The Cypriot bailout marks a new stage in the euro crisis
11 April 2013
Fifty-five years after the founding of the European Economic Community in 1958, the project of unifying Europe and bringing it lasting prosperity on a capitalist basis has been irrevocably shattered by the global capitalist crisis.
With the recent bailout of Cyprus and new austerity measures announced against Greece and Portugal, the European Union (EU) is emerging nakedly as an instrument for crushing workers’ social rights, as competing ruling elites ruthlessly fight for dominance in Europe.
The bailout of Cyprus was predicated on stealing money from Cypriot depositors—freezing and partially confiscating all bank deposits over 100,000 euros—in order to smash the country’s banking sector. The bailout had nothing to do with a socialist expropriation of the bourgeoisie by the working class, which in Cyprus protested the bailout on the streets of Nicosia.
The bailout aimed to eliminate a rival of major European banks and precipitate an economic collapse facilitating attacks on the working class. In Cyprus, the economy is expected to decline by 25 percent in the coming years as a result of the bailout. The EU is insisting that the Cypriot government implement the type of mass layoffs, wage cuts and privatization which have already led to a social catastrophe in Greece.
The broader aim of such bailouts, as Greek EU Commissioner Maria Damanaki recently said, is to cut wages and working conditions in Europe in line with levels in the most exploited countries of Eastern Europe and Asia.
All the social rights formally enshrined in law after World War II—when the European bourgeoisie felt it had to make social compromises to prevent a resurgence of the kind of mass revolutionary struggles that followed the October Revolution in Russia—are being smashed. Driven by the world crisis, the bourgeoisie is tearing up its own laws and the social gains of an earlier period, aiming to throw the working class back decades.
In Portugal, the Supreme Court recently ruled that the social attacks demanded by the EU violated the country’s constitution. When representatives of the EU then demanded that Portugal fully abide by its bailout commitments, the government promised it would slash education, health and social systems to raise the funds necessary to repay its creditors.
In Greece, mass redundancies in public education dictated by the EU and implemented by the government also flagrantly violate constitutional rights.
Sensing a rising tide of anger and social opposition in the working class, the bourgeoisie is preparing more drastic measures. According to Dutch Finance Minister Jeroen Dijsselbloem, the methods of the Cypriot bailout can be applied to other euro zone countries—Italy, Spain, or Greece. EU Internal Market Commissioner Michel Barnier has stated that a law is already being prepared to facilitate “sequestering” bank accounts.
In particular, Berlin has sought to set a precedent with the destruction of the Cypriot banks, making Cyprus an example for anyone who might consider defying its dictates—while also taking the opportunity to promote its banks at its competitors’ expense.
Referring to losses depositors face on their bank accounts in Cyprus, Comdirect CEO Thorsten Reitmeyer told Wirtschaftswoche: “People can see how valuable it is to have an account in Germany.”
As an undeclared financial war rages between the EU countries, military staffs are making preparations for real wars. According to Bloomberg News, the Swiss army undertook exercises last year based on the premise of a war between its neighboring countries (Germany, France, Italy, and Austria) after a collapse of the euro. The Swiss army’s main aim in the exercise was to stop floods of refugees from crossing its borders.
The working class’ initial attempts to oppose the onslaught of capitalist reaction have either been sold out by the union bureaucracies and petty-bourgeois “left” parties, or broken with naked force. Since the beginning of the Greek debt crisis, the Greek army has been used twice to break nationwide industrial actions and force strikers back to work. Military-style repression has been utilized to break strikes in Spain and France as well.
After five bitter years of economic crisis and social regression, the working class is being brought face to face with an imperious reality: the ruling class cannot be pressured or reformed; it must be overthrown. For this, the working class requires entirely different organizations of struggle and a new political leadership.
The petty-bourgeois “left” parties and the union bureaucracies of Europe have functioned as instruments of the ruling elite, moving inexorably to the right and closing ranks with the EU and their own national ruling elites as the crisis intensified.
The Left Party in Germany has supported the destruction of the Cypriot banking system, calling for this policy to be more consistently adopted internationally. The vice-chair of the Left Party, Sarah Wagenknecht, used the same chauvinist arguments as the German government to justify smashing Cyprus’ economy.
In line with the interests of sections of the Greek bourgeoisie, the Coalition of the Radical Left (SYRIZA) has taken an equally nationalist stance. It has criticized the EU, but from the standpoint of renegotiating the austerity measures facing Cyprus, while it simultaneously formed an alliance with the ultra-nationalist, populist Independent Greeks (ANEL) party.
These parties’ aggressive shift vindicates the ICFI’s consistent struggle to mobilize the working class independently of the reactionary bureaucracies and in opposition to the reactionary politics of the petty-bourgeois pseudo-left.
To the ruthlessness and brutality of the bourgeoisie, the working class must counterpose its own perspective, for workers’ control of banks and corporations and for the taking of power by the working class.
This was the essential policy elaborated by the Fourth International in 1940, in the face of the last great European disaster, the outbreak World War II: “Against the reactionary slogan of ‘national defense,’ it is necessary to advance the slogan of the revolutionary destruction of the nation state. To the madhouse of capitalist Europe it is necessary to counterpose the program of the Socialist United States of Europe as a stage on the road to the Socialist United States of the World.”
We need your support
The WSWS recently published its 75,000th article. Become a monthly donor today and keep up this vital work. It only takes a minute. Thank you.