German trade unions back European Stability fund

By Dietmar Henning
1 October 2011

On Thursday, the German parliament (Bundestag) voted on a bill for the enlargement of the euro bailout fund, EFSF (European Financial Stability Facility). Prior to the vote the German Trade Union Federation (DGB) and eight unions, including Germany’s largest trade unions such as IG Metall, the Mining, Chemical and Energy union and the public services union Verdi, published a quarter-page ad in several major daily newspapers calling for a “yes” vote.

“Without the cooperative efforts of all countries in the euro zone the disintegration of the common currency looms with far-reaching consequences for wealth and employment”, the trade union statement read, and continued:

“Our mothers and fathers have built a peaceful Europe on the ruins of two world wars.… It is our responsibility to preserve a united Europe for our children and grandchildren to preserve”. The rescue of Greece and securing the monetary union therefore were integral to the success of “our common European project”.

Members of the German Bundestag bore great responsibility, “because they are voting not only on the bailout, but on the future of Europe.”

The appeal bore the signatures of the DGB chairman, Michael Sommer, and the heads of all eight unions, including Berthold Huber (IG Metall) and Frank Bsirske (Verdi).

This public campaign by the unions makes clear that they stand fully behind the stance adopted by German industry and business interests to back the euro fund at the expense of working people.

A week earlier the four leading German business associations issued a joint letter in which they also called upon MPs to approve the EFSF law. The alternative, they claimed, would be “incalculable consequences for the European Union and its single currency”. In their letter, the four presidents of corporate and business organizations emphasized that the fund was a “major mechanism to hold together the euro zone.” The German economy is not an island, “it thrives on the cross-border exchange of persons, goods, services and ideas.... About 60 percent of German exports go to the European Union.”

On Wednesday the employers and unions then issued an additional joint appeal: “We are jointly promoting the approval of the expanded bailout EFSF”, the president of the Confederation of German Employers’ Associations (BDA), Dieter Hundt, and the chairman of the DGB, Michael Sommer, declared in Berlin. This is of elemental interest “for the entire German economy”, they stated.

When plans for the vote in the Bundestag were finalised many weeks ago both the Social Democratic Party (SPD) and the Greens had affirmed that they fully agree on this issue with the federal government of Angela Merkel (Christian Democratic Union, CDU) and would vote in favour of the measure. SPD Chairman Sigmar Gabriel and the SPD parliamentary group chairman Frank-Walter Steinmeier have repeatedly stressed that, irrespective of the voting pattern of the government coalition parties, the SPD would “by no means stand in the way.” The Greens also pledged to vote in favour.

The vote in the Bundestag was to ratify the decision made by European heads of state and government in July this year to expand the EFSF. At the heart of this decision was a pledge by Germany to increase its contribution to the guarantee facility from the current total of €123 billion to over €211 billion.

Funding for the EFSF is thereby to be increased to €780 billion, enabling the fund to borrow money cheaply on capital markets and lend up to €440 billion in emergency loans. To date, the EFSF fund amounted to €440 billion, the potential volume for emergency loans.

In fact, the new expanded EFSF is designed to guarantee and protect the major international banks, while the working population will carry the costs of the exercise. German banks alone have invested a total of €420 billion in governments, financial institutions and companies in Spain, Portugal, Ireland and Italy. A “25-percent discount on their debts would result in write-offs of more than one hundred billion euros”, writes Spiegel Online. “Do you recall the term ‘too big to fail?’” the magazine asks rhetorically, and replies: “Exactly: the government adopts a law on bank rescue and taxpayers foot the bill.”

At the same time the EFSF fund is being used to smash up all remaining social gains in the indebted countries. Chancellor Merkel reiterated that in return for billions in “aid” the EU’s leading nations demand extensive rights to intervene in the national budgetary affairs of ailing countries in order to ensure that they comply with the requirements of the Stability and Growth Pact. The chancellor will fight to ensure that in future, action can be taken against “notorious deficit sinners”. At a CDU regional conference in Karlsruhe, she said it was necessary “that there exist rights to intervene and declare national budgets to be null and void.”

This is the “common European project” that is praised by the trade unions. Workers in every European country are expected to finance billions for the banks at the same time as sacrificing all of their social rights and gains.

The latest advertising campaign by the unions makes it abundantly clear where they stand in the upcoming debates. In every European country they are doing everything they can to enforce the agenda of the banks and crush any opposition.