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Democrat November-December 2012 (Number 132)

The euro is structural
adjustment for all of us

Report by Brian Denny

On 1 January 2013 the EU’s European Stability Mechanism (ESM) will come into force to allow eurozone member states, or more accurately their banks, to be legally bailed out with a maximum lending capacity of €500 billion.

   The ESM will replace the two illegal temporary EU bail-out funding programmes: European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM) which stood outside the structures imposed by the Lisbon Treaty.

   All ESM bail-outs are conditional on member states first signing a Memorandum of Understanding (MoU), outlining a programme for mass privatisation and ‘internal devaluation’, ie wage cuts, a massive jobs cull and the effective abolition of the welfare state.

   Another precondition for receiving an ESM bail-out, starting from March 1 2013, will be that the member state must have fully ratified the Fiscal Compact. Budget proposals will be analysed and evaluated by the so-called Troika (European Commission, ECB and IMF). This Troika has imposed massive austerity on Greece, Ireland and Portugal.

   In Greece this has caused the economy to collapse, the raising of the retirement age, 25 per cent salary cuts and 50 per cent benefit cuts only apply to lower ranking government employees and do not affect Parliamentarians or their families.

   Greek oligarchs that effectively rule the country have been allowed to flee the country, taking their money to Swiss bank accounts.

   The Troika is currently negotiating with Spain and Cyprus about setting up similar ‘economic recovery’ programmes in return for providing support from the ESM.

   But this imposed austerity is actually creating greater imbalances in the single currency as poorer and smaller states are driven into permanent economic decline unable to compete with stronger states such as Germany or France.

   In other words the ESM, the Fiscal Compact and MoUs are mechanisms to carry out neoliberal structural adjustment – akin to those imposed on African states in the 1970s with disastrous results – inside the Eurozone.

   While Britain is outside the Eurozone the Con Dem coalition is carrying out the same austerity programme with the same outcomes, handing the public sector over to private monopolies to enable them to extract profit through public subsidies. This process has already led to the rail industry and now the postal service being transferred over to the carpet baggers of the corporate sector with support from various EU directives demanding mass privatisation, tendering and ˜competition™".

   UKIP leader Nigel Farage also supports this agenda, appearing in interviews recently calling for ‘deeper’ cuts  abolition of employment protection rights. The antics of UKIP do little to expose the corporate agenda being imposed across the EU but a lot to legitimise the austerity mantra being wheeled out by unelected eurocrats.