Contribution of the Communist Party of Ireland

Comrades,

The crisis within European monopoly capitalism is now centred around the euro, and the impact of the crisis is felt most acutely in the peripheral countries. The crisis of the euro is leading to a growing lack of confidence, firstly in the euro but also with the potential to begin to erode confidence in the European Union itself. This is an issue that I will return to.

The crisis now engulfing the Irish state is rooted in the global cyclical crisis of capitalism, the domination of monopoly finance capital, and stagnation in the manufacturing base, resulting in high profits that could be made in financial speculation and extremely volatile and high-risk “financial products,” rather than reinvestment in the productive economy, because of chronic stagnation and lack of any real investment opportunities in manufacturing.

Here we feel that the communist movement needs to explore the possibility that investment in manufacturing industry in the developed capitalist economies has reached a point of permanent stagnation. If they cannot destroy existing productive forces, or find new markets to conquer in order to expand the market for goods, then the only other way forward is a return to the policy of growing a credit bubble, which can only be built on an existing credit bust and a growing unpayable debt.

This will require not only a sustained assault on workers’ wages to reduce costs but fueling personal credit in order to get personal consumption going. Is this not a significant feature and factor in the present crisis?

The Irish banking system borrowed heavily from German, French, British and Belgian banks, not for productive development or long-term returns but rather for reinvestment for short-term speculative gains. The Irish banking system also became a conduit for mobile capital from Germany, France and Britain for speculative reinvestment in third countries, such as Portugal, Spain, and Greece. Irish financial institutions were the fifth-largest investors in those countries. Irish economic development itself could never generate the volume of capital speculated with by Irish banking institutions.

So far the Irish state has put up to €70 billion into the banks, the latest bail-out coming two weeks ago, after what the European Central Bank calls “stress tests” of the banks. Most Irish banks and financial institutions are now effectually controlled (as distinct from owned) by the state. The ECB has bought nearly €120 billion of debt bonds that the Irish state has effectually taken responsibility for, along with the continued state guarantee on all Irish banks’ loans and deposits.

Unemployment now runs at 14.7% or 440,000 people and emigration is 1000 people per week, unemployment in the North of Ireland is over 60,000. A new round of cuts have been flagged by the Dept Finance in Health and Education. The government are planning an additional budget in late May. The have also agreed to get rid of 25,000 public service workers.

There is now an emerging personal debt crisis. It is estimate that over 80,000 house holders are now in severe difficulties in meeting their mortgage repayments and house prices have already dropped by over 50% since the crisis. So this is while there is further additional strain on an already bankrupt banking system. This situation can only get worse as the ECB will continue to push up interest rates as that is what the German economy requires.

The new coalition Government elected in the recent general election, made up of the Labour Party (social democrats) and Fine Gael (Christian Democrats), is pursuing the same policies as the outgoing one, leading to growing disillusion. Before the “stress tests” on Irish banks were announced, the European Union stated that the Irish people should not succumb to any populist demands of making the senior bond-holders “share the burden” with the people. The Irish people are to pay back every penny borrowed from European banks.

The trade union movement has shown little stomach for a fight, and many in its leadership welcomed the participation of the Labour Party in government in the vain hope that it will provide them with a bolt-hole, in the mistaken hope that the economic storm will soon pass. Trade unions in the North of Ireland have shown a greater desire to mobilise and show resistance and to link into and build community resistance; but their impact is restricted because the form of government in the North of Ireland is one of a regional assembly with no fiscal powers: these are retained in London.

Coupled with a massive socialisation of corporate debt, the Irish state also took responsibility for all the liabilities of the banks in the form of properties and other assets that the banks loaned to speculators around the world. It is estimated that Irish banks borrowed a total of €500 to €600 billion, mainly from European banks.

The European Union and European Central Bank are using the Irish people to prop up and save the euro itself and thereby European monopoly capitalism. The International Monetary Fund was brought in to give political cover, to continue the pretence that somehow “Social Europe” still exists (if it ever existed).

The “Programme for Ireland” imposed by the EU and IMF demands that the Irish state invest what is left of the National Pension Fund (a fund that was built up from the initial capital accruing from the sale of the public telephone system)—what one could call a small national sovereign fund, aimed at meeting the future pension needs of state employees.

The interest of 5.8 per cent is punitive, beyond what other EU member-states had to accept. In addition, a list of public assets was drawn up, to be sold off in order to pay back money borrowed. These include electricity generation, gas, seaports, and natural resources. The management of national forests has been merged with the management of boglands, between them accounting for a land bank of between 10 to 12 percent of the state’s area, as a preparation for its privatisation. They have also committed the state to reducing public spending by €15 billion over three years, and to get government borrowing down to 3 per cent (the “Maastricht criterion”) by 2015.

What is becoming clear to growing numbers of Irish people is that they are being sacrificed to save the euro; that the EU and ECB are using the crisis to concentrate greater control at the centre over the national economic and social policy of member-states, in particular the states on the periphery. We have characterised this as a new form of internal neo-colonialism, that is, internal to the EU itself—something similar to the relationship that it has with developing countries.

At the last summit meeting of EU heads of state and heads of government, which took place at the end of March, it was agreed that the EU was to adopt the “Competitiveness Pact,” which was to remove “obstacles” to competitiveness within the EU. This is code for a renewed assault on workers’ rights and conditions. What workers understand as their rights the ruling class consider privileges, to be withdrawn at any time when their interests dictate. The ruling class is taking full advantage of the crisis to drive workers back.

The measure in question is for the establishment of a permanent “European Stability Mechanism,” to which Ireland will be committed to contributing some €11 billion. To establish this body it is proposed to amend the Lisbon Treaty by inserting an addition to article 136 of the Treaty on the Functioning of the European Union, which reads: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”

This amendment provides for budget discipline among euro-zone members by qualified majority, the co-ordination and surveillance of euro-zone members, and the setting out of economic “guidelines.” It is a budget harmonisation regime tailor-made to discipline indentured debtors, such as Ireland, and the other smaller, peripheral EU countries.

The amendment is a trigger for the establishment of the European Stability Mechanism, which is to replace the European Financial Stability Facility, the EU-ECB-IMF mechanism, when it expires in mid-2013. It was through this fund that the loan was pushed on Ireland last November by the ECB and the EU Commission, in conjunction with the IMF.

So what do we communists do in these circumstance?—that is, those parties that wish to resist, to mobilise the working class, and to fight back? It is clear that illusions in relation to the EU and its class character are still strong within the working class, illusions that also infect sections of our movement. While we need to continue to engage in polemics with our estranged family members, we need to come forward with a more coherent strategy ourselves.

What common goals and actions can we communists gathered here come up with that can give effective leadership and instil confidence within the working class about an alternative way forward? What are the strategic weaknesses at the heart of European monopoly capital? Where are their fault lines, and the fault lines in their strategy to make workers pay for the crisis? What wedges can we apply to those fault lines to open up their contradictions? What is their weakest link that we can exploit that has the potential to give forward momentum?

From our understanding of the conditions in our own country, we have come to the belief—which we wish to share with the comrades here—that the imposition of corporate debt on the backs of the people, carried out by national governments at the behest of the European Union, in compliance with national and foreign ruling-class interests, is the central strategic weakness of the European Union and of the ruling-class forces it represents.

It is our belief that if we find a common approach to a united campaign calling for the repudiation of this corporate debt imposed on working people throughout the EU, this would be an important strategic position for us to focus on.

To force the repudiation of the debt would be a major blow against the centralising forces within the EU. It would weaken the strategic approach of monopoly capitalism at both the national level and the EU level. It would weaken their ability to impose their will, also at both the national and the EU level. It is also the weakest link in the ideological front, and could provide the necessary focal point for a counter-attack. The instability of the euro is adding to the instability of the EU and of the system as a whole.

We feel it would open up a course of struggle for building the necessary forces and class-consciousness required to begin the long road of socialist construction. The national-democratic struggle—not in the bourgeois understanding of democracy—is central in mobilising all those oppressed and exploited groups in society.

The struggle around the debt has the potential to mobilise forces that at one time relied upon the system to ensure their own interests but that are now to be sacrificed in the interests of monopoly finance capitalism.

We are striving to mobilise forces around a national-democratic strategy that has the potential to challenge the ruling class and its allies in the EU and to unite working people. It is also a strategy for bringing the working class together in an all-Ireland economic and social struggle.

Eugene Mc Cartan
General Secretary
Communist Party of Ireland
11th April 2011
Brussels