The “Eurocrisis” is first and foremost about the failure of capitalist over-production as well as about inter-imperialist rivalry. French and German bosses are fighting to make sure their own bankers are not stuck with losses coming from the inability of other European governments to pay their debts. Chinese bosses are looking for opportunities to gain greater economic influence on the European continent. And U.S. bosses are worried about the possibility that the Eurocrisis will trigger a second worldwide financial crash. To analyze the current crisis, we must first look at how current European power relations developed. 

After the mass destruction of World War II, the main political goal of U.S. bosses was to limit post-war communist influence in a devastated Europe. According to General Lucius D. Clay, Deputy Governor of the U.S. Occupation in Germany: “There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand.” Although crudely anti-communist, this quote shows why the U.S. backed the resurgence of what was then the West German economy in 1946. French bosses, the long-time enemies of the German ruling class, were initially opposed to this move. But by 1950, under U.S. pressure, they went along. 

In 1952, Stalin had written, in Economic Problems of Socialism: “To eliminate the inevitability of war, it is necessary to abolish imperialism.” Marxist analysis of capitalism showed workers how big economic crises led to mass destruction of productive forces in imperialist wars. But liberal and social democratic politicians claimed that the various national bourgeoisies could reconcile their differences peacefully. To that end, European economic unions like the Coal and Steel Community (founded in 1951) were promoted as a way for countries to avoid the terrible consequences of war. These unions, however, were maintained within the context of U.S. dominance.

After the fall of the Soviet Union and German reunification, European bosses began asserting their independence. The European Union (EU) was formed in 1993. In 1999, eleven EU countries, led by France and Germany, established a common currency, the Euro, in a subset of the EU known as the Eurozone. Now a majority of EU countries use the Euro.

The EU’s bank, the European Central Bank (ECB), is supposed to represent the interests of all seventeen 17 EU member countries. But the reality is that both Germany and France wield huge power over the ECB. Germany contributes most to the ECB’s capital and has the biggest banks in Europe. The ECB policy of raising interest rates in the midst of a sharp economic downturn has damaged the economies of smaller EU countries, but benefits Germany.

Thirsting for maximum return on investments, European banks put an enormous amount of capital into the U.S. upsurge in housing before the 2007 crash. As the U.S. housing market collapsed, these profit-driven bankers moved money into the purchase of “sovereign” bonds issued by various EU governments. Between the second quarter of 2007 and the third quarter of 2009, EU banks shifted $827 billion into bonds issued by Portugal, Ireland, Italy, Greece, and Spain (New York Times, 11/11/11). The banks reaped huge amounts from interest and made tens of millions of dollars underwriting these bonds.

In 2009, a new Greek government admitted that previous administrations had lied about the size of the country’s budget deficit. German and French bosses used this admission as a pretext to impose a vicious austerity regime on Greek workers as a condition of any EU bailout. In reality, most of the “bailout” money sent to Greece has wound up in the pockets of the French, German and other bankers who bought Greek “sovereign” bonds.

Despite these measures, the worldwide capitalist economy has yet to recover from the crashes of 2007-2008. Short of war, capitalism has no choice but to shift the burden of the bankers’ losses to the working class. Smelling blood, the world’s biggest banks and other bondholders are seeking to turn the sovereign debt crisis into a net gain by attacking living conditions for workers throughout Europe.

Bond interest rates in Italy, Spain, Ireland and Portugal have soared. This in turn has forced local bosses in Italy and Greece to install “technocrats” (direct servants of the bankers) as government leaders, and has brought a conservative, pro-austerity government to power in Spain. All of these bosses have a mandate to attack the workers in their countries even more sharply.

But far from solving the capitalists’ problems, austerity regimes can only make them worse. Several European economies are now forecast to be in deep recession before the end of this year, making it even more difficult for their governments to cover their debt payments to the bankers.

The five countries whose sovereign bonds have been downgraded owe a total of $2.2 trillion (New York Times, 10/22/11). If they were to default on this debt, German, French, and U.S. banks would sustain some of the biggest losses. According to billionaire George Soros, this “deflationary debt trap” will lead to a “self-reinforcing process of disintegration” — that is, a global financial collapse (Huffington Post 12/5/11). Meanwhile, Chinese bosses are sitting back, hoping to pick up the pieces after the crash. 

The capitalists’ current path could bring the world to a depression like the one of the 1930s, which led to World War II. Once again, the bosses’ economic crisis will compel them to re-divide the imperialists’ markets and resources and destroy productive capacity. For the international working class, the only solution to the bosses’ inevitable wars is a communist revolution.

HAZOR HAGLILIT, ISRAEL-PALESTINE, November 12 — After declaring Israel an independent state in May 1948, the racist Zionist bosses faced a problem they call: “The Demographic Problem.” Despite expelling some 750,000 Palestinians from their homes and demolishing around 540 of their villages, 20% of the population of the newly created State of Israel, were Palestinian Arabs. The majority of Palestinians, within Israel, were concentrated in two areas: The Triangle (Central Israel) and the Galilee (northern part of Israel). In those areas, Palestinians constituted the majority of the population. In order to change this, the Zionist government started a racist campaign to “Judify” the Galilee.

The heart of the project consisted of creating new settlements called “Maabara” (transitional camps — mostly tents and huts made of wood and metal sheets.) These settlements were populated by Jewish immigrants, mostly Jews from Arab countries and from North Africa.

Jewish Immigrants Source of Cheap Labor

The new immigrants served as cheap labor for local industries set up by the government and the bosses. The new settlers  increased the Jewish population in the Galilee which led to a Jewish majority. The new settlements populated “The Frontier” in the north and south and could serve as cannon fodder and as a first barrier in case of an invasion by a neighboring Arab country. The Zionists gave these settlements a special name calling them a “Development Town”(Ayarat Pituach). Shderot in the South, known as a target for Kassam rockets from Gaza, is one of them, while Hatzor Haglilit is one in the north.

The policy of the Zionist bosses was similar in most of the “Development Towns.” A cheap labor force was at hand so the government, with money from local taxes and donations from rich Jewish bosses overseas, gave grants and subsidies to local bosses who established industrial factories in those towns. They employed the local new immigrants at a minimum wage making millions of dollars, while maximizing their profits. As a result of this policy the “Development Towns” turned out to be towns owned by the local industry. Most of the town’s life revolved around the factory. In Hazor Haglilit it was Vita Inc. producing pickled vegetables in cans.

During the “high” periods the bosses collected hundreds of millions of dollars which they refused to share with local workers who produced this wealth for them. But during the “down” periods the workers were the first to suffer the consequences. Competition from similar industries, cheap imports of the same product and rising costs of production decreased the profits of the Vita Hagalil bosses, and brought the company to the verge of bankruptcy.

Another Industrial enterprise, “Hazi Hinam” seized the opportunity and with financial aid from the government acquired the plant at a bargain price and profited from it for a while. After making a fortune for a few years, the management of Pri Hagalil (ex Vita Hagalil) decided on reorganization, code word for laying off workers. Once again Hazor workers had to pay the price for capitalism striving to make maximum profits.

During November 2011, 100 workers of Pri Hagalil received pink slips. One of the workers, 53 years old, was summoned for a hearing before being laid off. He said “I am shocked, I don’t know what I am going to do. I have worked for Pri Hagalil for 30 years, I have seven children but they told me they would leave Hazor, there is no future for them here.”

Solidarity is Crucial

Upon being fired, the workers of Pri Haglil went on a wildcat strike picketing the plant’s gate. The workers realized that without solidarity with the fired workers they are next in line. The bosses of Pri Hagalil had already declared their intentions to move the Plant to Naharia (30 miles away) where operating costs and local taxes are lower.

A retired worker of Pri Hagalil summed up the situation: “Every time new bosses arrive to “salvage” Pri Hagalil, they get financial support from the state, and draw enormous salaries [for themselves]. After a while they start the layoff process until the government shows up again with financial support which, once again, ends up in their pockets.”

All workers in historic Palestine, Hebrews and Arabs alike, should learn from the case of Hazor Haglilit. Capitalism is a ruthless, vicious economic system developed by the bosses for their sake. We in PLP support all Pri Hagalil workers’ demands. But even if there are victories, they can be reversed at any time by the courts, the Knesset (Israeli Parliament) and the other bosses’ state organs. It is only a question of time before they shut the plant, moving it to Naharia where they can extract higher profits.

The bosses treat the workers like the pickled cans they produce: Open them, use them and throw them away. Only in a communist society producing for need rather than for profit will all workers have humanity. Under communism everybody would contribute according to commitment and the total product would be divided based on need.

Workers need to build the revolutionary communist PLP to put an end to the capitalist system  — a dictatorship of the bosses — and build communism — the dictatorship of the workers to serve their needs.

PARIS, December 29 — Unemployment in November hit new record levels in France, and the bosses’ government and the union misleaders agree: shift the burden of the crisis onto the backs of the working class by putting workers on short time, cutting their income, in order to help maintain the bosses’ profits.

Pôle emploi, the unemployment office, reports an “official” jobless rate of 10.1% — 2,844,800 jobless in an active population of 28,269,000 — a level of unemployment unseen in the past 12 years. However, the real rate rose to 17.1%.

The 1,400,000 persons working part-time but actively seeking full-time work raises the rate to 15.0%. An additional 589,600 workers on the unemployment rolls were sick, in job training or had a government-subsidized job so were not counted in the “official” rate because they were not obliged to actively look for work. This ups the real unemployment rate to 17.1%.

All this hits black and Arab immigrant workers from sub-Saharan and North Africa, and their children, particularly hard (see box). Because of racist discrimination, they are already at the lower end of the jobs and income level and now are being driven deeper into poverty.

On December 27, the Minister for Labor said that a January 18 summit on jobs “will make it possible … to put forward quick-action solutions to limit the effects of the economic crisis as much as possible.” He notably favored making it easier for companies to put workers on short time. French President Nicolas Sarkozy will preside over the labor-management summit.

On December 27, France’s largest trade union confederation, the CGT, said it will propose to the summit “the elimination of untaxed overtime hours; reinforced checks on financial aid granted to companies, with a firm commitment to maintaining jobs; and the establishment of a mechanism to avoid layoffs by working short time.”

Thus, the CGT is trying to help the capitalists manage the recession and shift the crisis onto the workers. It’s trying to patch up the rotten capitalist system instead of pointing workers towards revolutionary change.

The CGT is also calling for nation-wide demonstrations on January 18, demanding more jobs, more purchasing power for all, and a united struggle against the government’s austerity policies. Although these reformist demands may sound positive, the demonstrations (as in the past) will probably prove to be little more than an opportunity for workers to blow off steam, especially since the CGT has carefully avoided calling for strikes to back up the demands.

France’s second-largest union confederation, the CFDT (more conservative than the CGT) will advance four points at the summit: (1) working short time to avoid layoffs; (2) more access to unemployment benefits for temporary workers; (3) state action to maintain jobs for youth; and (4) hiring 2,000 more workers at the unemployment agency, Pôle emploi, to deal with the expected increase in unemployment!

The CFDT is not even organizing workers to demonstrate behind these demands, much less go on strike. In other words, it’s begging the bosses to make a symbolic gesture, a sure-fire recipe for disaster. Capitalism is based on the bosses netting maximum profits, making it impossible for the bosses to show pity, even if they wanted to.

This summit will amount to nothing more than a showy photo-op for the government in the run-up to the April 22 presidential elections. Workers are wasting their time if they look to the bosses, the government or the union leaders for solutions. The initiative for action will have to come from the rank and file.

The upshot is that the government and the union leaders are working together to persuade the bosses to put workers on short time instead of laying them off. They’re aiming to avoid the kind of social unrest resulting from mass unemployment. But this is no solution, even in terms of capitalism.

The government will receive less revenue from income and corporate taxes. Already, it’s increasing taxes on natural gas, food and home improvements. Lower incomes and higher taxes will force workers to reduce their expenses even more, plunging France deeper into an economic depression.

Ultimately, the bosses and their government can only look to imperialist adventures to exit the crisis. French participation in the wars in Libya and Afghanistan is no accident — the French ruling class is honing the war readiness of the French army.

The capitalist system has plunged this country into a vicious circle in which austerity begets economic stagnation and unemployment, which in turn lead to more draconian austerity measures. For the working class here — as for workers worldwide — the only solution is to smash capitalist exploitation through communist revolution.

Racist Unemployment Hits Black and Arab Workers

According to an Oct. 19, 2010 government report entitled “Trajectoire et Origines,” all else being equal, the unemployment rate among immigrants from Sub-Saharan (mostly black) and North Africa (mostly Arab) is over twice that of people born to French parents. The unemployment rate among children of black or Arab immigrants is 1.8 to 2 times higher.

The report revealed that almost 25% of black immigrants and 19% of Algerian immigrants had been unjustly turned down for a job within the previous five years, as had 12% of the children of black or North African immigrants.

This racist discrimination means immigrants from sub-Saharan Africa and Algeria earn 12%-13% less than people born to French parents.

The study showed that there was no significant difference in unemployment or income levels between European immigrants and people born to French parents.

“The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action,” writes Secretary of State Hillary Clinton in the current issue of Foreign Policy magazine. In the article, “America’s Pacific Century,” she announces a major change in U.S. foreign policy, a “pivot to new global realities,” that sets its sights among the three giants of the Asia-Pacific: China, India and the U.S.

Crucial in this strategic turn to maintain U.S hegemony is the Trans-Pacific Partnership (TPP), a vast trade network spread across the Asia-Pacific rim promoted by Obama at the APEC (Asia-Pacific Economic Cooperation) forum in November. Currently being negotiated by nine countries, the TPP is essentially a U.S. thrust to exploit the markets, cheap labor and raw materials of the world’s fastest growing region and is also a move to contain China, the main threat to U.S imperialist aims.

In 1997, then Chinese Premier Jiang Zemin likened a similar strategy to having China “play Gulliver to Southeast Asia’s Lilliputians, with the United States supplying the rope and string.” But China is no sleeping giant. The Chinese Global Times warned that, “any country which chooses to be a pawn in the U.S. chess game will lose the opportunity to benefit from China’s economy.”

Obama urged the nine Beijing neighbors to join this “landmark 21st-century trade deal,” noting China’s trade barriers, high tariffs and taxes on foreign investors. Chinese Premier Wen countered that the region’s countries share interests as developing nations with dynamic economies, unlike the West which, “lacks momentum,” and is “plagued by serious financial and debt crises.”

But these threats and promises of economic gains and losses veil serious intentions to control the region’s economy, militarily if necessary.

In November China hosted a meeting of its regional security/economic bloc, the Shanghai Cooperation Organization (SCO) whose members, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, frequently hold joint military exercises.

At the meeting Wen called for developing multilateral trade and economic ties between its members and recommended Iran, (currently U.S. enemy #1), and Pakistan for membership. India and Turkey have observer status.

Obama makes no bones about U.S. intentions to back up its capitalist interests with military force. On his recent visit to Australia he announced the deployment of 2,500 Marines to Darwin, (the Australian port closest to China) and stated that the U.S. was “here to stay” as a Pacific power.

Hammering the point home, Clinton symbolically chose to speak from the deck of the guided missile cruiser U.S.S. Fitzgerald in Manila Bay, Philippines: “We are making sure that our collective defense capabilities and communications infrastructure are operationally and materially capable of deterring provocations from the full spectrum of state and non-state actors.”

Central to keeping China at bay in the Asia-Pacific is the U.S. backing of puppet regimes in Thailand and Malaysia, strengthening alliances with the Philippines, Japan, South Korea and Australia and pursuing “broader, deeper, and more purposeful relationships” with India and Indonesia.

These events come at a time of heightening tensions in the South China Sea over the oil-rich Spratly Islands, whose energy reserves may rival those of Kuwait, and which are claimed by China, the Philippines and other Southeast Asian nations. At a meeting of Asia-Pacific leaders, (ASEAN) in Indonesia, the U.S. and China disagreed about how to handle the claims, with Wen issuing a warning to the U.S., saying “outside forces” had no excuse to get involved in the complex maritime dispute.

The stakes are high. Half the world’s tonnage passes through the South China Sea. Control of its sea lanes is a necessity for U.S capitalists eager to invest for super-profits and for China, whose economy relies heavily on sea transportation for its import and export trade, including Middle East oil, vital for its industry.

The U.S. is aggressively attempting to weaken China’s growing economic relationships, such as between China and Pakistan which are involved in the development of a deep-sea port, heavily financed by China, at Qwadar on the Arabian Sea in Pakistan’s Baluchistan province. The project came under heavy attack by Baluchi separatists, secretly funded by the CIA and Britain, slowing down completion of the port and forcing the Chinese to work under the protection of the Pakistani Army.

Pakistan is facing increased attacks from U.S. intelligence and military forces in what many see as an attempt to destabilize and break up the nation (composed of four main provinces). An independent Baluchistan (and possibly Khyber Pakhtunkwha) would cut off China’s Gwadar port, leaving the sea lanes under U.S control and give the U.S. access through Northern Pakistan to Afghanistan and the oil and gas fields of the Caspian Basin.

New U.S. relations with India, which Obama calls “one of the defining partnerships of the 21st century, rooted in common values and interests,” is further straining the Pakistani-U.S. strategic partnership and sharpening tensions between China and India. The U.S. is helping India become a leading military power, selling it uranium and providing nuclear know–how. India, world’s largest weapons importer, accounts for 9% of the world’s arms transactions. They buy warships, destroyers and nuclear submarines to build a navy rivaling China’s.

Finally Russia, another player in the area, threatened to retaliate militarily if Washington goes ahead with a planned missile defense shield in Eastern Europe. America’s Pacific Century is quickly shaping up into a battleground between superpowers and would-be superpowers. But class struggle is also heating up. Globally the working class is taking to the streets in increasing numbers, in Russia, China, the Arab countries, Asia, Europe and the U.S. It’s time for the world’s workers to unite in a communist revolution, led by the ideas of PLP, to overthrow these bloodthirsty imperialists and wipe out the hell of capitalism with a society run by and for the international working class.