state budget into blue ink for the first time since the fall of the fascist dictatorship in 1974. Centeno dismissed himself from both positions in the middle of the pandemic, leaving the mess to be cleaned up by his successor.
Unemployment figures have not risen fundamentally yet because the Portuguese government introduced a so-called “lay-off policy” that publicly subsidized the private sector with social security funds in order to avoid massive sackings. The program guaranteed that workers could not be sacked during the pandemic, but their employment would be “paused” with a guarantee that they would get ⅔ of their wage. Only 30% would have to be paid by the employers, while 70% would be guaranteed by the social security system. The system massively endangers the financial sustainability of the social security system.
Unemployment statistics also don’t take into account unemployment created in the informal economy and seasonal employment, which are crucial economic sectors for the peripheral economies: tourism and agriculture. Many of the workers in the agricultural sector — particularly in the Alentejo region — are undocumented migrants from Eastern Europe and Africa who work in near-slavery conditions and had no access to any form of aid with the extinction of their employment.
Antonio Costa leads a minority government and is dependent on agreements to its left and right to secure political stability. At the onset of the lockdown, the government imposed a state of emergency which limited democratic rights, including the right to strike and protest. While all social life was brought to a standstill, construction and industry did not stop. The emergency measures prevented workers from demanding the closing of their workplaces or more strict hygiene policies. Most of Portugal’s first big surges of the virus were in industrial neighborhoods, particularly around Porto and the logistical center of Azambuja near Lisbon.
No fundamental opposition arose so far: the Left Bloc did support this state of emergency and the PCP abstained. Instead of building an opposition towards the PS government, both parties have tried to pass a message of “responsibility”, and a continuation of the agreements of the previous Geringonça government. These strategies had already led to the fact that systemic anger towards government policies is increasingly channelled through the extreme right. In the elections last year, the party CHEGA elected the first extreme right MP — André Ventura — since the collapse of fascism. Meanwhile, some opinion polls show that CHEGA — which during the pandemic tried to blame Romani for virus outbreaks and defended the necessity of confinement camps for Romani — has already surpassed PCP and Left Bloc and would become Portugal’s third party in the next elections.
Italy is one of the countries in Europe that have been hit the hardest by the epidemic and will be hit even harder by the economic consequences of the pandemic. The pandemic hit a country that had not grown economically for twenty years and was already seen as the “great sick man of Europe”. According to the EU, Italy has the worst estimated growth for 2020 of all the union, with GDP dropping by 11.2%. That would bring the public debt to an estimated 160% of GDP. Such a level of public debt in the third power of the EU, linked to the complexities of the Italian banking system, which is very exposed abroad, represents a hugely harmful danger for the stability of the single currency in Europe.
Istat, the national institute of statistics, estimates: that more than one in three companies, 38.8%, are at risk of closure. The danger of closure is higher among micro (40.6%) and small (33.5%) companies but is “significant” also among medium (22.4%) and large (18.8%) ones. More than six out of ten hotels and restaurants are at risk of closure within a year as a result of the Coronavirus emergency, endangering over 800,000 jobs. In the sector, 65.2% of companies are defined as at risk of survival.
The general feeling that exists in Italian society is that something big must happen. This feeling does not exist only among the popular classes but within the ruling class. For several years, the secret services have been warning governments about the risk of instability and social mobilization. This year, it was the Minister of the Interior, Lamorgese, herself who explicitly stated that the spread of poverty among millions of Italian families carries with it the risk of a hot autumn and revolts from below.
The reality is that mass poverty is advancing at an incredible rate. Millions of families face the specter of unemployment in a country where public benefits are few and very difficult to obtain. As we write, there are still workers’ families waiting for the redundancy fund announced in March, who haven’t received a cent since then.
Conte’s government is supported by a weak majority composed mainly of the M5S and the Democratic Party. The majority is based on the terror that M5S has of going to elections where it risks disappearing. The fear of early elections that would almost certainly be won by the right is the main glue holding the government together. For this reason, it is unlikely we will see early elections soon, especially with the risk of a second wave of the pandemic and with regional elections scheduled for September.
Having said that, the government could fall apart at any moment. In the case of a vote in parliament for the so-called ESM, the parliamentary majority risks splitting. For this reason, we are now witnessing the unlikely rehabilitation of Silvio Berlusconi, former Prime Minister involved in trials of all kinds for sexual, financial, corruption scandals, etc. … The rehabilitation of Berlusconi is aimed at exploring the possibility that Forza Italia, linked to the EPP, may support the parliamentary majority of Conte.
This internal split in the Italian mainstream right, now dominated by the alliance between the League and Fratelli d’Italia (another rightwing party), reflects the complexity of the economic crisis and the terror felt by part of the Italian bourgeoisie at the possibility of a right-wing populist government that could take, willingly or not, the path of Italexit. The rehabilitation of Forza Italia also says a lot about the seriousness of the crisis of the left, and of the M5S, which, having lived only off anti-Berlusconism, ended up resurrecting it and making it presentable.
In this context, characterized by the explosion of a social crisis in a scenario dominated by the proletarianization of the middle classes, and by a strong anti-elite sentiment and the absence of the left, we run the risk of witnessing a mass reactionary radicalization of the impoverished middle class in search of radical solutions to counter the crisis. If the Left does not regain a clear and radical anti-capitalist perspective, it runs the risk of watching this radicalization without being able to intervene in any way.
In Greece the right-wing government of New Democracy tries to present itself as a “model” of dealing with the Covid crisis, based on the low numbers of people infected, at least until now, and the low number of deaths — below 300 until the time of writing (11/9/2020) in a population of 11 million. This was based on the quick lockdown that the government implemented, which in turn was forced upon the government due to the knowledge that the health system in Greece, dismantled by the Memoranda austerity policies, could not possibly cope under high pressure. They also feared the reaction of the Greek working class, which has very militant traditions, if the situation would evolve the same way it did in Italy and Spain. This “success” of Mitsotakis has kept him high in the polls — around 40% support whereas the main opposition party, Syriza, is around 20%. However, the opening of the borders to tourists without mass testing or other restrictions and the loosening of social distancing measures “for the benefit of the economy” has started to change the picture, threatening with a serious spike in new cases.
According to most estimates, Greek GDP will fall by around 10%, unemployment will hit 23% and the public debt will surge to 204% of the GDP! This will come after a decade of crisis during which the GDP shrank by 26% and the lives of millions of working class people were devastated.
The ND government used the lockdown and still uses the Covid-19 crisis to impose more brutal repressive policies and austerity. A new law was approved that puts severe restrictions on protests and demonstrations and “organizers” are threatened with heavy fines and jail sentences. Another new law allows “investments” (mines, hotels, wind farms etc) in natura-2000 and other protected areas, which will lead to environmental degradation and destruction. In addition, new labor laws and regulations have been introduced. With the pretext of saving jobs, tens of thousands of workers see their wages being cut, and/or are forced onto part time contracts by their employers and a number of workers’ rights are being abolished. Furthermore, a new education bill has passed that, among other things, raises the number of students per class in order to cut public school funding, attacks the democratic rights of students and teachers, increases exams and gives a boost to private education.
The prospect of another deep crisis is a nightmare for working class people. However, the most militant layers in society are already organizing struggles to fight back. Important mobilizations took place after the lockdown, including mass demonstrations against the new law that severely restricts the right to protest, against the new law of environmental destruction, and also protests and strikes by teachers, art workers, workers in the tourist industry etc. The most militant layers in society don’t only have to fight the right-wing government, but also to “combat” the disillusionment of mass layers in society due to the capitulation of SYRIZA and the betrayals of trade union leaderships. The process of fighting back has however begun, as reflected by the struggles around the environment in recent years, and will include important battles in the coming period.
On both sides of the island of Cyprus, the governments implemented a full lockdown, closing the ports and airports quickly after the first cases appeared. Both economies are based on tourism and services, so they are both in a very big financial crisis even after taking the loans and subsidies from the EU, and Turkey for the north.
In the south, the right wing neoliberal government of DISI spent 5.7% of GDP during the lockdown on welfare and subsidies, and is planning to give an extra 7% in loans, from the grants and loans of the EU. The real economy however, is suffering.
Most of the money given during the lockdown was tax exemptions, leaving the coffers of the state funds empty. On that account, the Minister of Finance has already declared that soon there will be a need for cuts in the public sector. Even though a small amount of the grants is planned to go to the health system, which was the main place that the virus spread due to years of degradation, the privatization process of health continues. The second relief package is mainly loans, which are planned to be given to “viable” companies, excluding many SMEs that still suffer from the previous crisis having a lot of NPLs (Non Performing Loans). Some of the grants from the EU are given with the exchange of deregulating more the labor market by subsidizing part time work and zero hours contracts.
The contraction of the economy after the lockdown, and with the losses of the tourism sector is estimated to reach 7% for 2020. Tourism is the main sector of the economy and accounts for 23% of GDP. The fact that only 14% of 2019 arrivals came the first 7 months of 2020, shows the damage that has been done. With the new loans from the EU, the debt already reached 120% during the summer, and is calculated to be 116% of GDP at the end of the year, a similar level to 2013 when the banks collapsed. As with the previous crisis, all these “handouts” and loans will have to be repaid by the working people, who after 2013, saw their income shrink by 25%, part time work to rise by 50%, the welfare system destroyed and private sector salaries cut by almost half.
In northern Cyprus, even though some subsidies were given both by Turkey and the EU, this only accounted for 0.4% of GDP. Therefore, from the very first instance, the right wing UBP-HP government cut 25% of public sector workers’ salaries, and 25% of local government budgets. The public health sector is in very bad condition, with not enough ICU beds, ventilators, or hospital staff, and no investment has been made to change the situation. Even though Turkey promised a loan of 325 million dollars (about 8% of GDP), this is accompanied by another economic protocol that does not include serious investments in the health sector, but pushes for more privatizations, and supports mainly Turkish investments on the island. The only money that arrived to the Turkish government was the subsidies to the army, as part of the armament that is going on now around the natural gas reserves in Eastern Mediterranean. The situation is creating great unrest, and even though the economy is in a very bad shape, the Trade Unions’ Platform (a coalition of most of the trade unions in the north) mobilized against the opening of the airports demanding first to fix the health system and only then to open the economy, especially to Turkey, where Covid-19 is not under control yet. 2 months after the end of the first lockdown and the opening of the borders, north Cyprus is faced with a second wave of cases, and closes the borders with Turkey once more.
The pandemic would have been a good opportunity for the EU to show the “solidarity” that they hypocritically proclaim, and in the case of Cyprus, to show collaboration of the two communities to protect the people from their common danger. However, the conflicting interests of the capitalists and their greed for more profit and exploitation has led them to deal with the pandemic only within their own official and, in the case of Cyprus, unofficial borders, at the expense of human lives. Even though the lockdown was supported by the people of both sides of the island, the first measure that the governments took was to close the checkpoints between north and south, which initially provoked an important bicommunal movement, but then when the pandemic reached the island, gave way to fear, suspicion and nationalism.
The traditional, so-called communist left on both sides of the island, AKEL in the south, and CTP in the north, despite being in opposition and having traditionally the support of almost 30% of the population on each side, worked as partners to their respective right wing governments, “collaborating” to plan the relief packages. On both sides of the island, the left is trying to be “responsible”, “realistic”, not to disturb “social peace”. But there cannot be any social peace when the working people and the youth are losing their livelihoods or being pushed to emigration. The mobilization of trade unions in the north, even though still rather small, and the unrest displayed by the working people in the south show that the need for an anticapitalist left is bigger than ever.
The new economic crisis, triggered by the COVID-19 pandemic but fundamentally caused by conditions in the global economy that were already in place, will have a huge impact around the world, as it promises to be the most global crisis in the history of capitalism. Southern European countries, with their structural economic flaws and coming after a decade of austerity and slow or absent economic growth, are particularly vulnerable to this new crisis, within the wider context of the Eurozone. The financial support promised by the EU is completely insufficient to prevent the devastating social impact of the already worsening economic situation. On the contrary, it will likely come attached to further austerity measures. It will be a question of time until the social impact of all this will translate into mass upheaval, and we can already witness some level of mobilization in several countries and several sectors, such as the healthcare workers in Spain or the teachers and art workers in Greece. The first wave of the pandemic was also marked by industrial shutdowns imposed by workers’ action from below, in Italy and Spain in particular. As elsewhere, popular anger against the establishment will increase exponentially as the effects of the crisis on living standards will unravel.
At the same time, we need a sober assessment of the capacity of the existing left across the region to channel this anger and benefit from it politically in the immediate period. The aforementioned failures of new left formations are now undermining their credibility as alternatives to the status quo, as some of them have become part of it (SYRIZA and AKEL) or are propping it as we write (Podemos and Left Bloc); or simply don’t exist (Italy). This might see some gains for the populist far right on the short-to-medium term, particularly in Italy but perhaps also the Spanish state and Portugal. Having said that, this will also be accompanied by a shift in consciousness to the left, which will look for its own political vehicle. But due to the recent failure of the left, which is seen by the majority of the working class as pro-Euro and pro-business and therefore as having failed to prove itself as a genuine alternative to the establishment, and the impact that this has on the consciousness of mass layers of the working class, some time and experience will be needed before a new credible, mass left alternative can develop from the struggles to come, some of which have already started.
Hence, the left alternative that people desperately need, to counter both the neoliberal status quo and the rising threat of the populist far right, will most likely have to emerge anew from the mass movements and industrial struggles to come, in spite of the poor leadership of the current left and labor movement. This new left alternative will have to abandon all illusions in defending some sort of “progressive capitalism”. This means also breaking with the illusion that the EU can be reformed from within. What Europe needs is not more “democratic” capitalist institutions but international struggle, solidarity and coordination among popular classes from all countries. Indeed, it needs a left alternative that has the boldness and clarity to put forward a socialist, democratic and internationalist alternative to this bankrupt system.