Must we abandon the Euro to pull the continent out of the crisis in which it is stuck?
A contribution by Paul Boccara, Frédéric Boccara, Yves Dimicoli, Denis Durand, Jean-Marc Durand, and Catherine Mills (members of the PCF’s economics commission).
Anger at austerity is rising everywhere in Europe branding charges of bankruptcy on its leaders, who have successively and with alternating political labels recommended submission to the demands of the financial markets. Mass unemployment is raging and brutally striking young people.
The terrible social suffering is increasing illusions of false radicalism. On the one hand, as the Greeks themselves have confirmed, the majority of people reject the idea of leaving the Euro. There is no question or remaining isolated faced with the financial markets and unbridled speculation. On the other hand, however, there is a deep protest movement brewing against the use being made of the Euro, which is so favourable to the financial markets and the big banking corporations. Hence the proposals some people are making of leaving the Euro.
François Hollande keeps repeating that the crisis is over. This diagnostic is as wrong and deceptive as the promise to reverse the unemployment curve in France in 2013.
The way he who promised “if elected president” to “renegotiate” the Merkozy treaty and to “reorient” the ECB has renounced attacking his “enemy”, finance, and “defending growth” is as particularly harmful since France is both dominated and dominating in the European Union and occupies a pivotal position for transforming the Euro zone. It is bowing down to the demands of Angela Merkel and German finance while pretending to serve French interests.
In the face of this barrier, some people are agitating to quit the Euro. This amounts to running away from the decisive battle for a different use of its and of the ECB.
It is a dangerous and demagogic illusion for five major reasons:
1. French foreign trade is suffering from a 60 to 70-billion Euro deficit. Returning to the franc, which would then have to be done at the price of a 25% devaluation to the Euro, would automatically lead to an increase of the same order in the cost of our imports.
2. We are told that this would be very serious since our exports would rise thanks to the devaluation of the franc. This, however, ignores the fact that growth is slow everywhere and lastingly so. It means a failure to understand the extent to which the alleged increase in French exports this price-competitiveness would be achieved at the expense of our partners in Southern Europe. Germany, on the contrary, would see its positive trade balance swollen by the devaluation of French labour costs, which would make cheaper its imports from its main trading partner. All this would take place in the context of unbridled speculation. In short, this would be a scenario of overbidding in competitive devaluations and protectionist reprisals, which would lead the European countries to tear one another apart. What we must challenge are the policies of austerity with struggles to renew growth and social progress. This is exactly what would be made possible by another Euro and another use of the ECB in solidarity.
3. Our public debt has been considerably internationalised since the 80s. Today, 60% of it is held by non-resident operators — banks, insurance companies and pension funds . . . A return to a devalued franc would automatically lead to an increase of 25% in the price expressed in francs of the 1,140 billion Euros of debt bonds held outside France. The interest paid would soar, although it already absorbs some 50 billion Euros a year! Moreover, the devaluation of the franc would allow foreign capital, particularly German, to grab, very cheaply, our productive assets.
4. The most important reason is that in leaving the Euro we would be deserting the battle for another Euro and for building a European Union based on solidarity, without any thought for a renewed growth based on people’s development and especially, of help to the countries of Southern Europe. We would be bypassing a historic opportunity for changing the economic and social situation in Europe and in the world. A new policy of solidarity in the European Union would be based on the strength of the money the ECB can create. Whereas each European country, in isolation, has a restricted potential for this, the shared monetary creation with the Euro provides a much greater potential since it is based on the production of wealth and creativity of 32 million people.
Let us base ourselves on the failure of the present day Euro by a new kind of growth and development — not by regressing in relation to the needs for change and solidarity between Europeans.
On the basis of the protest movement that is growing amongst all the peoples of the Union against austerity, the stability pact, the scuppering of public services, let us demand that the ECB directly finance a very great expansion of public services and their cooperation in Europe. For this every country will issue public debts bonds bought by the ECB. The money would be allocated to a democratically managed fund for social and ecological development and solidarity of European public services. This would be allocated to each country according to its needs.
Starting with struggles for jobs and wages and against the rationing of credit to small and medium sized firms, we demand that the ECB stop refinancing the credits granted to speculators and firms that cut or delocalise jobs or make them insecure. Let us demand that it refinance credit for material and research investments of firms at rates of interest that would be lowered (even down to 0∞ or less) to the extent that these investments would programme more jobs and properly paid training plus ecological progress.
5. At world level, if we suppress the Euro, the dollar would remain the international reserve currency. Its hegemony would be reinforced. The monetary creation of the dollar enables the United States to finance their economic, cultural and military domination. This also enables it to become indebted in its own currency to the rest of the world. China, Russia the Latin-American countries want to free themselves from this domination by the promotion of a world common currency based on the IMF’s special drawing rights — a proposal put forward by the PCF’s and the Left Front’s programme “The Human First”. However, if the Euro disappears, how can we carry weight in a world negotiation in alliance with the emerging nations against the common American dominator?
Thus we see that another use of the Euro can contribute, in a decisive way, not only to another growth of social progress in the European Union but also to a fundamental change at monetary, economic and social levels worldwide.
Source of the original text in French: http://www.humanite.fr/tribunes/contre-l-austerite-en-europe-luttons-pour-un-autre-543688