By Dave Stockton

Since the Greek crisis – which saw European governments scramble to call the bluff of speculators betting on the nation’s default – the flag of “austerity” has been unfurled over every European capital. Our rulers are demanding that workers in public services and the millions that use them accept billions of euros in cuts.

The response from workers and youth across Europe has been immediate.

Greece has seen three general strikes and mass demonstrations, including protestors attempting to storm the parliament in Athens as it voted to impose the cuts. Similarly in Spain, two million public sector workers took strike action on 8 June.

Now the European Trades Union Congress (ETUC) – not a body normally known for its militancy – has called a continent-wide day of action on 29 September under the slogan “No cuts, more growth”.

Battle lines drawn
The cuts threaten a new dark age of mass unemployment and the destruction of working people’s living standards across Europe.
• Hundreds of thousands of public sector workers face the sack and millions face up to 20 per cent cuts in pay and
postponement of their retirement.
• The services they provide – such as health, education and public transport – are all on the hit list.
• The harshly regressive value added tax (VAT) on all goods, paid by workers regardless of their income, is being raised in many countries.

There are rumours that Germany could raise VAT on food from 7 per cent to 19 per cent. Chancellor Angela Merkel has announced cuts of 80bn euros (£66bn) by 2014, including getting rid of 15,000 government jobs, reducing family tax credits and delaying infrastructure projects. “Germany has an outstanding chance to set a good example,” she remarked, testifying to the pan-European scale of the entire austerity project.

Greece has been forced to adopt the most savage cuts, promising to reduce its budget deficit by 30bn euros over three years through wage and pension cuts, slashing social programmes and increasing VAT.

Massive cuts in Spain
Spain has adopted cuts amounting to 80bn euros. These include 13,000 jobs in public services, a reduction of state employees’ salaries by 5 per cent and a pension freeze. In order to reduce its budget deficit by 2bn euros, Portugal has imposed a hiring ban, frozen public salaries and increased VAT.

The Italian government has announced cuts of 24bn euros by 2012. They include a major reduction in civil service jobs, salary cuts, raising the retirement age and cuts in the health care system. France plans to reduce its budget deficit from 8 per cent to 3 per cent of GDP by 2013. This will be achieved by raising the retirement age, cuts in housing benefits, employment compensation and museums funding, as well as a 10 per cent cut in administrative costs.

Cuts like this will be more than mirrored in Britain, which has a deficit more than twice Germany’s (around 5 per cent) in relation to national income. The government is expected to announce £60bn of cuts annually, with 300,000 posts at risk and a pay freeze in the public sector. Given election pledges that health, overseas aid and defence will be “protected”, the most severe cuts are likely to hit areas such as education, transport, housing and welfare.

A global attack
During the first years of the crisis, Germany and France were able to pass off the credit crunch and the banking crisis caused by the “Anglo Saxon model”. But then the slump in world trade and an industrial recession hit Europe. This challenged to existence of common currency itself; the media questioned whether the euro could survive and whether countries that face state bankruptcy should be expelled from the eurozone.

In 2010, the “sovereign debt crisis” hit the southern eurozone countries full force. The media coined the repulsive acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain) for these countries. The message was that the population of countries with high debt to GDP ratios were facing economic meltdown because of their overindulgence, particularly by “excessive” spending on social services.

Yet a moment’s thought would make anyone realise that Greece is not a country of idlers living on huge pensions and salaries. With an average wage of about 1,000 euros a month, tiny pensions, some of the longest working hours and the weakest welfare system in Europe, it is not workers or poor farmers in Greece who are to blame for the country’s debt.

The bankers in Frankfurt, Paris, Zurich and London – who, despite “losing” 25 per cent of the financial assets of Europe, continue to pay themselves billions in bonuses – then organised a speculative frenzy against Greece on the bond market and stampeded the politicians into imposing enormous cuts and tax increases. It was a sort of crash diet for the already starving.

Obviously the continent’s ruling classes believe they can use this economic “shock therapy” to massively reduce the living standards and social wage of their workers and thus improve their competitive position against their rivals in East Asia and North America. The “European social model” with a living wage, universal health insurance, decent retirement pensions and union rights – which was fought for and won by workers for over 50 years – needs to be drastically reduced if our rulers are to achieve a “level playing field” with the labour conditions their rivals enjoy.

At the forefront
As the response to the cuts in Greece showed, a continent-wide austerity offensive can easily become a major turning point of the class struggle in Europe. Compared with the US, China and Japan, the working class in western and southern Europe has much stronger union organisations often with a record of resistance to the neoliberal reforms tried over the last 10 years. Also in Europe, the anticapitalist, antiwar and environmental movements have proved very capable of building powerful mobilisations on the streets.

The attack on the Greek working class and youth brought the country to the verge of revolution in late 2008, when the police shot a young man in Athens and provoked weeks of rioting and strikes against the repression of youth. It happened again this spring when the government announced its austerity measures.

Two million workers (in a country of just 11 million) took part in a one-day general strike on 24 February. Another on 11 March brought the country to a standstill. On 5 May Greece saw its largest-ever general strike and huge demonstrations in Athens, Thessalonica and indeed most cities and even small towns.

In Portugal, 500,000 workers participated in a strike on 4 March against the government’s austerity plans. In Spain, an estimated 200,000 workers struck on 23 February against plans for a two-year increase in the retirement age; in addition, two million took part in the day of action of 8 June after the Socialist Party government announced the new austerity plans. Further action is planned for 16 June when the government is due to unveil plans to introduce new labour laws to make it easier to sack workers – in a country with 20 per cent unemployment overall and youth joblessness at 40 per cent.

In France, a mass day of action took place on 23 March and another is planned for 24 June. The industrial action will come six days after the government is due to submit its draft law to parliament proposing changes to retirement age and pension system. In Italy on 12 March there was a major day of action called by the Cgil, the largest Italian union federation, and other unions to protest billionaire Silvio Berlusconi’s attacks on workers’ jobs and rights.

France, Italy, Portugal and Spain have strong militant traditions in their labour movements. This means that the rulers in Europe will not find it easy to push through the austerity measures without involving sections of the union leaderships and social democratic parties linked to them. In some cases where “their” parties are in government, for example Greece, Spain, Portugal, and the UK until recently, the unions have restricted protests against the crisis to a minimum.

But this sort of class collaboration is becoming less and less tenable, given the sheer scale of the cuts. This is already true for the weaker economies such as Greece and Portugal, and it is now spreading to major imperialist countries with fewer reserves such as Spain and Italy. In these countries, the economic basis for concessions to the privileged upper layers of the working class has always been slimmer. The stormy class struggles in Greece can certainly spark major outbursts across southern Europe and even trigger a blaze in the more northerly states – France, Germany, and Britain – where major austerity programmes are now being launched.

Socialist United States of Europe
It is clear that the years ahead will be ones of bitter struggle – the cuts needed are so vast that the bosses will launch wave after wave of attacks on workers’ living standards.

If they get away with it and defeat key unions, breaking workers’ organisations, the capitalists may succeed in creating a climate of fear, in which workers are so afraid of mass unemployment that strikes die down – a new “reserve army of unemployed” and desperate people can be used to undercut wages and divide workers against each other.

On the other hand, if we strengthen and unify resistance, linking struggles across industries and across borders, then we can not only break the European bosses offensive, but also convert our resistance into an offensive of our own, to overthrow the capitalists’ governments and create a Socialist United States of Europe, where the bosses will be forced to pay the price of the crisis, and where production will be for need, not for the profits of the coporations and the banks.

Key to this will be going beyond one-day actions. Waves of strikes and workplace occupations need to culminate in general strikes.

Only an indefinite withdrawal of labour can bring the austerity regimes to their knees and pose a direct question, who will be the master in Europe? The workers or the bosses?

Everything therefore depends on the leadership of the working class movement. The task of socialists is to build solidarity with the struggles, bring the struggles together, advance a programme that can defeat the bosses and their governments and win thousands upon thousands of European workers to the formation of a new political challenge to the existing social-democratic, Labour, “Communist” and trade union leaders, whose politics of compromise are holding us back and threaten to squander an historic opportunity to turn capitalism’s crisis into social revolution.