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European Union


European social institutions and aspirations for an independent role in world affairs are threatened by rampant United States’ power, Anglo-Saxon economics and European Union enlargement. These are all long-term forces, but already have enough strength to paralyse European institutions and subject the continent internally to corporate-led globalisation and externally to US leadership, as the White House now calls its imperial role. This is not the Europe that the world needs.


Because the EU is now the only global entity with an economic weight and political potential equal to that of the US, it has in principle the best possibility of defying the US. This should not be a question of making Europe more like the US (a process that has already gone too far) but ensuring that Europe represents a different model, based on social justice, and that on the international stage it frees itself from the chariot wheels of President George Bush’s policies of conquest.


Europe has an opportunity for a creative response to challenges. US leadership is in deep difficulties, above all in Iraq and the Middle East. And the sterile formula of Europe’s grotesquely-named Growth and Stability Pact has been breached by the EU’s two core states, breaking with the rule of the European Central Bank (ECB) and its disastrous monetarist dogmas.


European leaders’ current responses to the impasse of US strategy in Iraq and the crisis of EU monetary governance do not measure up to the opportunities, but weaken Europe and betray the hopes of those around the world who would like a check on the US. Washington’s allies within Nato protest publicly or privately about US unilateralism, but then endorse its consequences. These states voted in the UN to give the US occupation of Iraq unwarranted post-facto legitimacy.


As the US gets deeper into trouble, it will again expect its reluctant but meek allies to send troops, put their citizens in harm’s way to contain a dangerous situation and help Bush get re-elected in November.


At home the rule of the ECB will be rescued by giving even greater scope to implicit privatisation – whereby public services and social protections are degraded to oblige citizens to become customers of rapacious finance and insurance houses.


However, opposition will revive. The anti-war movement, which reached its apex on 15 February 2003, should gain a second wind as the nature of the occupation of Iraq becomes clearer. Similar mobilisations in defence of education and welfare will challenge those who mislead Europe and open conflicts in the extraordinary alliance that now unites Gerhard Schröder and Jean-Pierre Raffarin, Romano Prodi and Jacques Chirac, Sylvio Berlusconi and Tony Blair.


Europe’s leaders have failed to notice that the US leadership to which they defer is losing popular support in the US. Bush’s popularity had dropped sharply before the capture of Saddam Hussein. Within the Democratic party a militant wave behind Howard Dean had a chance of taking the nomination; Dean’s strength was that he opposed the war but he was prevented from making the most of it because Europe did not call for the withdrawal of US troops and allowed itself to be drawn into an auxiliary role. If Europe came forward with a plan for evacuation of the occupying forces – perhaps under the auspices of the Arab league or the UN – this would chime with the desire of millions of Americans to see their soldiers brought home.


The European elite also refuses to face the reality that the US economic model, far from being worthy of emulation, is beset with difficulties. The collapse of Enron began a series of scandals that involved every leading financial institution on Wall Street. The New York attorney general, Eliot Spitzer, has brought forward investigations and charges that allege that large US banks and mutual funds allowed hedge funds to skim the pension accounts of more than 90 million savers, a consequence of deregulation.


The US public is uneasily aware that over the next two decades the regime of commercial provision, which excludes a fifth of the population, will fail even those it does cover. Private pensions and health care suffer from a severe “cost disease” since competitive marketing consumes vast amounts of money; while customising provision for individuals is costly and cumbersome.


 Many on the US left look to Europe for an alternative but are disappointed when they do so. Social protection remains far better in Europe. But even governments of the left, such as that of the Social Democrats and Greens in Germany, lack courage and imagination: instead of finding better ways to finance welfare, they cut benefits.


The visible crumbling of Europe’s ability to protect its citizens weakens its voice in world affairs. A determined effort to rescue its collapsing social model could succeed if the EU sponsored at least some new social provision for all citizens. This was the approach of President Franklin Roosevelt in the 1930s when the US faced its most serious social crisis. The Social Security Act of 1935 eventually covered everyone, and the social security card became a badge of civic identity.


The EU should consider similar programmes. At present it has structural funds and a cohesion fund (1), as well as the Common Agricultural Policy and schemes targeted at new members. But these go to countries, regions and farmers – not to ordinary people in such a way as to create a link between citizens of European states.


Three economists, James Galbraith, Pedro Conceicao and Pedro Ferreira, have argued for a “truly European welfare state with a continental retirement programme”; “the creation of major new universities of the first water . . . in beautiful, lower income regions of the European periphery”; and “the full funding of students to attend them” (2). A Europe-wide welfare regime should be organised so every citizen from every country receives some benefit. This should be an addition to, not replacement of, national welfare policies that might also draw on emergency help, where necessary, from a European fund.


The European Federation of Trade Unions has long called for the setting up of a proper European social fund (3), with resources to invest to generate productive employment and underwrite future welfare expenditure. In 1959 the then European Economic Community (4) established the European Investment Bank (EIB), meant to counter-balance the power of central banks. With the scrapping of the growth and stability pact, the EIB has a bigger role than ever. Three Cambridge economists have argued it should be built up as a counterweight to the ECB (5).


Social funds would be as much about producing wealth as distributing it. In a continent where stock exchanges are of great importance such funds could help to protect productive enterprises from financial exploitation, to promote socially responsible business objectives and assert some popular control over wealth accumulation.


Europe would be better able to dedicate itself to rescuing and improving its welfare arrangements if it refuses to be dragged into US military aggrand isement. US bellicosity is prompted by the desire to distract US citizens from grave social problems and ballooning inequality at home. Europe should aspire to a more egalitarian and responsible model for its own people and in its relations with the world. Developing a Europe-wide welfare compact would help to build the common citizenship that could underpin a more independent European foreign policy.  ________________________________________________________


* Robin Blackburn is professor in the Graduate Faculty of the New School University, New York. He is an editor of New Left Review and author of ‘Banking on Death or Investing in Life: the History and Future of Pensions’ (Verso)


(1) The structural funds account for a third of the EU budget and benefit all its members, if unevenly; they relate to development, agriculture, fisheries and social funds.The cohesion fund benefits the four least developed members, Portugal, Spain, Greece and Ireland.


(2) James K Galbraith, Pedro Conceicao and Pedro Ferreira, “Inequality and Unemployment in Europe”, New Left Review, London, September-October 1999.


(3) Created by the 1957 Treaty of Rome, the present European social fund, in collaboration with member states, invests in programmes to improve the professional skills and opportunities of EU citizens. But its budget, one third of the structural funds (not including the cohesion fund), is only ¤62.5bn for 2000-2006, far from real needs.


(4) In November 1993, when the Maastricht Treaty came into effect, the EEC changed its name to the European Union.


(5) Philip Arestis, Kevin McCauley and Malcolm Sawyer, “An Alternative Stability Pact for the European Union”, Cambridge Journal of Economics, vol 25, n° 1, 2001. (Download the pdf file (48 kb) of this article as available on http://ideas.repec.org/p/wpa/wuwpma…)         


Original text in English


 


 



 

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