Austerity backlash rejigs political map


REVOLT against austerity is sweeping Europe. The election of Francois Hollande has not only opened up the chance of a change of direction in France, but even in the citadels of fiscal orthodoxy in Brussels, Frankfurt and Berlin. In Greece, Sunday’s electoral earthquake has all but destroyed the political establishment that dominated the country for 40 years.

From the Netherlands to Romania, governments are falling under the weight of cuts and tax rises required by the eurozone’s new permanent deflation treaty. In Ireland, the anti-austerity tide is swelling support for a no vote in this month’s treaty referendum. By rejecting renegotiation of either the treaty or the impossible terms of Greece’s bailout, Angela Merkel has meanwhile turned the struggle over Europe’s economy into a battle for democracy.

The Greeks and French have now unequivocally voted to reject a program the German Chancellor insists they will have to swallow regardless.

Vive la difference: French voters applaud the winds of change sweeping through parts of Europe. Photo: AFP

And it’s not difficult to see why they’re rejecting it. Austerity isn’t working, even in its own terms. Cutting jobs and pay while increasing taxes isn’t reducing borrowing and debt, let alone leading to economic recovery. It’s deepening recession, increasing debt and destroying jobs and squeezing living standards across the eurozone – in countries such as Spain and Greece, catastrophically – as well as in Britain.

David Cameron and Nick Clegg yesterday took the opportunity of their defeat in last week’s local elections to insist there could be no ”let-up” in their own austerity program. That comes less than a fortnight after the country officially sank into a double-dip recession as cuts shrank the construction sector. Of course, they also insisted they would ”go for growth”. But as voters across Europe will soon discover, growth policies come in all shapes and sizes, from deregulation to public investment, and the inclusion of plans to make it easier to sack workers in this week’s Queen’s speech makes clear which kind Cameron and Clegg have in mind.

But the victory of Hollande, on a platform of jobs, investment, higher taxes on the rich and renegotiation of the fiscal pact, has already changed the political dynamic across Europe and weakened the German-led axis of austerity. Even the finance mandarins are shifting ground: European Central Bank president Mario Draghi now talks about a ”growth compact”, while International Monetary Fund boss Christine Lagarde has just discovered that ”fiscal austerity holds back growth and the effects are worse in downturns”.

The political upheaval in Greece, however, could have still more far-reaching consequences. Real wages have fallen by 25 per cent in two years, according to the Organisation for Economic Co-operation and Development.

It’s hardly surprising that support for the governing parties that brought Greece to such a pass fell from 80 per cent to 30 per cent, while left-wing parties that reject the EU-IMF cuts, privatisations and unachievable debt repayments surged ahead of both the discredited establishment and the nationalist right.

While attention has focused on the fascist Golden Dawn party’s 7 per cent vote, the biggest beneficiary of Sunday’s election was the radical left Syriza coalition, which won 17 per cent. (Its leader, Alexis Tsipras, failed in his attempt to form government. The leader of Greece’s main socialist party, Evangelos Venizelos, was to meet conservative leader Antonis Samaras in an attempt to form a unity government.)

For the past four years, the crisis has culled incumbents without discrimination, from the Republican George Bush and conservative Nicolas Sarkozy to Labour’s Gordon Brown and the Spanish socialist Jose Luis Zapatero, while the far right has advanced across Europe by preying on anti-migrant insecurities and posing as anti-establishment outsiders.

It is now being challenged by parties of the left that reject a failing neo-liberal system and are retaking social territory. Marine Le Pen’s National Front outpolled Jean-Luc Melenchon’s Left Front in France’s presidential elections. But it’s not Geert Wilders’ Islamophobic Freedom party that has gained most from the collapse of the pro-austerity Dutch government, it’s the radical Socialist Party, now coming first or second in opinion polls with up to 20 per cent support.

As the cost of the establishment’s austerity deepens, the polarisation between left and right is portrayed in much of the media as the rise of ”extremes”. But it’s absurd and repugnant to equate racist or xenophobic nationalists, which have kept supposedly centrist governments in power from Denmark to Italy, with leftist parties rooted in social movements that stand for a progressive political and economic alternative.

Nor is there anything ”extreme” about an organisation such as Syriza that rejects a program of social and economic destruction that is in every sense extreme – and calls for negotiation.

The expectation is now that Merkel will block attempts by Hollande to renegotiate Europe’s austerity treaty, but instead agree to add a vaguely worded growth pact (as happened before the creation of the euro in the ’90s) that would allow extra European Investment Bank lending and infrastructure projects. If the French socialist president were then to drive through the kind of cuts implied by his plans to balance the budget by 2017, in a context of continuing eurozone crisis and slump, the risk of fuelling a resurgent and toxic right on the back of social disillusionment is obvious.

The future of the eurozone now depends on what happens in Greece, and the risk of market contagion.

People across Europe are profoundly disillusioned with a market-driven order that has failed to deliver. If the left doesn’t offer a real alternative, others certainly will – with ugly consequences.


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