Tag Archives: European integration

Collapse of the European Integration ‘is on the Cards’ – Sputniknews.com 5-1-2019








Collapse of the European Integration ‘is on the Cards’ – Professor


06:06 05.01.2019

With 2019 beginning and the EU as fractured as ever, increasing scrutiny has been placed by leading economists on the bloc’s single currency the EU. Which they argue has caused more harm than good.

Sputnik spoke with Stavros Mavroudeas, Professor of Political Economy at the University of Macedonia for more insight on the issue.

Sputnik: Is the Euro a failed project?

Stavros Mavroudeas: I think the Euro overall is a problematic project. It’s not a success story; it’s actually proving to be a story of a failure. The Euro is a part of the European integration project, and this in my opinion is an imperialist project.

Imperialism meaning; at least in Marxism, that a country or bloc of countries exploits other countries economically. The European integration was inaugurated the Second World War under the auspices of the US, with the aim of securing economically and politically Western Europe, from the Soviet threat.


© Sputnik / Alexey Filippov


It changed radically after the nineteen seventy three global capitalist crisis; because by then the US supremacy faltered, and there was another time after nineteen eighty nine, when the Soviet bloc collapsed.

By then the European integration acquired greater independence from the US and even aspired to dethrone it, as the new economic capitalist superpower of the world.

The former European Monetary Union is the necessary evolution of this course of European integration, because after the collapse of the Bretton Woods system, particularly its exchange rates system; that was based on the dollar and was a system of fixed exchange rates.

Once this system collapsed; and it did so because of the US under the Nixon administration withdrew from that system and acted unilaterally, then the European integration needed a currency for its common market.

They moved towards creating ultimately, after several previous failed attempts in creating the European Monetary Union, that is the Euro.


Sputnik: Would the collapse of the Euro mean the collapse of the EU?

Stavros Mavroudeas: I think that the possibility of either a collapse or a fragmentation of the European Integration and its monetary union is on the cards.

Now what would be the result of that? There are many possibilities; there would be an eruption of national rivalries and controversies, and that would be pretty bad, not only for Europe but also for the world.

Keep in mind two world wars began from Europe.

© Photo : Euro Banknote Memory


The other would be possibly the eruption and emergence of a new social movement of a progressive nature, workers movements in particular; that would change the landscape in Europe. This is I think a positive scenario and possibility.

In order to become a reality; it requires that the European Union and its monetary union would be destroyed. Both the European integration and monetary union are not mechanisms that can be reformed in a progressive way.

All attempts; even the limited ones, have failed so far and I don’ think there is any realistic possibility in these being implemented.

Views and opinions expressed in this article are those of Stavros Mavroudeas and do not necessarily reflect those of Sputnik.




Interview in SPUTNIK on the anniversary of the inauguration of the euro 4-1-2019

Below are the notes for my interview in SPUTNIK on the anniversary of the inauguration of the euro (4-1-2019).

The recording of the interview follows.









20 years after its inauguration, is euro a success story?


Definitely not.

Euro is part of the European integration project. This is an imperialist project. It was inaugurated after the 2nd WW under the auspices of the US with the aim of securing economically and politically the Western Europe from the Soviet threat. It involved the economic exploitation (in Marxist terms) of less developed economies by the more developed Western European ones.

As US supremacy faltered – after the 1973 global capitalist crisis – and with the demise of the Eastern bloc the European integration acquired greater independence from the US and even aspired to dethrone it and become the new economic capitalist superpower.

Euro – the EMU- is the necessary evolution of this course of the European integration. It was necessary, particularly after the collapse of the Bretton Woods system and the increasing unilateralism of the US, as a foundation for the European Common Market. It was also necessary, in its bid to become a major international reserve currency, as a challenger to US dollar’s supremacy.

It is indeed a problematic currency. It is a multi-state currency without a unified state behind it.

It is issued by a peculiar central bank (ECB), which has not the guarantee of a unified state behind it. ECB cannot act as lender-of-last-resort for the governments of the EMU countries. And it is only preoccupied with inflation as its mandate precludes it from considering growth.

The EMU is lacking a banking union (thus the financial system over which is ‘presiding’ is fragmented along national lines). It is also lacking a fiscal union support (in the form of a significant EU fiscal budget that could make fiscal transfers from surplus to deficit economies) in order to equilibrate trade and capital account imbalances between its member economies.

All these problems emerged after the 2008 global capitalist crisis. One of its major consequences was the eruption of the EMU crisis as several euro-periphery economies (Greece, Portugal, Ireland, Cyprus) faced severe crises (that appeared as debt crises although they have more deeper structural roots). Moreover, the whole European Union edifice is being shattered by liquidationist tendencies. Typical examples are Brexit and the growing popular discontent in many other countries with the authoritarian and austeritarian nature of the EU (that assumes both left-wing and right-wing expressions).

These disruptive tendencies within the EU are based on the deeply anti-popular nature of the EMU as it instigates austerity against the workers not only in euro-periphery but also in euro-core economies.

They are also based on the increasing divergence between its member economies and the polarization between the strong euro-core and the weak euro-periphery economies. This polarization facilitates the euro-core (as it exploits economically the euro-periphery) but at the same time increases tensions both politically and economically (as EMU cannot become an Optimal Currency Area [OCA]).

Moreover, EU’s attempt to use the 2008 crisis as a means to surpass the US and the emerging China has backfired. Whereas US and China relaxed their monetary policy and employed expanding fiscal policy in order to bypass the crisis, the EU relaxed slightly its monetary policy and almost abstained from fiscal expansion. Its aim was to ‘keep its economy in shape’ while its competitors created bubbles. Furthermore, EU aimed to take advantage of its competitors’ bubbles and keep selling to them (particularly Germany and the internationally competitive euro-core economies); thus, increasing their trade surpluses. This plan failed as its international rivals subverted it in many ways. The result is that EU – and its EMU – became the ‘big patient’ of contemporary capitalism.

Concluding, euro is failing to (a) unify the EU area and (b) to challenge the US dollar’s supremacy. Because it is a deeply anti-popular mechanism, it foments popular discontent.

Overall, the prospects of the euro are not good. I would say that the possibility of its demise or its fragmentation (e.g. a smaller area, as smaller area plus a peripheral zone of currencies tied to it) is on the table; it is a realistic scenario. Also, it is a welcome, a positive possibility. The European integration and its monetary union are antipopular mechanisms. They cannot be reformed. The successive failure of even the slightest attempts to lessen their authoritarian and austeritarian nature is indicative. Now, this demise can come either from an eruption of nationalist rivalries or through progressive and left popular movements. In the first case it is a very dangerous path. Keep in mind that two world wars have begun from nationalist and imperialist conflicts in Europe. The second case is a positive course. It represents a glimmer of hope and paves the way for changing the currently horrible European landscape.




The crisis of the European Union and the failure of its ‘salvation plans’

The crisis of the European Union and the failure of its ‘salvation plans’

Stavros D. Mavroudeas
Dept. of Economics
University of Macedonia

I. The crisis of European imperialist integration

The year 2011 (and as it seems today quite probable the 2012 also) was marked by the crisis of one of the main international pillars of capitalism: the European Union (EU). What is usually described as a crisis of the Eurozone (strictly speaking the European Monetary Union – EMU) is in fact a crisis of the whole EU edifice system, where EMU is its most avant-gardist structure.

The European integration was one of the most ambitious projects of the 20th century, as Europe’s bourgeoisies tried to form a unified imperialist bloc in the very area of the globe where capitalism was born predominantly in the form of nation-state and where conflicts between national capitalisms took their most brutal forms. In fact, behind the facade of a common European identity, etc. is an imperialist pyramidal structure. On top there are a handful of advanced and strong hegemonic capitalist economies (which have similar structures and are closely linked but never lose their separate national identities). At the intermediate level there are several less robust and less advanced capitalist economies. Finally, the base of the pyramid consists of the countries of the so-called ‘euro-periphery’, i.e. weaker economies. This pyramidal bloc dominates other less developed economies and areas and competes with the other major international poles (most notably the US and the Pacific Basin). But imperialist relations exist also within the European bloc and between its different levels. Imperialist exploitation takes place through the transfer of wealth from weaker to stronger economies.

This project of the European imperialist integration passed through several phases and faced several critical moments (failures of the Common Agricultural Policy and the European Monetary System etc.). Each time it surpassed them through a headlong rush that deepened linkages and the integration process while at the same time ignoring problems and contradictions. It seems that the current economic crisis – that erupted in 2007 – puts an end to this game. It brings to the fore its inherent contradictions in a way that no headlong rush can no longer cope.

II. Understanding the EU crisis

There are two basic mainstream explanations of the current EU crisis. According to the first – derived mainly from EU’s hegemonic top – the European integration has not structural defaults and its problems are basically policy-driven. That is, countries of its lower tier (the PIGS – Portugal, Ireland, Greece and Spain) followed imprudent economic policies by ‘consuming more than they could afford’ (particularly through excessive wage increases); in contrast to their ‘Protestant’ and temperate upper tiers’ ‘partners’. This ‘party’ was supported by fiscal deficits which were financed by external borrowing (facilitated by the low borrowing costs that the euro offered them). By surpassing every limit these imprudent countries were led to extravagant indebtedness which usually took the form of the twin deficits (fiscal deficit and external indebtedness). But PIGS problems threaten to ‘contaminate’ the healthy upper tiers and endanger the whole EU edifice. So their prudent ‘partners’ must come to their rescue through lending schemes but at the same time impose them strict austerity and privatization programs and effectively turning them into economic protectorates for their own sake.

The second mainstream interpretation – stemming largely from the US and England, its closest European ally – recognizes some structural problems in the European integration structure; namely the fact that it is not an optimum currency area. In Marxist terms, this means that the Eurozone is composed of very different economies (i.e. it is riddled by disproportionalities) that have been squeezed into the straitjacket of a single currency (the euro). The latter pertains to some of these economies but not to others. This uneven and dysfunctional structure is prone to problems particularly in times of economic crises that hit differentially its countries-members. To put it simply, economic crises exacerbate the inherent disproportionalities and uneven development levels of the Euroland because they affect dissimilarly its constituent parts. The solution is either the Eurozone evolves into a full economic union (i.e. with fiscal integration and hence wealth transfers from the richest to the poorest in order to balance its disproportionalities) or follows a path of controlled disintegration that does not left it in tatters. The latter because while the U.S. wants to eliminate the threat by the EU against the global hegemony, but do not want an uncontrolled collapse of the EU will create a strategic vacuum in Europe and will likely lead to a reordering of international alliances (e.g. a partnership between the German and Russian bourgeoisies).

Both interpretations are characteristic of the political voluntarism and the apologetic myopia of bourgeois theory. Above all, both interpretations ignore the role of the current economic crisis. Bourgeois theory not only failed utterly to predict the current economic crisis but, once the latter erupted, it hurried to pronounce it as a mere financial crisis. Thus it ignored – similarly to its radical relatives of the financialisation explanation) – the deep roots of the crisis in the very productive structure of capitalism. Put it in a nutshell, bourgeois theory considered the crisis as a chance outcome of wrong actions (primarily financial greed) and not as a structural outcome of the operation-as-usual of the capitalist system. Moreover, it hurried to announce its end by 2011 after the coordinated actions of capitalist states. Of course, today it already fears that this announcement might be proved mere wishful thinking since a ‘double dip’ is nowadays widely expected.

A Marxist interpretation of the current EU crisis should start right from the economic crisis that erupted in 2007-8 (the first great capitalist crisis of the 21st century). The current economic crisis is the consequence of the 1973 structural crisis – which required a radical restructuring of the ‘internal architecture’ of the capitalist system – and the failure of successive waves of capitalist restructuring that followed to create such a new and functional architecture. These capitalist restructuring waves achieved only partially to reverse the declining profit rate and to alleviate the overaccumulation of capital. Especially the last wave, neoliberalism, led to a surge in the internationalization of capital (the so-called ‘globalization’). Once this started faltering it resorted to the extensive use of fictitious capital in conjunction with credit money (the so-called ‘financialization’). This deus-ex-machina managed to postpone the eruption of the crisis but, at the same time, amplified further the problem of capital overaccumulation of capital. As soon as the profitability of productive capital – under the auspices of which surplus-value (and thus total profit) is generated – started tattering crisis re-emerged in all its glory. ‘Financialisation’ gave only a temporary respite to the crisis of profitability but at a very high cost. Namely, it increased significantly the portion of surplus-value extracted by productive capital but accruing to money capital. This aggravated further the falling profitability of productive capital and set the whole house on fire.

For surpassing the crisis capitalist states abandoned hastily their neoliberal credos and resorted massively to state intervention in order to support capitalist profitability. This subsidization of capital accumulation and profit from public funds boosted the usually pre-existing fiscal deficits. Most countries in order to cover these deficits resorted to international borrowing leading to the skyrocketing of external debt. As fears of collapse (the ‘return of the crisis’ and the double dip) increased, this led in the case of several countries to a dramatic increase of borrowing. As a result many countries are flirting with default.

The economic crisis has another crucial repercussion. It aggravates international antagonisms and conflicts, particularly between the major imperialist powers. Each of the major imperialist powers attempts to pass the burden of the crisis on other countries. Here the EU has sought to make a sleigh of hands. With the outbreak of crisis, the U.S. adopted a policy mix characterized by (a) an expansionary fiscal policy and (b) a very loose monetary policy (interest rates to almost zero and successive Quantitative Easing programs). A similar route was adopted by several other economies and, most significantly, China. The latter implemented an expansionary fiscal policy but not a very loose monetary policy (China has no problem of funding since it has plenty of funds). By contrast, the EU has followed a policy mix of (a) a tight fiscal policy and (b) tighter monetary policy (e.g. interest rate cuts were slower and smaller than the FED). This meant that the U.S. and China ‘inflate’ their economies to address the immediate danger of the crisis but also flirt with the perils of a bursting of ‘bubble’ which will rock their international position. On the other hand, the EU seeks to exploit the ‘bubbles’ of its competitors (by selling in their markets) while house-keeping its own economy and of course not providing similar facilities to its competitors. In a telling recent comment (Wall Street Journal, 25/1/2012) Volker Treier, chief economist at Germany’s chambers of commerce declared that Germany’s economy (which accounts for 30% of the eurozone) has benefited from strong growth in emerging markets such as China and a recovering U.S. economy.
Simultaneously, the EU initiated a process of ‘internal chinezation’ by pushing the euro-periphery (particularly the PIGS) into the debt trap. That is, the hegemonic European capitalisms fabricated the explosion of the foreign debt of the PIGS (by manipulating statistics, rumor spreading and calculated attacks). This already led three of them (Greece, Ireland and Portugal) into the straitjackets of the EU-ECB-IMF Memoranda and their austerity programs. Through these Memoranda the euro-peripheral countries are being drawn in a recession spiral accompanied by drastic reductions of wages and rapid deterioration of working relations to the point that they tend towards those of the Chinese economy. In other words, the euro-core is attempting to create its own internal ‘China’. This move does not leave unaffected the bourgeoisies of those euro-periphery countries. They too have to take considerable pain since the Memoranda lead to defaults and falling valuations of enterprises and properties. In a nutshell, these euro-periphery capitalisms are falling back within the international division of labor and are losing their economic sovereignty.

But this EU plan is too cunning to come true. The other major global imperialist poles do not permit the EU to play on their backs. So – especially through the supposedly anonymous ‘markets’ and the rating agencies (two basic tools crucially influenced by the U.S.) – the debt crisis of the euro-periphery was transformed into a debt crisis of the whole EU and as the crisis of the euro. What began as a controlled fire within firewall zones became an uncontrollable fire. Thus, the other global imperialist poles push the EU to ‘inflate’ its economy – both through debt (eurobonds, etc.), but mainly through a European Quantitative Easing policy (especially by printing money). Of course this would put the tombstone on the dreams of a global European imperialist hegemony and will leave the European imperialist pole behind its key competitors. For this reason Germany – having already made in the past (during the SPD-Greens Schroeder administration) its own ‘internal chinezation’ by reducing wage costs and extending flexible labor relations – resists vehemently this prospect.

III. The failure of the successive EU ‘salvation plans’

Once the EU crisis came to the forefront, the European bourgeoisies (headed by the euro-core countries) made several attempts to surpass it. However, all subsequent EU ‘salvation plans’ (including the last one of the December 9th 2011) have been blown apart because of ‘the markets’ distrust of their effectiveness’.

The first batch of plans aimed to show that the EU will not allow any of its members to default. This was based on two axes. The first was that the hegemonic euro-core lends some money to the beleaguered euro-periphery members but with extreme niggardliness. The channels for this are inter-state loans and the creation of an emergency fund, the European Financial Stability Facility – EFSF (inaugurated on May 9th 2010). It is characteristic of their niggardliness the cynical declaration by the German Finance minister Wolfgang Schaeuble that Germany has not actually paid much money into the rescue funds but has given mainly guarantees. The second axis was the acceleration of the process of ‘internal chinezation’ of the euro-periphery. This plan failed very soon as the ‘pressure of the markets’ tested the limits of these salvation mechanisms (and particularly the adequacy of their funds) and as the Memoranda policies led the euro-periphery countries in a steep recessionary spiral that derailed all their projections.

In the next batch of plans the hegemonic euro-core added some more money to the rescue funds. They beefed up a little the EFSF (e.g. agreement of June 24th 2010) and promised the creation of a permanent bailout facility (the European Stability Mechanism – ESM, in October 2010). But the funding for these mechanisms was based mainly on creating certain ‘toxic products’ (in the form of SPIVs with high leverage) that would be sold to China and Russia (and other emerging economies as well). This, of course, was a stupid joke since in times of extreme ‘toxicity’ in the international system none was stupid enough to buy EU’ ‘toxic products’; particularly in times when the EU is at the eye of the debt cyclone. Hence, despite Sarkozy’s humiliating plea to the Chinese, both China and Russia declined to participate .
The recent plan (December 9th 2011) had no better luck and it is already almost dead. This plan envisages a new euro-treaty for deeper fiscal integration with stricter budget rules and more discipline in economic policy for its members. Its main provisions include:

•    a cap of 0.5% of GDP on members’ annual structural deficits
•    automatic penalties for countries whose public deficit exceeds 3% of GDP
•    enshrining these tighter rules in members’ constitutions
•    bringing forward ESM’s introduction (July 2012)
•    reassessing the adequacy of 500bn-euro limit for the ESM
•    EU contributes up to 200bn euros to the IMF to help debt-stricken eurozone members

This new plan, essentially, promises a long term solution to a pressing short-term problem. It offers the ‘cinezation’ of not only the euro-periphery but also of the euro-core countries. This implies a brutal deterioration of the working and living conditions of the working classes in all European countries and, consequently, aggravates social conflicts with unforeseeable outcomes. This is a very long-run solution since it takes considerable time to take place and its very outcome is far from secure. On the other hand, the EU crisis has a much more short-run problem to face: how to solve the sovereign debt problems in its area. This problem requires immediate answers. Moreover, this new plan has several other strategic problems.

First, It implies a further strengthening of the German hegemony (which even France is increasingly hard to tolerate).

Second, the other global imperialist poles know that this will turn against them and are not willing to allow it to proceed unhindered. The opting-out of the United Kingdom is telling. It probably did not happen without the hidden consent of its transatlantic ally (the US). Moreover, it effectively blocked the way for a new EU treaty and led towards the more copious and problematic path of a treaty between governments.

Third, this process of signing a treaty between states is lengthy and fraught with dangers. It requires constitutional coups d’état at both EU and national levels. As the EU crisis deepens – it has already touched not only Italy but also France – it is far from certain whether social and political upheavals will permit its materialization. Already question marks, legal difficulties and politico-economic reservations have started being voiced among its participants.
For all these reasons the ‘Markets Anonymous’ gave already the thumbs down sign to the last plan. In particular, both the US and China are pushing the EU towards the short-term solution of an EU Quantitative Easing. That is why the EU prepares for a new conference and probably another ‘salvation plan’ (at the end of January 2012). But already the ECB is increasingly forced towards a form of mild Quantitative Easing by aggressively buying – or funding the buying – of member-states’ bonds. This is done – at least for the time being – selectively (for example in recent Italian auctions) but with increasing rhythms.

Stavros D. Mavroudeas is an associate professor in the Department of Economics, University of Macedonia, Greece. 


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