The EU Is Dead. Long Live The EU

Today, the conservative leaders of the EU, led by Angela Merkel, signed the death warrant for the EU as it currently exists. It will be up to workers to construct a new EU capable of meeting their needs.

Syriza, in calling the referendum to continue to oppose austerity, but to remain within and fight for the creation of such a new EU, destroyed the remnants of the conservative forces in Greece that are responsible first for creating the debt crisis within the country, and then for imposing the austerity upon it, which, in the last five years, has destroyed its economy. In January, those conservative forces, along with conservative forces across Europe, sought to force Syriza into an alliance with To Potami, so as to cripple it, and force it into implementing yet more austerity measures. They have sought to destroy Syriza ever since it defied that wish.

Instead, it has been the forces of conservatism of New Democracy and of To Potami that have weakened over the last five months, whilst Syriza has become significantly stronger. It was the leader of New Democracy that resigned after the referendum resulted in a 61-39 victory for the No vote, not Tsipras.  Immediately after the vote, Syriza began to similarly create the conditions for the destruction of the conservatives in the rest of Europe. They did so, by removing every possible excuse they might dream up for not providing Greece with the support that an EU member state, in difficulty, should naturally be entitled to receive from an institution whose core value is supposed to be solidarity, and mutual support.

First, Yanis Varoufakis resigned immediately, thereby removing the conservatives objection on personal grounds.  Then Syriza more or less agreed to the terms that Jean Claude Juncker had presented once the decision to organise the referendum had been announced, on condition that in return, the EU agreed to the kind of write off of Greece's debt that the IMF, under pressure from the US was now demanding, before even it would be part of any new deal. When the conservative leaders of the EU even signalled rejection of that, Syriza drew in Francois Hollande who according to Paul Mason, then sent in one of his top advisors to draw up plans that the EU could not find objectionable.

In doing so, Syriza has now exposed the true dividing lines in Europe between conservative nationalism, and social democracy. Already, in the most acute circumstances in Greece and Spain, the Blairite, bureaucratic and often corrupt social-democratic parties like PASOK and the PSOE have been swept into the dustbin of history, replaced by new social-democratic parties prepared to oppose the old conservative mantras of austerity.

Elsewhere in Europe that is happening too. In Scotland, a Blairite Labour Party offering austerity-lite politics as its alternative to the Tories was decimated by the SNP, as a nationalist party that was only offering traditional social-democratic verbiage. Even in England, the evidence is that many who failed to vote Labour did so, not because Labour's message was too left-wing, but because it was not sufficiently distinct from that of the Tories. Even some of those who voted UKIP, did so as a protest against Labour's lack of a radical alternative to austerity. In Ireland, the petit-bourgeois nationalists of Sinn Fein have won rapidly increasing support on the basis of the same kind of radical anti-austerity, social democratic rhetoric used by the SNP.

According to the latest reports, Jeremy Corbyn, offering a traditional social-democratic agenda, as opposed to the Blairite, austerity-lite message of the other three leadership candidates, already has the second largest number of nominations from CLP's, whilst the large unions are backing him, with UNITE having already signed up 50,000 registered supporters, most of whom will back him. Syriza has shown the future to all of the conservative and Blairite elements within the traditional social-democratic parties across Europe. Their day is over, and if those parties themselves do not slough off those elements, the parties themselves will be eclipsed by new parties emerging to replace them.

By rejecting the offer that Hollande's representative had himself drawn up on behalf of Greece, Merkel and the other conservative leaders have thereby snubbed Hollande, and simultaneously exposed the deeply fractured nature of the EU project. With the FN, itself presenting itself as a radical anti-austerity party, which stands to suck the lifeblood from the French Socialists, Hollande himself faces an existential threat. He came to office talking left, and then veered sharply right. Unless the French Socialist Party itself adopts a radical anti-austerity stance, it will be destroyed, losing support to the FN, as well as to parties to its left.

The same is true in relation to the Italian Socialists. The conservative leaders may force a defeat on Greece, but it will only be at the cost of promoting the real battle of conservatism and social democracy across the whole of the EU. They have already exposed the fractured and flawed nature of the EU, whose contradictions must now be resolved, by its radical reconstitution.  If they have achieved nothing else, then Syriza will have achieved a great deal in hastening that confrontation.

The conservatives, because they are locked tightly within the stranglehold of petty-minded nationalism, have always sat awkwardly at the head of an EU, whose central thesis is the need for international solidarity, and mutual support. The EU, was always a flawed concept, in that regard, in terms of its construction. It was a state that is not a state, a monetary union that is not a monetary union, a single market that is not a single market. The demands of conservatives, to meet their own national interests, was always going to blow those contradictions apart at some point. The decisions of those conservative leaders, has now brought that to pass.

Having had all of the possible reasonable excuses removed from them, as to why they would not agree a deal with Syriza, those conservative leaders still rejected it. And as Paul Mason has described on Channel 4 News, it is not just that those conservative leaders have then put forward proposals that Syriza could not agree. Syriza has backed them into a corner, whereby in order to justify not making a deal, the conservatives have had to come up with proposals that not even To Potami, or even New Democracy could agree!!!

The ridiculous proposal that was floated by Herr Schaeuble that Greece should be basically asked to exit the Eurozone on a temporary basis, like someone getting a pass out from a nightclub, and which everyone said would not fly, because it had not been approved by the SPD, now appears to have been incorporated into the conservative leaders main proposals. In other words, besides Merkel snubbing Hollande, and the social democratic leaders from Italy and elsewhere, it appears that she has openly snubbed the SPD leaders, who are a part of her own coalition government. The writing is on the wall for them too. Either the SPD walks away from the coalition with Merkel, or it too will go the way of PASOK, and the PSOE, with Die Linke already standing by to take votes away from it.

The conservative leaders, effectively having attempted to send Greece into penury and humiliation, with their proposals, now want Greece to co-operate with them in avoiding the financial chaos which rationally flows from their decision. The proposal for a planned exit from the Euro, is designed to avoid the kind of defaults and contagion that is likely to collapse banks and financial institutions across the continent, and spark a new global financial crisis.

Everyone has concentrated on the €360 billion of Greek sovereign debt, but the real problem for those banks and financial institutions, across Europe, is actually the additional €360 billion of Greek private debt. Whilst a lot of the former has been transferred from private hands into the hands of states across Europe, the Greek private debt is almost entirely in the hands of European banks, and private individuals. If the Greek banks default, most of the Greek private debt will default along with it, and that will produce a cascade of payment failure, and activation of credit default swaps, of an unknown, but undoubtedly much greater magnitude than just the nominal €360 billion. Germany's Deutsche Bank, for example, is reported to have debt hidden away in various derivatives amounting to the equivalent of the entire global GDP. Clearly, only a fraction of that will be Greek debt, but as 2008 demonstrated, once these derivatives begin to collapse, they are like a set of collapsing dominoes, each one causing a series of chain reactions.

A look at China, where the state has intervened to stop any large shareholders from selling shares, has pumped billions of Yuan into circulation, opened the sluice gates of credit, and bought huge quantities of bonds and shares itself, but where the market still continues to crash, shows that the global financial system is teetering on the edge.

So, why would Syriza help out the conservative leaders? No reason whatsoever. The course now seems set. There is no basis for any kind of deal. Even if Tsipras and the right-wing of Syriza wanted to implement it, the rest of Syriza would reject it. As I said months ago, Syriza cannot buckle, because if it does, chaos will ensue, and out of that chaos will rise Golden Dawn, and a spread of chaos into Turkey and beyond. Even if a majority could be cudgelled together to vote through such measures, the Greek workers and peasants would simply resist it in the streets. Once again chaos would ensue.

Syriza, therefore, has nothing to lose from fighting to the last man. The first thing is to allow the Greek banks to fail, so that a collapse of private debt ensues. Once private money lenders begin to suffer huge losses, as a result of rolling defaults, and collapsing financial markets, it will focus the minds of those financial interests, and the conservative politicians that rest upon them. The next thing to do, is to transfer the bad debts of the banks into a bad bank, and to encourage the bank workers to take over the remaining banks and run them as co-operatives.  These co-operative banks, along with credit unions and other community based organisations, and in conjunction with the production and distribution co-operatives can begin not only to build a worker owned sector of the economy outside capitalist control, but to create the kinds of payments systems that remove the reliance upon foreign controlled currency.

Greece can stay in the Euro, resisting the attempts of the conservative politicians to force it out.  It can continue to denominate its prices in Euros, and outside ECB control it can print as many electronic Euros as are required to meet its needs for currency, and the funding of anti-austerity programmes.

A series of co-operatives and other mutual organisations have been established spontaneously by Greek workers and peasants to meet their needs, Syriza should facilitate the coming together of those co-operatives into a national federation. They together with members of co-operatives across Europe, should begin to forge links, and merge their operations. In fact, this provides the vision of the kind of new EU European workers now need to build to replace the empty husk of the old EU. It is an EU, built from the bottom up by workers across Europe, truly based on the principles of solidarity, mutuality, co-operation and democracy, that the bourgeoisie has now so signally failed to achieve.