By Michael Roberts

The euro debt crisis is reaching a new level.   Greece is now close to defaulting on its state debts.  This threatens to cause a new banking crisis that could trigger another economic slump.  This dire scenario may yet be avoided, but the odds against it are dropping.

The latest hot spot has been highlighted by the news that European Central Bank chief economist Juergen Stark has resigned.  Stark has done this because he opposes the decision of the ECB board to start buying the bonds of the Spanish and Italian governments.  The ECB decided to do this because these bonds were falling so much in value, they threatened make it impossible for the governments of these major European economies to raise money to finance their debt at anything like reasonable rates of interest.  It had already become impossible for the Greek government to do so.  Lenders to Greece were demanding 45% interest on one-year bonds!

The Eurozone governments had set up an emergency fund called the European Financial Stability Facility (EFSF) to ‘bail out’ Greece, Ireland and Portugal so they did not need to borrow money from bond markets.  But over the summer, the same problem began to arise for Italy and Spain.  Europe’s leaders have dithered about whether to increase EFSF capacity to fund these big states too.  So the ECB was pressured into providing emergency support and agreed to buy Italian and Spanish bonds as a temporary measure until Eurozone governments decided what to do.

This is what has upset Stark.  For him, as  a German, this is not what the ECB was set up to do.  Its role is to keep inflation under control by manipulating interest rates, not bailing out governments by buying their bonds.  Stark sees this as exposing the ECB to the possible losses on this government debt if Eurozone governments default on their debt, thus forcing German and other governments to bail out the ECB itself.    Stark wants either the government leaders to come up with more funds themselves or to allow Greece and the other states to ‘restructure’ their debt, or even better just do what they are told on fiscal austerity.

Increasingly, the German leaders are split between ‘bail out’ or ‘kick out’.  Stop bailing out Greece and the other states and just kick them out of the euro, says one wing.  While the other wing says: make the Greeks meet their austerity targets but bail them out to save the euro in its current form.  The latter group is still the majority, but the former group is growing.

In the meantime, the Greek people face yet another round of cuts in living standards, jobs and services as the pressure grows from other Eurozone governments and their leaders for the Greek government to meet draconian targets set for government spending and taxation.  The so-called Troika (officials of the EU Commission, the European Central Bank and the IMF) come back this week to Greece to tell the ‘socialist’ PASOK government in Athens that they must do more to meet these targets or the next tranche of the bailout funds agreed last July by the heads of the Eurozone to pay for the Greek government’s debts that it owes banks and pension funds across Europe and elsewhere may be stopped.

What was the reaction of the Greek government?  The finance minister Venizelos announced that all public sector employees would lose their permanent posts and would have to reapply for them on a stand-by basis, while receiving just 60% of their salaries for the next 12 months.  Up to 120,000 would not be re-employed.  Health Minister Andreas Loverdos remarked to a parliamentary committee that “1 million employees have been burdening the other 10 million… the fact that civil service positions are permanent is what got us into this mess in the first place,” he said.  So, according to Loverdos (no love there, I think), the reason for the economic crisis in Greece is not the banking collapse or the Great Recession, but the burden of too many lazy workers in public services that other Greeks can’t afford.  This is from a socialist minister.

Onanran correctly opposes the solution of leaving the euro,  as suggested by the socialist economist Lapavitsas among others.  Onanran says that “we would prefer to push for an alternative Europe and changes in the economic policy framework within which the Euro operates…
Public finance has to be unchained via debt default in both the periphery and the core. This has to be coordinated at the EU level as part of a broader public finance policy to make the responsible pay for the costs of crisis and to reverse the origin of the crisis, i.e. pro-capital redistribution. This involves a highly progressive system of taxes, coordinated at the EU level, on not only income but also wealth, higher corporate tax rates, inheritance tax, and tax on financial transactions. A progressive income tax mechanism could also introduce a maximum income with the highest marginal tax rate increasing to 90% above a certain income threshold in relation to the median wage. A progressive wealth tax on government bonds with the highest marginal tax rate reaching to 100% for holdings above a certain amount of bonds could be formulated as a way of restructuring the debt; this would make the banks, the private investment funds, and the high wealth individuals pay the costs of the fiscal crisis.”

Moreover, fiscal policy “should completely abandon the EU’s Stability and Growth Pact, and public spending should aim at the multiple targets of full employment, ecological sustainability, equality, and convergence via generating public employment in labor intensive social services as well as public investments in ecological maintenance and repair, renewable energy, public transport, insulation of the existing housing stock and building of zero energy houses.”  
And “the ECB should be turned into a real central bank with the ability to lend to member states…to serve  the priorities of development, sustainability, full employment, and equality.”

As for employment, “a minimum wage should be coordinated at the EU level… and regional convergence should be supported by fiscal transfers and public investments to boost productivity in poorer regions. Furthermore a European unemployment benefit system should be developed to redistribute from low to high unemployment regions. This requires a significant EU budget financed by EU level progressive taxes.”

Regarding employment in the private sector, “it is important to prevent firms from making use of the crisis to implement their long-term downsizing strategies. An alternative would be legal measures to ban firing during the crisis and implement wage floors: if the firing ban leads to bankruptcy in certain firms, these firms can be re-appropriated and revitalized under workers’ control, supported by public credits. Widespread examples of that were seen in Argentina after the crisis in shut-down companies.”

In cases of sectors that are under the threat of mass layoffs, like the auto industry, nationalization of the firms and restructuring of these public firms should be considered, e.g. the auto industry, a shift of focus towards the production of public transport vehicles, and a gradual transfer of labor towards new sectors.”

And finally, the banks: “Financial regulations including capital controls are important but not enough. Finance is a crucial sector which cannot be left to the short-termism of the private profit motive. This sector has already been de facto nationalized, but without any voice for the society and with a commitment to privatization as soon as possible.  …. Instead what needs to be done is to build a public banking sector with the participation of the workers and other stakeholders to decision making and the transparence of the accounts.”

Above all, “this crisis calls for a major shift in decision making to facilitate economy wide coordination of important decisions. This in turn requires public ownership and the participation and control of the stakeholders (the workers in the firms, consumers, regional representatives etc.) in critical sectors for the society, such as banking, housing, energy, infrastructure, pension system, education, health.“

This is the way forward, not the programme of austerity that brings even lower economic activity; or the slogan of leaving the euro and resurrecting a national currency.  The Greek or even British working classes will not be saved by having their own currency in a capitalist Europe.

*Ozlem Onanran (Fiscal crisis in Europe or a crisis of distribution?) Political Economy Research Institute, University of Massachusetts Amherst, http://www.peri.umass.edu/236/hash/91ee67bea2d8f4b261cd1c80cfc69d70/publication/412/

http://thenextrecession.wordpress.com

Greece proof?

The new Greek bailout deal announced by the EU leaders late last week will leave Greece with a huge debt burden.  The EU and the IMF have imposed massive austerity measures on the Greek government and its people.  So it beggars belief that the ‘socialist’ government of PM George Papandreou should return from Brussels and congratulate themselves on ‘winning’ a deal.  They have not ‘saved’ Greece, but instead left it to a 30% cut in living standards over just a few years, and under the fiscal heel of the other EU governments.

The so-called private sector involvement in the deal is nothing of the kind.  The banks and other financial institutions of Europe hold €150bn of Greek government debt and are being asked to swap most of this debt for new Greek government debt that is of longer maturity (15-30 years) at a discount to the previous value of its holdings.  The headline ‘haircut’ on the value of this debt is reported at 21%, but this is an illusion.   Assuming 90% of their existing holdings are put into the debt swap, the final losses on the banks books will be just €17bn, or no more than 12% in losses.  But in return, the banks get new Greek debt with 5% annual interest guaranteed by the EU fund and get rid of the old junk Greek bonds at a rate way higher than it would at current market rates (they are currently priced at 50c to the par value).   Indeed, as the years go by, the banks will be able to get repayments on their EU-guaranteed Greek government bonds rated at top investment grade and so will get a big profit from the deal.  Also, as a result, by the end of 2014, two-thirds of the remaining Greek government debt will be owed not to the banks, pension funds etc but to other EU governments, the ECB and the IMF.

The debt swap deal with the banks will reduce the amount of debt the Greeks will owe a little, maybe just 20% pts maximum out of a debt burden of 160% of GDP.  Also, the Greeks get a delay in making repayments on the debt owed to the banks.  But the government is still left with a burden much greater than any other in Europe.  And the Greek people will be faced with a massive range of tax increases, cuts in pensions, social security and other public services and severe wage cuts; along with a rapidly contracting economy and unemployment at 16%.

The banks of Europe are only agreeing to take this small hit as the German government insisted on their ‘involvement’ because of the anger of its own electorate over the amount of taxpayers money that was going into bailing out the Greeks and others in Europe.  And here is the issue.  The Greek government has a massive debt of around 160% of GDP because it has had to borrow at ever higher interest rates from the banks and other financial institutions (pension funds, insurance companies).  So bailing out the Greeks is really bailing out the banks.  The banks gain either way – through the bailout (now) and through the debt swap (eventually).

What is the alternative?  The Greek socialists don’t see any and neither does any other socialist leader in Europe.  The alternative would have been for the Greek government to refuse to accept the draconian terms of the EU leaders and the IMF and instead negotiate a reduction of its debt with the banks.  In effect, the government would default on its debt and offer payment at say 25% of the original value, so that its debt burden fell to 40% of GDP – much more manageable.  If the banks refused, they would get nothing.  If the banks say they would not lend any more to the Greeks (almost a certainty), the Greek banks could be nationalised (they would have to be anyway as the losses on their holdings of Greek debt of €50bn would wipe out their shareholders capital).  The customer deposits of Greeks could be guaranteed to avoid a run on the banks.

This would be a very tough situation for the Greeks, but it would be no worse than what has been imposed by the EU leaders and the banks.  At least, they could decide their own future and make any sacrifices that reduce the burden on average Greeks, rather than the EU deal that saves the banks.  If the EU leaders moved to block funds to the Greeks and expel Greece from the euro, the government could appeal to the people of Europe and any friendly governments to resist this threat.  The EU leaders could be forced into a deal as they fear that a Greek default could lead to further crises in the rest of the EU and they badly need to make Europe ‘Greece proof’.

But does it matter if Greece has a big government debt?  Some Keynesian economists like Paul Krugman have condemned the Greek package because fiscal austerity measures will cause an economic recession in Greece and in the rest of Europe.  That’s true, but they also argue that it does not matter if Greece runs up budget deficits and has a large government debt.  After all, this can be financed by the Greek central bank just printing money for as long as is necessary to get the Greek economy going.  Krugman says if Greece is restrained from doing this because it is in the Eurozone, then that’s a good reason to leave.

The problem with this argument is that it does not recognise the nature of the capitalist economy.  It depends on profitability and that depends on the capitalist sector of the economy having freedom to raise money to invest at reasonable interest rates.  A bigger and bigger government owing more to the banks threatens the capitalist control of the economy and eats into profitability through higher taxes on profits and/or higher interest rates across the board.  Capitalism does not want and cannot afford a big public sector without threatening its own existence.  In that sense, under capitalism, public debt must be reduced.  That is the real meaning of being Greece proof.

http://thenextrecession.wordpress.com

 Despite the deal which has just been cobbled together the crisis in Greece and the Euro zone will continue

 By Mick Brooks

 4 July 2011

 The financial crisis, the fiscal crisis of the state, the sovereign debt crises and the crisis of the Euro are all successive forms of appearance of the crisis of capitalism. Governments ran deficits and got deep into debt to bail out the banks and capitalism. Governments of peripheral countries like Greece mainly borrowed from abroad and got into debt to the banks of the dominant countries of the European Union.

The Euro is a common currency for 17 EU states. It is a form of fixed exchange rate system, where nation states have no power to devalue if they find themselves in economic difficulties. The problem with the Euro is that it is a currency not backed by any one nation state, so no country has the power or the will to defend it when it comes under pressure. That makes it particularly vulnerable in a crisis.

After the May 2010 Greek crisis, it seemed that the European Union had seen the speculators off for the time being. More important to the authorities in Europe than the fate of Greece, the threat to the Euro had been allayed. The Greek people, of course, paid for the ‘rescue’ with another round of austerity.

A year later it is clear that nothing had changed fundamentally. The institutional weakness of the Euro, concealed by years of boom, remained.

The Greek government debt and deficit are higher in 2011 than they had been a year earlier. It was quite clear by now that the Greek economy is in a vicious circle, where cuts fed economic decline and further decline necessitated yet more cuts. The Greek economy was in effect going on a diet by slicing off limbs in order to lose weight.

Commentators have mined Greek mythology for analogies with the plight of modern Greece. One is reminded of Sisyphus, condemned to eternally roll an enormous boulder up a slope, only to see it slide down again once he had reached the top.

One reason for the deteriorating economic situation was that much of this enforced austerity didn’t even go to pay off the country’s monster debts. Costas Lapavitsas estimated in the Guardian (21.06.11) that, “Servicing the debt will cost 12% of GDP, vastly more than health and education.” All this money will be syphoned off just to pay interest on the existing debt, not even to reduce the principal. Most of this money is drained out of the country.

Holders of Greek government securities are making higher returns than they would do even on the stock exchange.  Currently the return on two year Greek bonds stands at 28%. The spread (the difference between the rates on German bonds and those of the Greek government), hardly discernable at the beginning of 2010, was in the summer of 2011 a gaping 1,460 basis points (14.6%), further adding to the debt burden. The justification for these usurious rates is that the excess is payment for the risk that bondholders take by holding Greek government debt.

Commentators have suggested, quite plausibly, that, had the European authorities borrowed aggressively at low EU rates in January 2010 to prop up the Greek government, they could have seen off the speculators at comparatively little cost. But as L.P. Hartley commented, “The past is a foreign country.”

There is no doubt that Greece will default eventually. The only doubt is whether this will be a conciliatory, managed default organised by the EU authorities as the least worst option; or whether default will be a unilateral act of defiance at the continued imposition of intolerable burdens upon the Greek people.

How would a default proceed? We have only historical experience to go on, and every national default is a unique historic event. Having said that, Argentina’s default in 2001provides some clues.

Argentina has long gone through alternating periods of hyperinflation (from printing paper money to pay debts) and austerity. Reinhart and Rogoff lament (This time is different, p.259), “Perhaps Latin America would have done better in terms of economic stability had the printing press never crossed the Atlantic.”

After a period of rapid inflation in the 1980s the Argentine authorities opted for a currency board as a way of pinning the peso to the dollar and fighting rising prices. This meant that Argentina’s Central Bank could not issue another unit of the national currency unless it was backed by a greenback earned as foreign exchange through exports. It was an extreme form of fixed exchange rate system, offering the monetary authorities no room for manoeuvre.

The cure was worse than the disease. Inflation slumped, but so did economic activity. The pain was intolerable (just like Greece today). It was made worse by massive capital flight which turned into a run on the banks. The government responded to the run on the banks by effectively freezing bank accounts. Violent protests erupted. A state of emergency was declared but it didn’t save the government. President de la Rua escaped the people’s anger by helicopter in December 2001.

The interim government had no alternative: in the last week in December 2001 it defaulted on the major part of the intolerable burden $132bn of public debt. Much of the debt was foreign owned. It is not possible to default on foreign debt without severe damage to the domestic circulation of money, which was already in turmoil. All the currency is, after all, held in the home country banks.

The interim government was forced to suspend convertibility with the dollar. Devaluation followed as a matter of course, together with a period of chaos, where most economic activity was conducted by means of barter. Naturally foreign capital would not touch Argentina with a barge pole after this default.

Argentina is potentially a wealthy country with an export-oriented big business agricultural sector. The world economy was booming at the time, and the Chinese seemed to have an insatiable appetite for Argentinean soy. After the default the economy recovered rapidly, assisted by the cheapness of the Argentinean peso in world markets. The country grew by 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007. (Greece will not achieve this, as its main exports are to the European Union, still mired in the backwash effects of the Great Recession.)

Argentina began to run a huge trade surplus. It seemed once again a tempting prospect to foreign investors. A deal was negotiated with foreign creditors by 2005 in which they accepted part-payment of the debt. Bonds were swapped at 25-35% of their former face value. Once again Argentina was viewed as a sound investment and, after receiving assurances as to future good behaviour, good money was thrown after bad.

The prospects for Greece in the event of a default don’t seem as rosy as it was for Argentina. When Greece defaulted in 1826, the country was shut out of foreign capital markets for the next 53 years (Reinhart & Rogoff-This time is different, pp.12-13). Modern Greece has actually spent half of its existence in default and financial limbo with foreign investors.

The options facing Greece are default, deflation or devaluation (which means leaving the Euro).

1. Default

A default usually proceeds in the panic-stricken atmosphere of crisis. At the first hint of non-payment a flight of capital and a run on the banks begin. If a government is determined to go through with the default and sees no alternative, it must impose capital controls. It may have to declare a bank holiday as well, and shut down the ATMs. The only effective way to carry through a default effectively is therefore to nationalise the banks.

It may be argued that Greece needs the money on offer. After all the government is still running a primary deficit (a deficit excluding interest payments on the national debt). That means that at least some of the ‘rescue package’ will go to pay for public services, not just drain out of the country as interest payments. So it would be irrational to refuse.

This is a powerful argument. The troika will hand out the payments a tranche at a time. If the Greek parliament refuses to pass the package, civil servants and other public service workers will find that they are not being paid and public services will pack up as the money runs out.

That is how the troika intends to make the Greeks learn how to sit up and beg! But the situation is not governed by economic ‘rationality’. It is ruled by a swelling political mood felt by the vast majority of Greeks that they need to free themselves from the chains of debt.

2. Deflation

In Greece the prospects for deflation – a general reduction in wages and prices - are ruled out. In theory deflation means that, after immense hardship, wages and prices fall till the country becomes competitive. We already know that this is not happening in Greece.

When wages fall, workers do not just put up with it as economic theory predicts. Many leave paid employment and return to their ancestral village to help out on the family smallholding to eke out a living instead. The models used by neoclassical economics are hopelessly flawed.

3. Exit from the Euro

What about exit from the Euro? There is no constitutional procedure for this within the European Union, but that is the least of the Greeks’ problems. The new Drachma, if launched, would probably fall to half the value of the Euro. Many experts believe it would fall far further.

The good news is that this would give Greek exports a competitive edge. Their exports would be half the price that they were before on world markets. The bad news is that their creditors would demand that debts denominated in Euros be repaid in Euros. That would mean earning twice as many new Drachmas as before. That is why it is more important to repudiate the debt than to leave the Eurozone, though one might lead to the other in a crisis.

The traditional justification for higher interest rates on Greek government bonds than elsewhere in the Eurozone is that they are a compensation for greater risk. Yet the speculators seem curiously unwilling to swallow that risk, happy though they are with the return. This is a bone of contention in the tortuous negotiations between the Greek government and the hated troika.

The troika, charged with supervising Greece’s debt repayment, consists of the European Commission, the European Central Bank and the International Monetary Fund. As far as the Greek people are concerned the troika is united in grinding them down with its iron heel, driving them all to penury.

In the summer of 2011 the troika is demanding, as the price of its ‘aid’, the sacking of 150,000 public sector workers, 20% of the total. This is on top of years of hardship already imposed. The troika are demanding 50bn Euros from privatisation, which strikes most Greeks as looting of their national wealth. Inevitably, under present conditions of crisis, this would be a fire sale of assets.

Youth unemployment is already 40% - a generation going to waste. A quarter of the population are below the poverty line, 100,000 businesses have closed since the recession began and industrial production is down by 20%. This is all supposed to restore Greek competiveness!

The political crisis is boiling over. The overwhelming majority of Greeks oppose the terms of the bail out. They are right. It is really foreign banks that are being bailed out at the expense of Greek living standards.

The trade unions have launched eleven one day general strikes and one two day strike against the cuts in little more than a year. Though the ruling PASOK (Pan-Hellenic Socialist Party) has an outright majority in the Greek parliament, defections are putting the imposition of the cuts package on a knife edge.

The troika is divided among itself. The Germans under Merkel have been insisting that speculators who took the risky investment in Greek bonds should share in the losses. They have a point. The ECB is opposed to this, and to the creation of a Eurobond backed by the united authority of the EU.

The rating agencies protest against any clemency to the Greeks. Moody’s Investor Service, Standard & Poor’s and Fitch Ratings are the private capitalist concerns that fix a company’s – and a country’s – creditworthiness. These rating agencies, it will be remembered, are the firms that corruptly signed off incomprehensible Credit Default Obligations as triple ‘A’ rating – because they were paid to do so. This was one of the causes of the ‘credit crunch’. They are deeply implicated in the world financial crash.

Now they presume to declare on the prospects of entire nations. And they have decided that Greece, a country of 11 million people, has prospects not much better than junk bond status. The rating agencies have also decided that any rollover of Greece’s sovereign debt, leaving them on the books but making them payable at a later date, would count as a technical default.

In such a case the agencies can and would blow the whistle on Greece. That would obviously be a green light to the speculators to pull their money out, and could spell ruin for millions of Greeks as the markets effectively bankrupted the country.

So the ECB and the IMF are mortally hostile to a rollover of debt, In fact this would be the easy way out if they could get away with it. It would not, of course solve the problem, but it would buy time.

The ECB is rabidly opposed to the notion of a Eurobond. It also opposes ‘haircuts’ being imposed on Greek government bondholders (mainly French and German banks). It is determined that the Greek people should bear the entire burden alone.

If the whole weight of the European decision-making process and of the EU economy were thrown behind the creation of a European-wide security (a Eurobond) then loans at about the German level of 3%, rather than the usurious rates paid by the hapless Greek government, could be borrowed and passed on to the Greeks. That would require the dominant countries within the Eurozone to abandon their national interests in favour of subsidising Greece.

That opportunity is now gone. Panic has set in on financial markets.

The ECB and IMF are right against Merkel that they are caught in a dilemma. A dilemma is a choice of two alternatives, both of which are impossible.

The ECB and IMF are also concerned with the threat of contagion. If Greece is let off the hook only a little bit, then Ireland, Portugal and all the other debtor countries will be queuing up for equal treatment. If Greece collapses, that could be the start of a chain reaction that could drag the world economy right to the brink of meltdown as it was in September 2008. Commentators are starting to whisper about ‘a Lehman moment’ - that signalled the near-collapse of world banking.

Despite all the top US bankers and the Treasury Secretary being closeted away for an entire weekend no agreement on saving the stricken Lehman Brothers bank could be arrived at in September 2008. Whatever the reason, this failure is now seen as catastrophic – leading to the collapse of all the subsequent financial dominos. Greece could be the equivalent of Lehman Brothers in the sovereign debt crisis. Its default could bring down the Euro.

European-wide decision making is in a state of paralysis. Merkel is playing for time, as usual. Rather than sorting out a common position behind the scenes and presenting it to the world, the troika engages in public dissent.

There are two reasons for this: the first is the clash of national antagonisms within the EU. Merkel and Sarkozy are not concerned with the problems of the Greeks; they are too busy listening to the voices back home. The second is the fact that there is no way out of this crisis. That explains the air of incompetence and dithering displayed by the troika on the public arena as they spin out the moment of crisis.

Half-witted British Eurosceptics like Boris Johnson scoff at the plight of Greece and the Euro. ‘It’s nothing to do with us,’ they rant. The sub-prime mortgage scandal in Florida and California may have seemed to be nothing to do with us. But we’re all part of the capitalist world economy. British banks may have little exposure to Greece, but they are massively committed to Ireland. If Greece went down, Ireland would be next in line to go.

Though British banks have few direct holdings of Greek government debt, they have apparently been having a little flutter on Credit Default Swaps. Described as an insurance policy, CDS are really a form of gambling on the prospects of default. US banks also hold $34bn in Greek CDS. They stand to lose heavily if Greece goes down.

The effect of the rescue package is to save the bacon of the banks who imprudently lent to Greece.  Whatever the eventual outcome, it seems the banks will walk away laughing from the wreckage – as usual. It can confidently be predicted that the political and economic crisis will rumble on and on. No obvious solution is in sight. Only a concerted intervention by the working class can break the deadlock.

4 July 2011

The muddle-through approach to the eurozone crisis has failed to resolve the fundamental problems of economic and competitiveness divergence within the union. If this continues the euro will move towards disorderly debt workouts, and eventually a break-up of the monetary union itself, as some of the weaker members crash out.

The Economic and Monetary Union never fully satisfied the conditions for an optimal currency area. Instead its leaders hoped that their lack of monetary, fiscal and exchange rate policies would in turn see an acceleration of structural reforms. These, it was hoped, would see productivity and growth rates converge.

The reality turned out to be different. Paradoxically the halo effect of early interest rate convergence allowed a greater divergence in fiscal policies. A reckless lack of discipline in countries such as Greece and Portugal was matched only by the build-up of asset bubbles in others like Spain and Ireland. Structural reforms were delayed, while wage growth relative to productivity growth diverged. The result was a loss of competitiveness on the periphery.

All successful monetary unions have eventually been associated with a political and fiscal union. But European moves toward political union have stalled, while moves towards fiscal union would require significant federal central revenues, and also the widespread issuance of euro bonds — where the taxes of German (and other core) taxpayers are not backstopping only their country’s debt but also the debt of the members of the periphery. Core taxpayers are unlikely to accept this.

Eurozone debt reduction or “reprofiling” will help to resolve the issue of excessive debt in some insolvent economies. But it will do nothing to restore economic convergence, which requires the restoration of competitiveness convergence. Without this the periphery will simply stagnate.

Here the options are limited. The euro could fall sharply in value towards – say – parity with the US dollar, to restore competitiveness to the periphery; but a sharp fall of the euro is unlikely given the trade strength of Germany and the hawkish policies of the European Central Bank.

The German route — reforms to increase productivity growth and keep a lid on wage growth — will not work either. In the short run such reforms actually tend to reduce growth and it took more than a decade for Germany to restore its competitiveness, a horizon that is way too long for periphery economies that need growth soon.

Deflation is a third option, but this is also associated with persistent recession. Argentina tried this route, but after three years of an ever deepening slump it gave up, and decided to default and exit its currency board peg. Even if deflation was achieved, the balance sheet effect would  increase the real burden of private and public debts. All the talk by the ECB and the European Union of an internal depreciation is thus faulty, while the necessary fiscal austerity still has – in the short run – a negative effect on growth.

So given these three options are unlikely, there is really only one other way to restore competitiveness and growth on the periphery: leave the euro, go back to national currencies and achieve a massive nominal and real depreciation. After all, in all those emerging market financial crises that restored growth a move to flexible exchange rates was necessary and unavoidable on top of official liquidity, austerity and reform and, in some cases, debt restructuring and reduction.

Of course today the idea of leaving the euro is treated as inconceivable, even in Athens and Lisbon. Exit would impose big trade losses on the rest of the eurozone, via major real depreciation and capital losses on the creditor core, in much the same way as Argentina’s “pesification” of its dollar debt did during its last crisis.

Yet scenarios that are treated as inconceivable today may not be so far-fetched five years from now, especially if some of the periphery economies stagnate. The eurozone was glued together by the convergence of low real interest rates sustaining growth, the hope that reforms could maintain convergence; and the prospect of eventual fiscal and political union. But now convergence is gone, reform is stalled, while fiscal and political union is a distant dream.

Debt restructuring will happen. The question is when (sooner or later) and how (orderly or disorderly). But even debt reduction will not be sufficient to restore competitiveness and growth. Yet if this cannot be achieved, the option of exiting the monetary union will become dominant: the benefits of staying in will be lower than the benefits of exiting, however bumpy or disorderly that exit may end up being.

Nouriel Roubini is chairman of Roubini Global Economics, professor of economics at the Stern School of Business NYU and co-author of ‘Crisis Economics’ that has been recently published in its paperback edition.

By Michael Roberts

As I write, the Greek trade unions are engaged in a 24-hour general strike in protest against the impact of the fiscal austerity measures imposed by their socialist government over the last year that were insisted upon by the EU and the IMF as part of the €110bn bailout package that the Greeks received last May.  The Greeks needed the money to cover the borrowing that its government had to make to meet repayments on its bonds that were maturing as well as new borrowing to finance government expenditure that could not be paid for by tax revenues. In return for this money, the Greeks have had to endure a massive cut in their living standards through public sector job losses and wage cuts, pension benefit reductions, increased taxes across the board and reduced public services.  Unemployment jumped to a new record high of 15.1% in January and the Greek economy contracted by 4.5% in 2010 and is expected to shrink by another 3% this year. 

As I said in my post last February, (Greek countdown, 1 February 2010), “the Greek people have done nothing to deserve this and yet they must pay heavily for the failure of capitalism.”  The Greek people have been forced to pay with their living standards and public services for the failure of the global banking system (see my post, Paying for Europe’s banking mess, 16 March 2011) .  The socialist government agreed to take a €110bn in loans from the European Union and IMF to fund the buyback of its maturing government bonds and future government borrowing.  It had to do so because capitalist bond investors (who are mainly Greek and European banks and pension funds) were refusing to buy any more Greek government debt unless the prices they paid were slashed.

Now one year later, the dread Troika (named after officials from the EU Commission, the European Central Bank and the IMF) are back in Athens to check the books of the Greek government and see if they have met the fiscal targets set by the bailout package.  The short answer is no.  So great was the budget deficit when the package started (15% of GDP) and so quickly has the public debt level mounted (heading towards 150% of GDP by the end of this year) that, despite the misery caused by the cuts in spending and tax hikes, the draconian targets set by the EU and the IMF have not been met.  So the Troika must recommend whether to allow another tranche of the bailout funds to be handed over or not. 

But the problem is even worse than that.  The holders and potential purchasers of Greek government bonds, mainly the banks, pension funds and hedge funds around the world, are unwilling to buy any more Greek debt.  They are already getting nearly 25% interest on their existing debt so any new debt issuance would be even more costly to the government.  Indeed, it would be so costly that the government would find it would have to borrow more to pay for the interest cost – a true Ponzi-style situation.  And yet the existing package is not enough to to fund all Greek borrowing next year and the Greeks are supposed to renew their borrowing from the banks in 2012.  

That is clearly impossible.  So what are the alternatives?  One is that the EU-IMF decides to lend the Greeks more money to tide them over for a few more years.  But that would be at the price of yet more public spending, wage and job cuts.  Already, the Troika is demanding that the socialist government sell precious state assets (airports, motorways, power corporations, real estate, postal savings, the state lottery) to the tune of €50bn as part of the bailout package.  The Troika will ask for more and for speedier sales.  At this rate, the EU, the ECB and the IMF will own the Parthenon in return for funding Greek government borrowing!  And of course, this solves nothing.  The debt remains to be repaid, only the cost of borrowing might fall back.  In the meantime, the huge cuts in government services and employment will mean that Greece will be in economic recession for years.

As the leader of the True Finns, a right-wing populist party that recently gained hugely in the Finnish elections on a platform of NOT bailing out the Greeks, the Irish or the Portuguese, recently wrote in the Wall Street Journal;  “To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them.   It is not the little guy who benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going. Meanwhile, a symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever more money back to our governments.”

The holders of Greek, Irish and Portuguese debt, or for that matter government debt in all countries, are the major banks, pension funds and other financial institutions.  In other words, the collapse of the global financial system forced governments to bail them out.  Governments had to borrow money to do this from the very institutions that were being bailed out!  These institutions want to maximise their profits from this lending without any defaults on payments.  It’s a circle of capital.   As the True Finn leader commented: “the EU project is being put in jeopardy by a political elite who would sacrifice the interests of Europe ‘s ordinary people in order to protect certain corporate interests.“

The circle could be broken if the governments decided not to pay the debt owed to their banks.  This is called default.  It would mean that the banks in Greece, Portugal and Ireland would suffer such losses that their shareholders would be liquidated and the banks would have to be taken over by the state.  In the case of Ireland, they are already are.  Even the True Finns leader can see the merit of this approach: ” If some banks are recapitalized with taxpayer money, taxpayers should get ownership stakes in return, and the entire board should be kicked out. But before any such taxpayer participation can be contemplated, it is essential to first apply big haircuts to bondholders.”

Where I leave the True Finns is what happens next.  For me, the banks could then be used to provide lending not just to the government but also to small businesses and households.  They would become a public service designed to help the economy, not an instrument for financial speculation that brought Greece and the other countries to their knees in the first place (see my post, Banking as a public service, 15 September 2010).  

The added complication is that much of Greek, Portuguese and Irish debt is held not by just their own banks but also by banks in France, Germany and the rest of Europe.  Those banks would be in jeopardy if Greece and the other governments were to default on their debt.  That is precisely why the EU and the ECB are so strongly opposed to default or even so-called ‘restructuring ‘ (a disguised version of default) of Greek debt.  They want to keep the financial sector viable but in the private sector  – at the expense of the working people and their families.  The whole issue then boils down to how Europe’s economy is to be structured: either as a capitalist economy with big banks and business in the private sector, designed to make profits; or mainly publicly owned with the big banks and financial institutions run as public services.  Fo me, it is the latter, of course.

by Michael Roberts

In several posts in 2010, I argued that the people of Europe were going to have to pay for the bailout of the banking system in the Europe through a significant reduction in their living standards (by higher taxation and inflation, lower incomes, rising unemployment and reduced public services.

 Wojciech Figiel and Bojan Stanisławski of Polish Labour Notes speak to Leszek Miętek , the president of the Confederation of Railway Trade Unions.

 Could you please tell our readers how the process of restructuring the Polish State Railways was done?

The railway company was functioning as one state company up to September 2000 when the commercialization, restructuring and privatisation of Polish State Railways law came into force. In accordance with this law Polish State Railways S.A. was created along with its subsidiaries. It was all about that PKP S.A. take over the railway debts and the whole burden of restructuring. The “sick mother” was supposed to give birth to healthy unindebted children. Let us add that this law lobbied for a foreign consulting company that gave advice in the privatisation process of British Railways. It was a fiasco. The British paid a lot of money for this re-nationalisation than they did in World War II.

The breaking up of the Polish State Railways was motivated by the need to put Polish railway regulations in line with European Union directives which stated the separation of Railway infrastructure from trains. This time not only trains were separated but also other companies which were important in serving the Railway infrastructure such as for example energy or Railway telecommunications. Besides that the companies that were in charge of transporting passengers and goods were isolated. The Cargo company was trusted with managing the whole stock which it rented to passenger transporters. In a space of ten years of restructuring , locomotives and wagons have been taken from Cargo to passenger carriers, and commuter trains.

How many subsidiaries are in the PKP S.A.group?

No one knows that. For sure there are a number of subsidiaries affiliated with trains. It is worth remembering that when a client buys a ticket he thinks that he is travelling by train, travelling by PKP (Polish State Railways) considering both as one thing.

Railway transport as opposed to road transport is a structure that is inter-dependent. Dividing the railways into many subsidiaries brings complications associated with organising the timetables of trains. We use tracks that belong to Polish Railway lines. The controlling of trains is done with the help of isolated subsidies - Railway Telecommunications. However electricity is provided by the energy subsidiary. All these subsidiaries are interdependent and they cannot operate if they do not cooperate. Their division creates the need for the separate paying of tax and transferring of money. A number of different transporters operate in this kind of infrastructure. However each one of them have their own norms as well as safety in the workplace.

What kind of “complications” associated with train services came about after the breaking up of PKP?

Transporters function in accordance with business law - they must compete amongst themselves. The Intercity squad and the Regional Transporters compete on the Polish railways. The second company introduced InterRegio trains which service the routes between voivodships. The InterRegio routes are made possible with the help of commuter trains (EMUs) which are made for local routes and not for the whole of Poland. On the same route trains go one after the other with a difference of ten minutes or they go unannounced. However it used to be like this, at the station trains for different destinations were available, people could get in and after that the trains would leave for their respective destinations. Nowadays I have a problem with getting to Warsaw because at the station the train for Warsaw leaves ten minutes before the arrival of my regional train. It also happens that the passenger buys a ticket then it happens that it is not valid because it was given by another company.

What processes of restructuring backfired when it came to safety?

The security systems were not consistent with the process of liberalisation. That is why we can expect shortly, very serious complications in this area. At present each transporter gives their own instructions to the train engineer. In reality all norms should be confirmed by the government organ regulating railway line transportation but that does not give any guarantees that they are in agreement with each other. We have one instruction on the technical controlling of railway movement but all the other factors like braking systems and other important instructions set by the transporter personally.

The workers working in the railways, train engineers, train dispatchers and so on are mostly people who have 30 years experience. Let us tell ourselves the truth, the railways function thanks to their work and experience. I do not know how it will be when young people come who are without railway education, (railway schools were closed 10 years ago),trained too quickly, unused to dealing with extreme situations and
taught according to different railway rules. I do not want to be a prophet of doom but honestly speaking it can be a catastrophe.

How are train engineers trained at the present moment?

In line with the Third Railway Package which was accepted by the European Union the train engineer is trained and he gets a licence and a certificate soon after. The licence is given by the government office regulating Railway Transport and the certificate is given by the transporter. The problem is that the European Union set some standards which train engineers are supposed to master but it was not precise on the time frame. The minister of Infrastructure did not consider our regulations. In the regulations book there is nowhere where they address the amount of time needed by the train engineer to master certain topics. The result is that private training firms save on time and make the training shorter.

The Third Railway Package also liquidates the position of train engineer assistant. Up until now that position was very important. The assistant learnt the required skills, he learnt the routines and habits of the train engineers. Nowadays a young person, from the street without the knowledge of any compatible skills will operate the train. Alone.

Some time ago in the Polish State Railways there were the same security standards. Nowadays every transporter employs his own train engineer. It is reaching such a point that private transporters employ train engineers on short term contracts or they hire services from a “one man company offering train engineering services”. There is no central registration of self employed train engineers. It is hard to tell at the moment how many transporters have such train engineers.

In some private railway businesses the working hours of a train engineer are counted from the moment “he gets into the locomotive”. If the train engineer lives in Warsaw and the train is supposed to travel to Gdańsk, the time that the journey takes is not counted as working hours. He rests in the train because he has not yet made it home then gets another phone call with the next task.

Catastrophes are now prevalent on Polish railways, in Korzyb (North Western Poland). There are locomotives made in such a way that the train engineer can only see from one side because from the other side the engine blocks his view. If he wants to go in another direction he must reverse looking behind him. That led to the accident in Korzyb. Sometime ago the assistant sat there and informed the train engineer of any danger. Nowadays that place is empty. Sometime back those kind of situations were regulated by the R1 rules which stated that one man service was only possible in locomotives which had two cabins (those which had cabins from both ends), those which had automatic train braking systems. However in the year 2003 the minister amended the formula which said “single person service is possible for twin cabin locomotives”. The words “twin cabin” were “removed”. After last year’s catastrophe in Korzyb the prosecutor took over but then refused to open an investigation when she did not see the presence of any criminal acts.

You mentioned InterRegio trains. What is the situation at the present moment in the regional transporting company?

The regional transporters are pro-social transporters who should be sponsored if the costs of running trains are more than the income generated from the sale of tickets. A few years ago all the equipment was the property of the Cargo company which subsidised passenger trains leasing locomotives and electric multiple units on some routes. Little financing from the earnings of Polish State Railways Cargo led these companies to lose their position on the market. Successive governments cut funds meant for passenger transporters as they wanted to get rid of them. In the end the government managed to accomplish its mission. The regional transporters company was given to local government. Earlier, commuter trains had been given away to Regional transporting companies, all the locomotives were added to the inter-provincial trains and the wagons were given to Intercity so that the Regional transporters would not have the equipment to service the inter-provincial routes.

The Regional transport company has got 16 owners. Each one of them has 4-5% shares. The largest part is owned by the voivodship Marshal and that is absurd when the passengers in this voivodship are transported by the Mazovian Railway company. The voivodship Marshals in a space of  2 years were unable to work out a collective expansion strategy. To finance the subsidised trains the personal income tax and corporate income tax to the local government was increased. There is no controlling how much of that money reaches the passenger train department. Already after 2 months in business, because of the mistakes committed during the process of subsidising the Regional transport company was around 400 million in debt and it filled the criteria for bankruptcy. Besides that the Regional Transporting companies are the property of local governments - there is no obligation to sign contacts with them. It is not an inside company so the local governments must organize bidding for certain routes. And the bidding is done in different ways. For example the Marshal of the Kuyavian- Pomeranian voivodship announced bidding for the servicing of diesel traction on which around 10% of routes in the region are made. A 10 year contract has been signed with Arriva for which the Marshal gave 40% of all resources. From the information from Arriva which I have, it shows that during the last time when there was a lot of snow there were days when there was not even one train on the routes serviced by this transporter. And there was no outcry in the media but only the exact opposite. The media hyped the rise of competition in the Kuyavian-Pomeranian voivodship. The truth is that when Arriva started to compete in this transporting business it did not have the right equipment and it did not prepare qualified train engineers. The last ones were taken from mines!

The Marshals are obliged to finance trains only in one given voivodship. It also happens that passengers travelling with Regional trains go to small stations which are on the peripheries of the voivodships. From those stops they are then taken to their intended destinations in the next voivodship by bus. We have that situation with the line that is servicing Białystok (In the North East of Poland) and Warsaw. Trains only go up to Czyżew (North East Poland)-which is the border of the voivodship and most travellers would want to travel to Małkini. The problem is that Małkini is already in that same Mazovian voivodship which does not want to fund these trains. In the near future passports will be needed at the borders between voivodships…

I would like to underline that a lot of costs that are encountered by transporters are equipment costs and costs in the everyday running of the company.We have a tendency that, the voivodship Marshals organise their own companies that are Regional transporters. How does that influence permanent costs? If equipment is going to be repaired only in the voivodship then instead of a number of service points that are open around the clock there will be fewer service points. Which are more expensive to manage.

The minister of infrastructure promised us that before the process of subsidising there will be a package of guarantee for the workers. Up to now it is still not in place. The company separated itself from the trade union of railway workers. It announced a Company Collective Bargaining system and it does not want to go along with the rules of of workplaces. For the government the problem is public debt and for us the fate of 15 000 people who work just in Regional Transporting. At the same time the government is presenting commercialisation laws in parliament which are slowly causing the collapse of railway companies. If these laws are passed then Regional Transporters will collapse at once.

And how is the situation in Intercity?

When 2 years ago inter-provincial trains were given to Intercity the capital of the company increased by 300% and capital inflow increased by 50%. Already we had noticed that the situation of this company would get worse in dramatic fashion. 2 years ago the directors went around the country and requested that the train engineers and other workers that they leave Regional Transporters and come to Intercity. And now the president of the same company in a meeting with trade unionists said that he has 50% more people than he needs and they need to retrench some.

The actions which are worsening the results of the company are a lot. The management of the company is blaming everything on the introduction of cheap trains by InterRegio. In my opinion the main reason for the loss of passengers in inter-provincial transporters is the catastrophic state of railway infrastructure. Who would want to travel by train from Warsaw to Gdynia (Northern Poland) when the journey will take 7 or 8 hours. That line has been under renovation for 6 years. On the other lines the commercial speed is not above 40km/h. A train needs more than 1 hour to cover a 60 kilometre distance between Toruń (Northern Poland) and Bydgoscz. The businessmen travelling by Intercity cannot allow that. Let us note that Intercity does not complain on the number of passengers on the Warsaw-Kraków (Southern Poland) route or Warsaw-Katowice (Southern Poland). The infrastructure for the central railway route is in a better state and sometimes rail transport can compete with road transport.

Why were union funds for infrastructure suspended?

That decision made us write an impulsive open letter. 25% of railway lines were closed. At this moment 19 000 kilometres of railway lines are functioning. There were 27 000 kilometres earlier. The president of Polish Railways S.A. says that the company can maintain at most 7,500 kilometres. In the coming years two thirds of railway lines will be closed. The residents of Kraków and Lublin have threatened Grabarczyk that if there will be no bypass then the Civic Platform will be dealt with in the next elections. That is why it was decided that money could be taken from the railways. It is explained that the railway is not in a state to manage these funds. That is a half-truth. I am not saying that Polish Railways prepare for all projects perfectly and on time. I am only making a point on the fact that the government did not prepare the legal and organisational conditions for such a serious investment.

First of all - the Minister of Finance did not give guarantees on credit for Polish Railways which would have financed its own contributions. If that money is not available you cannot get any grants. The law on commercialisation and privatisation was passed but the railway was not given access to its assets. If the government wanted to shorten the long process of enfranchisement, notaries, allotments then the law would have given the railway power over its assets, predicting compensation for its present owners. Legally a huge amount of investment work has to be done just like it was done in road infrastructure. Because there is no regulations which can hurry up investment processes. Railway workers have to ask about everything: if water is flowing from the platform, then it is a “leak” and you have to put a drainage system in place at once and so on…

Even if there is investment in railway infrastructure it is only in trans-European circles which are needed by the European Union. In Poland the lines that are needed are those that go from north to south. There is no railway investment in in Śląsk (South of Poland). If a train goes there at a speed of 10km/h it is possible go to it, open the door and calmly put in some coal, which is done anyway.

In the European Union it was decided that 60% of the budget is directed to road investment ,and 40% to rail transport. In Poland roads and railways are financed at a proportion of 95:5. The railways have to repair on their own and coordinate the process of exploiting railways. The rates on the availability of infrastructure for transporters are some of the highest in Europe. That means that for access to railway lines you need to pay ten times more than you pay for access to a carriageway.

The debt of PKP S.A. has been talked about a lot. How did these debts accumulate?

Because of the use of public transporters without refunding them. Parliament provided some relief but it did not give money. More than 400 000 people worked in the railways. Today there are around 100 000 workers. The railway health service was liquidated, nurseries, tailors…. A whole sector of the economy was restructured without a single zloty coming from the budget. PKP even replaced the employment offices, paying the retrenched workers pre-pension benefits. Also some government companies were in debt-for example the ironworks. Because the ironworks were earmarked for privatisation - their debts to PKP was suspended. The ironworks found a foreign investor and PKP remained with debts. Every year the subsidiaries must raise a 300mln ransom which is then used for paying interest and not debts. I note that debt did not come about because of rail workers. That is a national budget debt in PKP S.A. The rail has been always a trash can where you can always take from and where you can always dump into.

Was any procedure of removing debts in PKP S.A. ever put in place?

A fund was created in which money from the sale of fuel is directed there. It was meant to enable the building of rail infrastructure. However, because PKP is in debt it has been decided that the fund will buy shares of Polish Railways on behalf of the national treasury. Because of that, PKP will then have money to pay its debts. The problem is that in the next few years those funds will cover only one third of the debt. The rest around a billion zloty per year, the Polish Railways must find it on their own. They could take credit but the government’s guarantee is needed. That would in turn increase the public debt. The government would not agree to that. The only options that are left are the selling of assets and privatisation. The best railway companies are preparing for privatization. It is not about increasing capital so that the companies could invest but about the brutal selling of the most valuable assets only to pay debts. That is why for example Polish Railways is being sold to a company with a 20% return.

The infrastructure repair centres have been sold. PKP Cargo the second largest goods transporter in Europe is getting ready for privatisation. Because there is a crisis in Europe - there is no profit in big railway companies. Polish companies will be sold to anyone, for cheap so that the debts can be paid.

Us as trade unionists do not want money from the budget. We just want the creation of a level playing field. We are not against privatisation but we want the money obtained in such a way that it funds rail companies in order for them to become more competitive. I will give an example, for the past few years Cargo has been operating in an open transporting market. However because it is being forced to pay the credit for PKP cargo it is less competitive according to Polish and foreign transporters. German companies have been allowed on the market and they do not have any debts. In addition to that they have access to public funds which finance the buying of equipment and so on. How are we supposed to compete in such conditions?

What does the future hold for the National Railways?

Without the systematic changes of which we talked about nothing will change in the railways. For the government the PKP debt is marginal. The government is spending public debt and reducing the deficit is not important. For us however it is a matter of life and death.

Poland is situated at the centre of communication in Europe. We could compete in the transportation of goods and earn a lot. But the lobbyists in the car industry will not allow that because they want to maintain the inequality between road transport and rail transport. In Poland sometime it is more productive to transport coal by trucks from the mine to the port. The state is interested mainly in road transport but it does not look at the consequences of such politics. How many people die on Polish roads? How many are removed from professional life? How much are the costs of rehabilitation?

For a number of years we have been saying that the processes of restructuring are going the wrong way. Now we are standing over irreversible decisions. If a company collapses or is sold we cannot do anything. The railway workers will have to pay for those decisions. This time they are not at fault in any way-they just do what they are told.

If nothing is done the regional transporters will collapse, equipment will be divided between voivodships which create these companies. The consequences are that there will be more problems when it comes to travelling between voivodships, the costs of exploitation will rise and in regions where there are few travellers trains will be liquidated. In the main towns the only available connections will be those by road. Two thirds of the railways will be closed and the regional transporters will be practically liquidated. That would cause economic problems in regions. If there wont be any railways then there wont be any investment.

What should be done to avoid such a scenario?

Unfortunately no one wants to see a situation where the Polish railways are only limited to the needs of the Polish economy and not the European economy. The most important thing here is the will. If there is no will there are always a million reasons available for not doing anything . If there is a will then there is need to fix all the things that we talked about. First of all we should find a way to liquidate the debts in PKP S.A.

The problem with rail is that trains should not only be colourful, smell good and have good promotion but they must also operate. For that specialists are needed , those who know the processes needed for operating trains. Unfortunately for a number of years the railways have been managed by people who think that they are rectifying the problems by making the trains nice and smelling good, not having the slightest idea of the exploitation processes. They draw some plans where a train goes across the whole of Poland without servicing. On paper everything is ok. Only that in reality nothing is ok. This is not about lack of motivation. Simply they are incompetent people. I wonder what would be if these people went to manage banks.

In what ways are trade unions opposed to this situation?

In 1998 we organised a four day strike of train engineers. We demanded then that the railways be financed on a level of 1% of the GDP. We organised conferences, we prepared even alternatives projects for changing the railways. However the management did not take it seriously. They treat trade unions as boys with dirty fingernails. Our efforts are tossed away and they hire consulting firms. Therefore I am not optimistic but I can assure you that we will fight to the end!

Translation: Marlon Nziramasanga

From Polish Labour Notes  http://english.zwiazkowiec.info/

Facebook  http://www.facebook.com/pages/Polish-Labour-Notes/153987821299619?ref=ts

	Call for a Referendum on the IMF/EU Deal   Fri, 01/04/2011 - 19:10. Over 400 people attend launch meeting  On Tuesday 5th April, 8pm, in the Gresham Hotel, Dublin at a meeting organised by Richard Boyd Barrett TD and including speakers: Andy Storey (Afri), Jimmy Kelly (Unite Trade Union), Rita Fagan (Community Activist) a new campaign called 'ENOUGH!' was launched to fight for a referendum on the EU/IMF Deal and an end to the bank bailout. Protest Dail Eireann, Kildare Street, D.2, 6th April, 6pm

 United Left Alliance builds on election breakthrough

The interim steering committee of the United Left Alliance met yesterday to discuss building on their major breakthrough which saw five TDs elected to the Dáil.

A round of local public meetings throughout the country in April will be soon announced. From these local branches of the United Left Alliance will be formed which will immediately get stuck into local issues affecting communities as well as national campaigns and struggles against the austerity policies of the Fine Gael/Labour government.

A National Convention of the United Left Alliance will then take place in late June where a broad range of policy areas will be discussed as well as the steps necessary to launch the United Left Alliance as a party.

Joe Higgins TD said:

“The Moriarty Tribunal report served as a timely reminder to people that Fine Gael like Fianna Fáil are a party wedded to the interests of big business. We believe that between that and the inevitability that Fine Gael and Labour’s promise to have the terms of the EU/IMF deal significantly altered will come to nothing, opposition to this government will continue to grow.

“A point will soon be reached when Fine Gael and Labour blaming Fianna Fail for the austerity policies they continue will no longer wash with ordinary people. The United Left Alliance will be well positioned to further build and extend its support on the basis of the radical left alternative it offers to the cuts consensus.

Richard Boyd Barrett TD commented:

“Water charges, property taxes and job cuts are all attacks waiting to take place on Fine Gael and Labour’s watch. The United Left Alliance is determined to position itself so that it can respond to these attacks in every town and city in the country.

“Likewise the floundering of Fine Gael and Labour in the face of the current phase of the banking disaster will show starkly the need for genuine political representation for ordinary people. The United Left Alliance has already made its mark in the Dáil. This will be more that matched by our role in campaigns and the developing struggles in communities and workplaces in the weeks and months ahead.”

htttp://www.unitedleftalliance.org

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Labour Youth Chair opposes coalition

Madam, – Last weekend saw a fantastic victory for the Labour Party, with 37 deputies elected to Dáil Éireann. I felt immensely proud, as a member, to have seen my party grow from strength to strength under Éamon Gilmore. The Irish people have offered Labour an historic opportunity to reshape the course of politics. As the second largest party in the State, the people have asked us to lead an opposition to Fine Gael. With some 76 seats, incredibly close to an overall majority, Fine Gael was selected as the party to govern.

In the interests of democracy, it is appropriate that the Labour Party provide a robust opposition and keep this administration in check. Some have argued that Labour must be a “mudguard” to Fine Gael and restrain some of the more extreme policies advocated by that party.

Unfortunately, Fine Gael already has the capacity to receive support from Independents and Fianna Fáil, making a Labour contribution to government irrelevant. In 1994, when there was an almost even split between Democratic Left/Labour and Fine Gael, with FG on 47 seats and DL/Lab on 38. In that situation, it was necessary and productive for Labour to be in government and indeed that coalition achieved a great deal. We campaigned for Gilmore to be taoiseach and to break the mould of Irish politics in the recent general election. The electorate have voiced their opinions and offered us an historic opportunity to be a real force in Irish politics. It is important that we seize it, and offer a coherent opposition, which can implement real change for the people of this country.

We must not prop up Fine Gael and offer that party a monopoly of power. Fine Gael and Labour are distinctly different parties. In any other European state, we would lead the opposition. It ought to be no different in Ireland.

Allowing a government to form with 114 seats out of 166 is inherently undemocratic and would allow a discredited Fianna Fáil, who the people rejected outright, lead the charge. Labour Youth believes that this new government must be accountable to the people, and the only way of achieving that is by creating a strong opposition, led by the Labour Party and Mr Gilmore. – Yours, etc,

COLM LAWLESS,

National Chairperson,

Labour Youth,

Cypress Downs,

Templeogue, Dublin 6W.

(from the letters page of  the Irish Times)

Union calls on Irish Labour to lead opposition

Coalition talks are about to take place between Fine Gael and the Irish Labour Party on forming a government, as counting continues to allocate the last remaining seats following the Irish general election. However, the Unite trade union has called on the Irish Labour Party to resist the lure of coalition with Fine Gael, and opt instead to lead a ‘game changing’ opposition coalition of the left. UNITE Regional Secretary, Jimmy Kelly, said today:

This election was about change. Part of the change was unequivocal; the removal of Fianna Fáil from power, but the rest is now in the hands of the Labour Party leadership. The people did not vote for a Fine Gael overall majority.  Their policies on privatisation, austerity and income cuts did not attract enough support and should not now be facilitated by the tired old fall-back of coalition with Labour.

The Labour Party has an historic opportunity to become the official opposition in the 31st Dáil, leading a greatly expanded Left wing coalition.  The prospect of a Left-led government in the short-term has been greatly enhanced. We can now see the end of the old and outdated political divisions that dominated Irish politics since the 1930s.  The political dividing line is no longer determined by Fianna Fáil.  They have been totally rejected and must not be given the oxygen of being an unwanted official opposition.   The dividing line is now between the Left and the Right.

If Labour grasps this opportunity, the party can lead an invigorated Left opposition in the Dáil.  It will have 60 seats in the new Dáil, with Labour at the head, Sinn Féin, the United Left Alliance and other independents in support.  Campaigning with civil society groups, we now have an opportunity to present the Irish people with a real choice, a real alternative to Fine Gael’s programme of austerity, privatisation, and income cuts.

When Eamon Gilmore sits down with Enda Kenny he should explain that the old politics is over.  Labour will not wait any longer.  If Fine Gael wants to form a government, they shouldn’t expect the Left to be a crutch or a mudguard.  They should go to those of similar policy and psychology like Fianna Fáil or right-wing independents.”

Labour should look to the interests of the nation and working people, create new alliances with an expanded Left inside the Dail and social organisations outside.  A Fine Gael-led government would only last two to three years.  Then, finally, the goal of a Left-led government can become a reality.  Labour should hold its nerve.”

Negotiations are currently underway between Fine Gael and Labour Party to form a coalition government.

www.leftfutures.org

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Is The Labour Party About To Miss The Best Chance In Its History

 by George_East on February 28, 2011

  http://www.allthatsleft.co.uk

 From the perspective of most other western democracies the politics of Ireland are pretty strange.  The two historically largest parties, Fine Gael and Fianna Fail, are both parties of the centre-right and yet would not ever consider entering coalition together.   Yes Fine Gael are more urban, more middle class and more socially liberal than Fianna Fail, but on economic philosophy there is little if anything between them.  Their respective origins, in the division between those who accepted the partition agreement of 1921 and those who rejected it is deeply rooted in a country which has a longer historical folk memory than most. 

So instead it is the Labour Party to which Fine Gael is looking as its coalition partner following last week’s seismic election result, which as, has Jackie South has reported,  seen Fianna Fail pushed into a poor third place not far ahead of Gerry Adams’ Sinn Fein.    Indeed the Labour Party, which has only once ever been in coalition with Fianna Fail, has always been the preferred coalition partner of Fine Gael which has never mustered sufficient seats in the Dail to govern on its own.

The Labour Party for the first time in its history is in second place in terms of numbers of seats and in terms of the first preference vote.  Fine Gael is comfortably ahead on both counts – with 36% of the vote (compared with Labour’s 19%) and a projected 75 seats (compared with Labour’s projected 38).  If Labour goes into government with Fine Gael the result will be a coalition government with a huge majority, commanding 103 of the 165 seats in the Dail.  It is what all the pundits expect to happen and coalition talks are underway according to Irish state broadcaster RTE.

Fine Gael are committed to the same policies of public spending cuts and austerity insanity of the despised outgoing government.  There will no doubt be considerable mileage for a while in blaming the last lot for the mess the Irish economy is in, but given that even further spending cuts and/or debt default are very real possibilities in Ireland in the coming years on the basis of the policies being pursued, one would have thought that this is a government to steer well clear of, particularly as a party of the centre left.  Indeed the fate of the Irish Green Party in the election, which saw the entirety of its parliamentary representation wiped out, should be a sufficient lesson in itself for parties of the left.  The polling position of the Lib Dems on this side of the Irish Sea should also ring alarm bells. 

Labour’s position, if it does go into coalition, has added potential for disaster as it is, like the British Labour Party, closely affiliated to the Trade Union movement.   Internal division and even splits in the party could easily follow if it puts itself in direct collision with many of its own members.

Unlike the Lib Dems in 2010 in the UK, staying out of the government would have the added advantage for the Labour Party of enabling it, for the first time, to be the official opposition.  Not only could it position itself to lead the fight against the suicidal economic policies that have been adopted but it could also through the oxygen of publicity afforded to the main opposition party in a parliamentary system permanently marginalise Fianna Fail.  This may be a once in several generation opportunity.  It is a moment in which Irish politics could finally align themselves along the familiar right-left lines seen in virtually every other western country.  

It seems sadly that the prospect for senior Labour Party TDs of getting their arses on the back seats of government limos is just too enticing.

Details of elections for 31st Dáil

Friday 25 February 2011

Summary of Seats Won (Change since previous election)

18  -60

70  +19

36  +16

13  +9

2

14  +8

Total  153   166

www.electionsireland.org

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Just a brief few stats that may be of interest about the left.

The ULA polled  59,423 votes getting around 2.7% of the vote nationally and winning five seats.
(Socialist Party 26,770 , People Before Profit 21,551, Declan Bree and Seamus Healy 11,102)

The United Left Alliance (ULA) consists of three existing political parties, the Socialist Party (CWI)  the People Before Profit Alliance (including Irish affiliate of the British SWP) and the Workers and Unemployed Action Group,^[2] as well as former members of the Labour Party.^[3]

The Workers Party polled 3,056 0.1% of the Vote

Left of Centre Independents polled 55145 votes around 2.5% winning six seats.
(To the List posted last Monday I added in Brian Markham, Sean Connolly Farrell, Robin Wilson, Mick Wallace, Veronica Cawley and one or two others that polled around 200 votes)
(Catherine Connolly may yet win in Galway West)

So over 5% of the vote nationally went Left other than to Sinn Fein or Labour. (that’s assuming I managed to include every Left candidate)
That is around half the vote Labour got in 2007.

www.cedarlounge.wordpress.com

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Ireland – Time to Resist

 On Saturday November 27th more than 100,000 people marched through the city of Dublin to protest against the widespread programme of cuts that affects every aspect of the lives of Irish workers and their families. Savage reductions in public services as well as pay cuts have been in operation for over two years. The loudest call at the demonstration was for the resignation of the Fianna Fáil/Green Party Government. Outside the General Post Office, the site where the Irish Republic was declared in 1916, a loud chant of ‘Out! Out! Out!’ left nobody with the slightest doubt as to the unpopularity of this government. The demonstration was called by the Irish Congress of Trade Unions (ICTU), the national body that unites all trade unions across the country.

The most recent opinion poll places the government parties at 16%, and in a recent by-election the government candidate received just a little above that percentage of the total poll.

Representatives of the International Monetary Fund came to Ireland in recent weeks in order to decide on what money they would loan to the Government, what interest rate they would charge on that money, and what series of cut-backs in living standards they would demand. With regard to the programme of cuts the IMF representatives found themselves in agreement with what the Irish Government had already agreed upon for the coming years. Their economic strategy is to reduce government spending from 35% of GDP which it is today to 3% of GDP within four years, without penalising the owners of banks, financial speculators or property tycoons, and without increasing capital gains taxes or introducing wealth or assets taxes or levying the property of the many multimillionaires who have left Ireland rather than pay any taxes here.

A very severe regime of falling living standards and reduced public services faces the Irish people in the coming decades unless these measures are reversed.

In an earlier indication of the widespread opposition throughout Irish society more than 40,000 students marched through Dublin on November 3rd in the largest student demonstration for a generation. More than two hundred special buses arrived in the capital carrying protesting students from all over the country. The issues raised on the march were threats of rising fees, reduced student supports and graduate unemployment. Yet following this protest university charges were increased by 30%.

Government Ministers and their supporters in the media have been trying to create an impression that the Irish people somehow support the programme of cut-backs. The nation must unite in this time of adversity, they proclaim. The dismal failure of Fianna Fáil governments over the last fourteen years is being clouded by hired commentators and economists in the big lie that everybody lived extravagantly over the period of the so-called boom and that now we have arrived at ‘pay-back time’. This falsehood is exposed by an OECD study produced two years ago that showed Ireland to be the 23rd most unequal society out of 29 developed countries studied.

The largest opposition party Fine Gael, identical to Fianna Fáil except in name, agrees with the current programme of cuts and has a few more of its own to add to the mix, such as their proposal to sack 30,000 public service workers. Unfortunately the Irish Labour Party too has accepted the big lie, but says that it would cut public spending this coming year by €4.5 billion rather than by the Government’s figure of €6.5 billion. All this is on top of the €7 billion that the Government took out in 2009 and the further €7 billion that was taken out in 2010. The Government now. plans to sell off major sections of publicly-owned industry in an effort to raise funds. Electricity, transport, postal services and health insurance are in the firing line. If the cuts did not work in the past why should they work now! Before the arrival of the IMF, trade union leaders had already agreed with the  Government for the implementation of a series of massive cuts over the next four years and had given up on the fight against the cuts that had already been imposed. This betrayal became known as the ‘Croke Park deal’, named after the historic location in which the betrayal was perpetrated. It is the absence of political leadership, combined with the abject betrayal of this current generation of trade union officials, that is making it possible for the Government to persist in its stated task and to remain in office.

One year ago, almost to the day, a general strike in the public services was called by the Irish Congress of Trade Unions. In the largest ever strike across the public sector, over 250,000 workers downed tools on November 23rd 2009. The same demand was advanced. Oppose the government cuts! Shortly after the demonstrators had arrived home from the marches that were held across the country trade union leaders were in talks with the Government agreeing that €1.3 billion be cut from the pay of public sector workers, along with other reductions in the public service. Yet the real power of organized workers was shown on that day. Civil Service offices were closed down, passport offices, the Revenue Commissioners and social welfare offices. Many Local Authority services were suspended. Schools, Colleges of Technology and Universities closed. So too did Dublin City Traffic Control services. Hospitals provided only a limited service on that day, as did the Courts. Swimming pools, museums, libraries, parks, as well as visitor attractions owned and operated by the State were closed. Department of Agriculture officers working at meat factories stopped work, as did customs officers at parts and airports. Off-duty police (gardai) joined their colleagues on pickets outside police stations. Prison officers paraded outside Mountjoy prison in Dublin alongside their work colleagues from other unions within the prison: across the road at the Mater Hospital nurses, oncologists, porters and other staff mounted their picket. Shortly after that, nurses, firemen and police officers (gardai) marched through Dublin in protest against the cuts in public service and the continuing attacks on public sector workers. Meetings of this group – Frontline Services – were held across the country over a period of weeks. Despite the protests of their members a trade union that represents army ranks, PDFORA, was prohibited from participating in these events.

Apologists for the capitalist system in Ireland have been describing the present economic crisis in the country as a classic situation of boom and bust, hoping thereby to soften political opposition by creating an expectation that somehow things will ‘work themselves out’. But they are incorrect. The recurrence of periods of boom and recession is part and parcel of the capitalist system, but there are aspects of the present crisis that are peculiar to the manner in which a boom in Ireland was generated in the early years of this century. The tendency of the rate of profit to fall, leading to a situation where the capitalists cannot realise the full value and profit inherent in commodities that are produced, create periodic crises within the system. Such crises, described by Karl Marx. in Capital as ‘ever-occurring explosions’, are endemic in the capitalist mode of production. But in Ireland other factors aggravated the situation. Financial institutions engaged in a spasm of frantic borrowing and lending. Combined with the sale across the world of new financial products such as hedge funds and credit default swaps, and an  out-of-control expansion of credit with no link to real production, created conditions for the Irish collapse.

Some seven or so years ago Irish banks began a crazy borrowing spree with major international banks. Billions of euro were borrowed. In 2003 alone some 10% of the value of Ireland’s Gross Domestic Product was raised in this way. By 2007 that figure had reached 60%. The money was used to fuel a property and building bubble. Massive sums were paid out for derelict sites on which luxury apartment blocks and shopping malls were constructed. Hotels were built in remote areas of the country where major tax concessions could be secured. Many of these building developments now lie abandoned or uncompleted in remote regions of the country. So many apartments are unoccupied that the Government is considering demolishing them. During the frenzy, bank owners and executives paid themselves enormous salaries and bonuses, even as these same banks were imploding. Industry chiefs did the same. The average pay of Chief Executive Officers in 21 of the largest private companies was €1.1 million in 2007. Two years later this figure had risen to €1.6 million, an increase of 45%.

A clique consisting of bankers, property speculators and Fianna Fáil Ministers pushed the process to breaking point. Planning decisions were secured through bribery; tax concessions that facilitated the accumulation of personal wealth by multimillionaires were introduced. Corruption became endemic. One Fianna Fáil Minister was sent to prison. Others, including, two Prime Ministers (Taoisaigh), were hauled before legal Tribunals to explain their actions. Some years ago oil and gas reserves that were discovered off the coast of Mayo were given scot free to Shell by a Fianna Fáil Minister.

One of the knock-on effects of the credit-based building inferno was to raise the cost of ordinary homes to such an extent that houses in Dublin became more expensive than in London. When property values collapsed, as inevitably they were bound to, creditors sought the return of their money. Irish banks found themselves in serious trouble; some were insolvent. But Irish workers are paying a big price for the profligacy of the rich minority. The Central Statistics Office estimates that today some 77,500 home owners are in arrears with mortgage repayments. 30,000 of these may have to default. Eviction is becoming a serious problem within the country. Huge costs are now also being borne by the middle layers of Irish society.

Friedrich Engels, writing of housing conditions in 1872, said that the growth of large modern cities gives land in certain areas “an artificial and often colossally increasing value”. Even he could not have foreseen the extreme extent of that phenomenon in Ireland in the early years of this century.

After the first hints of the impending crisis surfaced the Fianna Fáil/Green Party Government in September 2008 pledged that the Irish tax-payers would provide whatever funds the banks needed in order to survive. What became known as the ‘bank guarantee’ was introduced; all private deposits, investments and bonds would be safeguarded and guaranteed in full. The potential cost of this measure could reach €450 billion. Ireland’s Gross Domestic Product for that year amounted to €182 billion. In effect a large segment of Irish financial capitalism collapsed, but the State declared that all the existing banks would be maintained as private institutions using public funds as collateral. If the chips were cashed in then the total value of all final goods and services produced within the country for two years would not be sufficient to meet the debt!

Shortly after the decision to support these failing institutions was made a one percent levy on all wages and salaries was imposed. In addition child benefit was cut, Special Needs Teachers were sacked, many old people lost their entitlement to free medical care, and the pupil/teacher ratio was raised resulting in the loss of up to 2,000 teaching jobs. But these attacks on public services were not sufficient to save the banks. Share values collapsed. One bank, Anglo Irish, failed entirely but the Irish Government insisted in shoring it up, to the extent that to date an estimated €30 billion of public funds have been thrown away into this black hole of financial capitalism. The Government continued with its endeavours to find whatever cash that the banks found to be necessary. In early 2009 all public service workers suffered a cut of 7.5% in their pay (this was called a ‘pension levy’!) Out patients in hospital emergency wards were to be charged a fee of €100 for treatment. In January 2010 all public sector salaries and wages were reduced by a further 5%. The crisis did not abate. It worsened.

The country’s banks were massively indebted to international financial institutions, and they in turn were owed billions in unpaid loans that resulted from the collapse in the property market. The Fianna Fáil/Green Party Government again came to the rescue by setting up a state-owned body that would take over responsibility for these unpaid loans, the National Asset Management Agency (NAMA). It would be the tax-payer and not the banks that would have to chase up the defaulters; all this at a further possible cost of up to €80 billion.

Ireland is now affected by three interlinked crises. It faces a fiscal crisis: there is a €20 billion gap between Government income and expenditure. It faces a debt crisis: international banks and financial institutions will no longer lend money to the Irish Government or to Irish banks. It faces a banking crisis: some of the largest banks in the country are insolvent.

Over the past two years Irish banks have borrowed €119 billion from the European Central Bank (ECB), This amounts to around 25% of total lending by the ECB, to a country that represents no more than 1% of the total economy of the 27 countries of the European Union. The right wing political leaders of the dominant countries of the European Union would not allow that situation to continue, with all the implications that it has for the large financial institutions of Germany and France and for the trade of countries within the euro zone. The Irish Government’s continuing inability to solve the problems has led to the intervention of the International Monetary Fund and a loan of €85 billion. The penal interest rate of 5.8% imposed by the ECB and the IMF will cripple the country if allowed to proceed.

The strategy of the Fianna Fail/Green Party government is to take €6.5 billion out of the economy next year, and a further €9 billion in the two subsequent years. All of this is in addition to the €14.5 billion that have been taken out since 2008. The Government insists that money has to be raised by such measures as cutting social welfare payments, reducing pensions, cutting the minimum wage, reducing the pay of all public service workers, increasing tax on low-paid workers, abolishing social supports, introducing new taxes on homes and charges for essential services. The money lenders have been given assurances that their wealth will not be adversely affected by the current crisis. Ireland has one of the lowest tax takes as a percentage of GDP in the European Union, 32.5% versus an EU average of 40.9%.

The savage Budget that was carried through by the Fianna Fáil/Green Party Government, coupled with their Four Year Plan of austerity, constitutes a slash and burn strategy of which the IMF would be proud. They were. The IMF found themselves in agreement with the Fianna Fáil/Green Party Government. There are now some 270,000 fewer people at work in Ireland than there were in 2007. The current official rate of unemployment is 14%. The real figure is far higher as tens of thousands have emigrated in search of work. It has been estimated that the new Government measures will place a further 60,000 people on the dole queues. The trade union INMO (Irish Nurses and Midwives Organisation) estimates that a majority of this year’s 1,600 graduates in nursing and midwifery will have left the country in search of work before the end of 2010. In addition the Health Service Executive, a statutory body responsible for the nation’s health service, has stated that another 1,900 jobs were lost in the past two and a half years. According to the INTO (Irish National Teachers Organisation) one thousand fully qualified primary teachers cannot find regular work, eventhough more than one hundred thousand children are in classes of 30 or more. The Union of Students of Ireland estimates that over 1,250 people are emigrating from Ireland each week.

The introduction of the IMF to Ireland does not change the economic system. The rentier class will continue to speculate in parasitic, financial products, while stock markets devise new methods of making swift monetary gains. The Government pretends that growth is again beginning to emerge in the economy, but there is no real growth here. Capitalism has no answer. Profits are being made, but they are being exported by the multinational companies. More than €32 billion in profits is sent out of the country each year in repatriated profits. Employment in the multinational sector has dropped by 3,000 in the recent period. Growth in that sector alone does not guarantee expanding prosperity as only 10% of the goods and services that support multinationals is sourced within the country. Investment, the lifeblood of the system, fell by 9.5% in recent months. It is investment that drives productivity and jobs. Yet overall investment today is at 1998 levels. Reliance on foreign direct investment will not solve the unemployment problem in the country. Two years ago Dell abandoned Limerick for Poland at a cost of 1,500 jobs. The new foreign companies that are setting up in Ireland, such as Google and Microsoft, are only pecking at the surface of the jobs crisis.

The entire banking and financial sector has failed dismally to assist citizens or small businesses. A rational banking system is necessary in order to sustain industry and the services. But instead of such banks, modern capitalism has created instead a series of gambling casinos where entire pension funds and personal savings are gambled away on international stock markets. It is time to abolish that system. The whole gamut of banks and other financial institutions, including insurance companies, should be brought into public ownership and placed under democratic control. Compensation to previous owners should only be paid on the basis of proven need. The books of all these institutions should be open to public scrutiny so that the huge amounts of money that were made during the years of the so-called boom can be disclosed. The losses sustained by some constituted the gains secured by others. This information must be made public knowledge. The universal bank guarantee, introduced by the Irish Government in 2008 should be withdrawn. Similarly the undertaking by the Government to repay the €85 billion loan to the IMF and the European Central Bank should be withdrawn. The money that is being collected from Irish social welfare recipients and from the wages of public service workers is going towards the profits of the large German and French banks. This process must be halted. The rich should pay in full for the crisis that they created.

There is no solution to the current crisis within the confines of any individual country. The crisis of capitalism is an international crisis. The collapse of Lehman Brothers Bank in 2008 had repercussions for living standards across the globe. At the present time within Europe a number of countries are facing threats from financial institutions.  Greece, Portugal, Italy and Spain are all victims of the same clique of international money-lenders known as the ‘Bond Markets’. Like loan sharks these parasites move from country to country trying to extract the maximum profits from the labour of working people across the globe. The socialist response must be international.

Joe Higgins (centre) Socialist Party MEP above

ULA! “No one would have believed….”

…The United Left Alliance, launched 29^th November 2010.

To download as a PDF (right-click this and select Save As)

Jodie Ginsberg, Reuters’ woman in Dublin, on TV3’s Vincent Browne Tonight on Thursday 25^th November, when asked for her impression of the situation here, said “people are shell shocked”.

They have been for some time, but in little more than two months a close series of ever more powerful shells has burst among us:

• the Central Bank revises the cost of the Anglo-Irish bail-out at up to €34 billion bringing the overall banks’ bail-out to €45-50 billion;
• the deficit to be closed jumps from €7 billion to €15 billion, and this to be done by 2014;
• the €15 billion to be frontloaded with €6 billion taken out in the December budget and mostly through cuts;
• the markets push interest rates on Irish debt to over 9%;
• the state is to be bailed-out by the IMF, the ECB, the EU and some other countries including £7 billion from Britain;
• the four year plan for the €15 billion includes a cut in the national minimum wage and an 11% cut in social welfare;
• default is widely spoken of;
• the €85 billion bail-out entails use of the national pension reserve fund and the cash reserves, these Irish funds going mainly to the banks;
• a rate of up to 5.8% makes the bail-out a rip-off;
• the bondholders are let off.

Fintan O’Toole has tracked this narrative thus:

“Like the sorcerer’s incompetent apprentice, the Government …turned a banking crisis into a sovereign debt crisis, which it then transformed into a crisis of Irish democracy…”[1]

In this litany of lashes the shock of an impending mortgage default crisis, greater than the bank crisis, has got lost along the way. Che Guevara said to Jean-Paul Sartre, probably in 1960, “I can’t help it if reality is Marxist”.[2] An honest scholar like Morgan Kelly, Professor of Economics at University College Dublin, can read like a Marxist simply by telling it like it is. As he does in his Irish Times article of 8^th November[3].

His apocalyptic political conclusion is as sonorously chilling as his economic examination. Were he as specialised in politics as economics his vision might have appeared on the other side of the spectrum. Sounding like the more alarmist, or lazy, persuaders of the far left he spoke of

“…the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America. Within five years, both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party…”

It is possible; the black shoots of fascism are always possible in the fertile soil of a capitalist crisis. What are already there, though only in brittle buds, are some red shoots which are just as likely to grow to fill the trough of despond as any tea leaves hanging to the right. Actually it is more probable that the historic shift from Fianna Fáil will go to a moderate centre-left in the main, at least for a while. It is the seriousness of the crisis that leads Morgan Kelly to assert that “both Civil War parties” will be brushed aside and for something more radical than anything the Labour Party or Sinn Féin would be prepared to provide.

We’d better put aside cathatrophism, though it has never looked more respectable, and for the minute leave the Nazis in the bathroom, just below the stairs. But we should also remind ourselves it is now over eighteen months since Vincent Browne first warned, at the launch of the People Before Profit Alliance’s since underused Alternative Economic Agenda[4], that if the left can’t get its act together and get itself together to present a viable alternative to the people in this crisis then it should just give up and go away.

So, for once it was not hyperbole when the first announcement of the ULA’s arrival proclaimed:

“At a meeting held in Dublin last Sunday, 24th October, involving the People Before Profit Alliance, the Socialist Party, the Tipperary Workers and Unemployed Group, and Cllr. Declan Bree and his local group in Sligo, a historic decision was taken to establish a left alliance to contest the next general election and to take the first steps towards a new, left, anti capitalist formation to represent working people.[5]“

The Socialist Party made its announcement on, appropriately enough, Armistice Day, 11^th November[6]. For all its consideration, restraint and reservation it significantly gave similar prominence as that in the PBPA’s announcement to an eventual higher political and organisational aspiration.

“In pushing for the establishment of a slate/alliance, the Socialist Party argued that it was very important to try to get a fraction of genuinely left TDs elected at the next opportunity. Given that this crisis will continue to wreck devastation for the foreseeable future and the likelihood that Labour will be in power putting the boot into working class people while ICTU sit idly by, three or four left TDs could become a very important focal point for organising struggle against austerity and for the launching of a new party of the working class to fill the political vacuum.[7]“

The United Left Alliance was launched at a well attended rally in the Gresham Hotel, Dublin on Monday 29th November. There’s a good report giving a flavour of the meeting by Mark P on The Cedar Lounge blog site[8], some masterful stenographic minutes from Emmett Farrell on Indymedia[9] and a very visual report on the PBPA site[10]. For many reasons - not least its long delay in arriving - the ULA has arrived in the nick of time:

• an imminent election:
• a crisis two years in without a radical left alternative with any leverage;
• a stunned and momentarily unresponsive populace complemented by a trade union leadership - the one force, in the absence of such an radical alternative, with the authority and means to coordinate a fight back - which has been all too successful in its two decade crusade to remove struggle from the labour movement;
• a mounting crisis reaching its EU/ECB/IMF climax that could conceivably lead to Morgan Kelly’s paradigm shift with only small warring clans of the left to meet it;
• the beginning of new social explorations and formations all over;
• the apparent dominance of the left field by a Labour Party which is so confidently bourgeois that it can announce the renunciation of even symbolic ‘labour movement’ measures such as tax relief on union dues.

Sometimes the first paragraph on the front page of the Irish Times really does record in summary (and translation) the days that are upon us:

“The Government will battle to prevent any increase in the €6 billion adjustment proposed for the 2011 budget and the €15 billion target in the four-year plan as EU and International Monetary Fund (IMF) negotiators arrive in Dublin today to intensify talks on a rescue plan for Ireland.”[11]

The apocalypse awaited after Morgan Kelly and then after the arrival of the IMF faded before the real Apocalypse Now: the actual details of the four year plan,[12] the bail-out[13] and the memorandum of understanding[14] which outsavaged An Bórd Snip Nua. Then the Budget which activated all this[15].That the radical left, or the chief chunk of it, commenced a cautious portion of cooperation within days of these developments is more accident than alacrity on the left. Yet for all that it’s a cause for celebration (or sighs of relief!) and, to be fair to all concerned, some recognition of the unitary need Vincent Browne gave voice to in April 2009.

No doubt the formation of the United Left Alliance has had its messy side and things could have been done better. For a start the name contains a superfluous adjective (a double knot perhaps, to anxiously stress the good intentions?). It almost started on the wrong foot of launching in a non-union hotel (since rectified when the launch was postponed). But these are relatively minor considerations. Declan Bree dematerialising from the list of declared ULA runners between mid and end November was not so minor. The airbrush applied by the ULA to this and the reason for it is not a good start either. One ULA negotiating source said the last minute withdrawal was about Declan Bree’s desire to bring Galway councillor Catherine Connolly & Co. along with him. He was also said to have asked the ULA to speak with The People’s Movement.

The same messiness can be ascribed to the whole decade-long process of unity and regroupment that has led us here and that has involved, to one degree or another, different permutations and combinations of most of the radical left.

One of the imperfections of the current phase is that some additional currents might perhaps have been included - though there is a genuine desire to be open and inclusive within reason. Another imperfection is that there was too much of a ‘top-down’ character to the negotiation and disclosure of the ULA.

‘Building  A Real Political Alternative’[16], a seven point Programme of the ULA was agreed during the negotiations and a Pledge[17], which all ULA candidates must sign, was distributed at the launch. There was some talk of a protocol between the groups to prevent “competitive recruitment” and the gauntlet of paper sellers at meetings, but these don’t seem to have made the final cut so far. There were plenty of sellers and leafleteers at the launch and the SP, SWP and the PBPA had a literature stall each.

There is a history to this process of alliance that colours its outcome so far. Since 2000 there has been a stop-start stumble of conferencing, alliances, separations, negotiation, groupments and regroupments, involving at one time or another almost all of the organised groups on the radical left including Labour Youth and individual Labour Party members. In the 90s an electoral alliance emerged briefly from the water and bin charges campaigns to link the Socialist Party and Seamus Healy’s South Tipperary Workers and Unemployed Action Group, in a harbinger of the ULA.

Since the turn of the millennium some of the world wave of left liaison has lapped these shores. There have been several political alliances of varying life spans: The Socialist Alliance briefly brought together the SWP, Socialist Democracy and independents. Some of these independents (recently described on the blogosphere as “the usual left unity suspects”) are a common denominator along this many-leagued road of leagues. The Socialist Environmental Alliance comprised the SWP, environmentalists and some others in Derry.                 The People Before Profit Alliance consists of the SWP plus various and varying activists, groupings and independents. The Campaign for an Independent Left enfolded at one time the Dublin South Central based Community and Workers Action Group, now in the PBPA, the South Tipperary Workers and Unemployed Action Group, the Irish Socialist Network, and some independents. The rump of CIL is now in the PBPA and still meets occasionally. Last year the SEA in Derry joined the PBPA.

The Peoples Movement is a broad formation of activists close to the Communist Party, dissident Greens and anti-EU-superstate activists (with, interestingly enough Decal Bree among its patrons). The Grassroot Gathering(s) and the Social Solidarity Network are link-ups of the libertarian left. That end of the left, which works well and works well together, is associated now in the 1% Network which brings together the Workers Solidarity Movement and Seomra Spraoí with the Irish Socialist Network and éirígí in imaginative and original activities.

As mentioned, almost all, and more besides, of the above groups and groupings have been engaged in the slow, shaky but secular shift from separation, be it just to send delegates to a conference or all the way to participation in one of the projects. Some came to preach the proper programme; some copied the regroupment model of their parent organisations abroad with the hope of control as well as cooperation. Some have stood away when they should have come on board a decade earlier; some have not been invited when perhaps they should have been.

In relation to the, in my view fair, complaint that the talks to form the ULA could have been more open to others, those in glasshouses should admit to common practice on the left even in unitary initiatives. The organisers of the most recent round of all-left general discussions on unity neglected to invite any of the “the usual left unity suspects” who had been hammering on about it to a fault all along. Actually the ULA proceedings, or the general explorations preceding them, did involve more than the present participants, without final success. (Cllr. Chris O’Leary, for instance, actually attended a PBPA steering group meeting before the PBPA learned in the newspapers that he had joined Sinn Féin.) Besides, after so many false starts and bust ups there is something to be said for a businesslike and thorough transaction between the key players even if that has been done inter apparti. Getting to the ULA itself has been a survival as a glance at Indymedia’s archives will show. No, better not!

There is of course a wider, international history to the current movement towards radical left unity, regroupment and alliances; a zeitgeist that has glided through the European and South American left with bases - and pioneering if  problematic ones - in the English speaking world. On the Continent there have been costly collapses like Rifondazione Comunista in Italy, but also abiding broad formations like Die Linke in Germany, the New Anti-Capitalist Party (NPA) in France, the Left Bloc in Portugal[18] and the Red-Green Alliance in Denmark. Yet the story in Britain (from where much of our own radical left gets its culture and current line) is a sorry one with the disintegration of Respect and the implosion of the Scottish Socialist Party (the latter once a model of pluralism across Europe and for some of those professing left unity here).

This endeavour was part of a thrust to build a new left and a new movement which arose with the ‘anti-capitalist’ mobilisations of the 1990s. Within this again there was an urge to build a new left that would be an alternative to a social democracy that had adapted to, or adopted, neo-liberalism; an alternative to a stalinism which had fallen along with its material walls and to a splintered sectarianism that had arisen from and reproduced the isolation of the far left. There was a desire to reconnect radical socialist ideas with the very class and forces which the left professed to express politically. Within the radical and marxist left there has been a consequent international debate over organisation and programme, between the immediate perspectives of a broad left party or a revolutionary organisation. This has amassed a copious literature, some of which is referenced and linked to in the Appendix below.

The ULA is not in the ‘broad party’ camp as such, and (let us not get ahead of ourselves) is just (what’s with the ‘just’?) an electoral alliance on its first nervous outing. But it is a kind of compromise between those who at least formally take the ‘broad’ approach and those who insist on the need for a tightly knit and explicitly marxist “revolutionary organisation”.

As such it is an achievement in itself of course. The ULA is also a means of facilitating that other new-found aspect of attempting to reconnect with the wider world: contesting elections. Unity is always better but in elections, when the only rationale is to present general politics to an average electorate, standing obscurely opposing organisations separately is absurd. The practice has even been, and for some remains, to stand candidates of radical left parties against each other in the same constituency. Pure madness and scandal-giving to the working people we are hoping to persuade.

On the other hand the presentation of an electoral alliance or slate of candidates represents at least the beginning of a real alternative. There’s no shortage of radical left groups, as you know, but the numerous atoms have been too diffuse to make an impression on the space where an alternative should be. On the one side the cartel parties are all on course for cutting the public finances deficit to 3% by 2014, and, on the other side, an increasingly disillusioned electorate is looking for some actual and authoritative alternate option to austerity. The truth of the cliché oft-mouthed by “the usual suspects”, that the sum of left unity is greater than its parts, can already be seen in the splash created by the media launch of the ULA on 25^th November and the second ULA press conference on 2^nd December. And in the faint but hopeful murmuring of non-aligned individuals, who could have joined one of the constituent parts long ago if they wanted to, expressing tentative support for the new venture. For all its failure to spread its cloak far beyond its original owners[19] the People Before Profit Alliance put some flesh on the concept of an organisation with a radical and active policy but without the need for complete internal agreement: indeed allowing those who disagree on inessentials to argue and organise. The attraction of a formation that genuinely facilitates democracy and pluralism cannot be overestimated.

The significance of the United Left Alliance in responding to the crisis and to the opportunity of shifting allegiances in the electorate, in ‘presenting an alternative’, is not in standing a mass of candidates spread like thin butter across a large slice of bread. It is in the breakthrough offered by getting a half dozen radical left TDs elected and forming a critical platform from which to reach out and build something far bigger. The Socialist Party statement on 11^th November, already cited above, recognised this (my emphasis below):

“In pushing for the establishment of a slate/alliance, the Socialist Party argued that it was very important to try to get a fraction of genuinely left TDs elected at the next opportunity. Given that this crisis will continue to wreck devastation for the foreseeable future and the likelihood that Labour will be in power putting the boot into working class people while ICTU sit idly by, three or four left TDs could become a very important focal point for organising struggle against austerity and for the launching of a new party of the working class to fill the political vacuum[20]“

Joe Higgins echoed this at the ULA press launch:

“The presence of a number of genuine left TDs in the Dáil offering a visible political alternative will be a massive pole of attraction to workers, unemployed and young people, and can become a real factor in the unfolding crisis.[21]“

This is a strategy. It is not being strictly honoured in the actual selection of candidates. The prospect of “three or four” left TDs would indeed be a “pole of attraction” and this is actually less than the six or seven very possible-to-probable ULA TDs. This tantalising possibility is a stepped strategy over time rather than a pretence that an elected radical alternative can arrive nationwide in one fell swoop. 2011 will not be 1918 (Joe Higgins and Fintan O’Toole thankfully have not been shot), and if it was like 1918 the radical left does not have the movement already in place that the radical nationalists had in 1918. The ULA has talked of 20 candidates which could arguably include some who won’t win but would get a good vote.

Yet there is some ‘utterly butterly’ thinking going on. Both the SP and the PBPA have been selecting some candidates with no roots or record and where the relevant vote up to now has been tiny. The ULA press conference on 6^th December[22] was told that the alliance intends to run candidates in, as the Irish Times reported it, ‘at least’ 14 constituencies. If the 14 names released[23] were the limit, and this is not clear, it would be possible to shrug and get on with it even though only half that number have a real chance of being elected.

The lessons of the 2009 local elections, when hyped hopes sometimes resulted in ‘also ran’ results, haven’t been learned. Quite apart from this public confirmation of weakness and dismissability, some amount of funds and a fair amount of footwear were spent for very little return. A degree of ‘have a go’ élan is a risky luxury when some of the ‘banker’ (oops!) candidates are not guaranteed (oops again!) election at all and will need all hands on deck, and not running the flag up various masts, to make it.  You can pour candidates into the ring if you have bulging war chests. The PBPA for instance has little or no money. There must still however be room for adding on really good candidates that might suddenly come forward. The surprise addition of the admirable Conor MacLiam to the slate, campaigning husband of the late and great Susie Long, was a minor sensation.

This is a conservative position and I may be proved wrong. There is an argument for ‘raising the standard’ in a constituency so distant from a target seat that no campaigners would travel to it anyway. But what about diverted funds? Though the SP candidate Cian Prendiville would on paper seem a candidate with too few roots in Limerick yet, it is clear from his performance at the ULA launch that he is charismatic enough to make a mark in the right circumstances.

The expected ‘historic shift’ in the electorate could be a two-edged sword. The leftward edge of the charge for change could see a rush to Labour, as the nearest available alternative place on the port side, which might pitch some of the radical left contenders out of the boat. In an analysis of the Donegal South West by-election results Paddy Healy questions this prospect:

“The dog that didn’t bark in the night– Left Independent Thomas Pringle was not squeezed by Sinn Fein or by Labour. In the Spring-tide election Labour squeezed all other lefts. In the coming election the defection from Fianna Fail will be so great that left independents and Sinn Fein will be lifted as well as Labour. This augurs well for the prospects of the recently launched Unite Left Alliance in the next election.[24]“

It is by no means just in the electoral field that cooperation must replace competition on the left. In the trade unions the scattered forces of the left  - as well of course as the general weakness of organised labour - have allowed a pathetic and pampered peerage to prostrate the unions and propose in perpetuity, as the only ‘alternative’ they perceive, a depreciated partnership that has been passed over by patrons and politicians. In the face of impending catastrophe - not my words[25] - the trade union leadership, or sections of it, has begun to stir into life. It could be only another false beginning like February, March, November and December 2009[26]. Yet the preparatory machine, authoritative call and turn out for Saturday 27^th November contrasted clearly with the meagre mobilisations wrought by the left throughout the year. So clearly that we surely must be open to some lessons in intra-left pooling and modesty and extra-left orientation to union and community structures however professionalised they are at present.

And during the very birth of a new alliance the same old crap repeats itself even among the allies, reminding us how far we have yet to travel.  One organisation, a ULA participant, through a closely associated campaign, organises a march for Budget Day. Another organisation in the ULA, along with almost all the rest of the radical left, wishes to organise a joint left march for the same time. This might have been sorted out in the spirit of the new departure. But after some diplomatic efforts the original organisers refused to convert the march to a joint one and ‘the rest of the left’, in those circumstances, declined to row in behind the original march. The march therefore proceeded with the weight of just one section of the left, while the ‘rest of the left’, rather than gritting their teeth, raising their eyes to heaven and joining the march anyway, held a separate rally at the Dáil before the march arrived there. ULA? Ooh alors! The ULA will either merge the train sets or derail[27].

The disembarkation of Declan Bree before the ULA even left the station reduced it not just quantitatively, from four allies to a less impressive three, but qualitatively. Not in the quality of decisiveness, obviously, but of political genesis. The alliance is consequently open to the unfair and inaccurate jibe of being a trotskyist mother and child reunion and loses one avenue into other areas of the left. Nevertheless people from some currents have actually and understandably muttered about being left out. There is no objective reason why at this time redundant wrangles cannot be closed or relevant ones discussed with other groups with a view to inclusion.

The Irish Socialist Network has already left an alliance (the old Campaign for an Independent Left) with the South Tipperary Workers and Unemployed Action Group, the Community and Workers Action Group (now a Branch or two of the PBPA) and the rump CIL independents now in the PBPA. But moods mellow in five years. The ISN are formally for left regroupment, have supported the pluralist Scottish Socialist Party and produce intelligent and attractive literature. Their usual candidate in Finglas began in 2004 with a decent 6% but that has fallen dramatically since. There is no reason I can see why the ISN cannot be part of the ULA.

The Workers Party are not the kettle of fish they were. It is not clear how strongly they still adhere to social partnership (an issue for the ULA) or even to coalition with conservative parties. The Workers Party have an abiding interest in elections; a rather enthusiastic one - often standing against components of the ULA and often gleaning low votes. They have a seat on Cork and Waterford city councils. In places personal relations between the WP and the ‘far left’ have greatly improved. Their new magazine ‘Look Left’ has been nothing short of astonishing in its outreach even to the ‘trotskyist’ left. In some ways ‘Looking Left’ is in appearance, content and intent a little reminiscent of ‘Gralton’ and ‘Z’ magazines in the 80s. It carried a short but positive report of the arrival of the ULA.

The Communist Party doesn’t stand in elections these days but they continue to punch above their numbers with a consistent flow of events and communication (not least their alternative economic document An Economy for the Common Good) and a well-tended periphery. They have an interesting-looking post-Budget public meeting in Liberty hall on 14^th December. The CP would probably look to the People’s Movement which itself would have umbrella aspirations to rival the ULA. The CP’s Socialist Voice[28] carried an unusually scathing criticism of the ICTU’s pathetic down-playing preparation for its photo-shoot on 29^th September. Maybe it was felt that this needed to be balanced with an unusually explicit go at the far left because the report also castigates the “infantilism of the ultra-left”, naming the Socialist Party and the SWP. Now some of this was as fair comment as that on Congress, but some of it was inaccurate and contrived. The penny has not dropped everywhere that the days are long gone when - talk about exclusions from joint initiatives - the 1970s May Day organising committee could blithely refuse the application for membership of the SWM, and that “the ultra left” these days have trade union positions, local authority councillors, media celebrities and an MEP! Nevertheless I don’t see why - apart from realpolitik - the CP cannot be seen as a potential part of an even bigger amalgam with the UAL and others.

Eirígí are new enough and post-date much of the unitary saga. They are probably the most ‘revolutionary socialist’ grouping to come out of mainstream republicanism since the Independent Socialist Party in the 70s (excepting the small scale magazine Fourthwrite) but it is not clear how far they have come from republican methods. They are refreshingly rebellious and their grá for direct action seems to have been taken up recently, under the rubric of civil disobedience, in far wider circles including some hitherto opposed ULA components. Eirígí also have a Dublin city councillor who has recently painted herself into history. I see no insuperable difficulty for Eirígí or the UAL in being on a common slate.

There are other individuals and groups that can and should be invited into the ULA (as opposed to waiting for them to call). The ULA may as yet seem a little narrow for them to consider, but as the Labour Party takes office and puts on John Gormley’s  straitjacket there must be a breaking point for some of those in the Party who have campaigned up to now for action against austerity.

Dublin North Central is a left congested area. Cllr. Ciaran Perry’s organisation has votes, a record and a presence in the constituency though they nurture little affection for those in the ULA. Nevertheless since the local elections there has been cooperation on Dublin City Council and respect between Ciaran Perry and the two PBPA councillors, Joan Collins and Bríd Smith. It is not clear if Maureen O’Sullivan TD of the Gregory group identifies ideologically with the left but the legacy she represents is still strongly associated with grassroots opposition. It may be too much of an ‘ask’ to see these strands link up, and there may be real differences of principle in the way, but at a time when even children’s allowance is on the block there’s a big fence, you’re on one side or another, and funny things can happen.

Thomas Pringle stated firmly to the PBPA in May that he had given a pledge to his supporters that he would not be joining any organisation or party. But look how things can change, even the in short time since May. And the ULA is at present but a mere electoral alliance (though there was a little more to the feeling in the Gresham on the 29th November than that).

The ULA is timely too because it is just one of a blossoming array of new coordinations, coalescences and potential centres of leadership responding to a crisis in which more and more are realising that “a totally new approach is needed.[29]”

From the extraordinary Claiming Our Future event to the ‘Budgetjam’ collective of journalists and media activists, from Fintan O’Toole hitting the campaign trail as a very effective rallying public figure to The Second Republic group, from student marches to ‘Pots and pans’ protests[30], from school student walk outs to the comedians’ demo, a hundred flowers are blooming. Many of them are genuinely spontaneous, a sure sign of a real movement. On 6^th December the Irish Times carried a roundup of the many and varied protests planned for Budget day at the Dáil[31] and the Cedar Lounge blog site outlined the several newborn political parties[32]. There are now as many corresponding X-point alternatives as there are such initiatives and all to the good; all to make up a big answer to the interminable TINA talk.

The Dublin Council of Trade Unions has temporarily stood down its particular brave attempt to provide such a coordinating centre, ‘There Is An Alternative’, crushed between ‘the upper and nether millstone” of the ICTU’s focus on Claiming Our Future and the formation by some on the left of their own alliance, the ULA. The DCTU sought to encourage a coalition of unions, community organisations, campaigns and parties against the cuts. Some of this work is already covered by the union-based ‘Defend Ireland’s Communities’ campaign. But the DCTU also sought to add a political dimension in its own seven-point alternative which aimed at the possibility of an all-left alliance to present an alternative electable, even majority, bloc, including the Labour Party and Sinn Féin. This welcome ecumenism extended a new embrace to the far left just as the far left was finally coalescing on the premise of an alternative to the left of Labour.

A left alliance of the Labour Party and all to its left may be a non-runner with the right of that spectrum[33] as much as the left. It is a diminishing prospect the more the sharpening crisis blunts the edge of the Labour response and the more the narrowing options for capitalism squeezes all parties committed to capitalism into the same basic policies (a 3% deficit in a four/five year time span; public sector “reform”, and so on). But it gives rise to a question for the left of how to relate to those along the line of this spectrum who put forward an all-left alliance in all sincerity. It seems to me that if some senior trade union activists, for instance, are moving into a newly open criticism of the ICTU’s passivity, and also displaying a new willingness to work with the far left , that to simply reject an alliance with  Labour - an alliance that has an ever receding likelihood of actually happening - is counterproductive. It is not just “left bureaucrats” who contemplate an all-left alliance. In the above mentioned Donegal analysis Paddy Healy says, “A Labour/Sinn Fein/Left majority may yet be possible on the numbers.”[34] This is put as an implication not a prescription. However Seamus Healy has spoken in the past of such an alliance as an aim, even during the South Tipperary Workers and Unemployed Action Group’s participation in the Campaign for an Independent Left. For sure, time and a tide since then have floated Labour way outside the twelve-mile-limit, as discussed below.

Whatever the experience of social democracy elsewhere we have not had a right social democratic or social-liberal government here. The issue of coalition is still one of coalition with an avowedly conservative party. In France, for instance, the coalition debate on the left has been about alliance and government with the Socialist Party and not Chirac or Sarkozy. It seems to me that a similar debate here, about participation in a Labour-led, all-left alliance, can be expressed through our traditional debate on coalition with Fine Gael (or Fianna Fáil) and, now, on support for austerity. Rather than saying a curt ‘no’ to the notion of an all-left alliance we could say ‘OK, if Labour (and Sinn Féin) give a pledge that they will not go into coalition with Fine Gael or Fianna Fáil and oppose the cuts, the bail-outs, the privatisations, etc., they will thereby have a place in a left alliance and be colleagues in a basic resistance programme’. There is not a chance they (Labour anyway) would give such a pledge. But that raises a question for leftwingers in the Labour Party (and Sinn Féin too) who are critical of Congress for not fighting austerity but members of a political party which will administer austerity.

Of course people will live with all kinds of political contradictions if it suits them. And Labour is looking at times like the alternative, even challenging Fine Gael, and the only show in town to be part of. Time moves on though. As the crisis deepens and the state is sown into the IMF/EU ‘deal” the Labour Party throws off with stunning candour any pretence of being an alternative. On Saturday 27^th November, the day the ICTU rallied thousands to its slogan (the weakest of the day), ‘There Is A Better, Fairer Way’, Eamon Gilmore addressed a pre-budget seminar of Labour Party activists. He told them, “If Labour comes into government in the spring we will not be able to press a button and rewind the 2011 budget. No more than we can reverse any of the past 13 Fianna Fáil budgets or the blanket bank guarantee or Nama.” He said Labour had opposed such Government decisions “not only because they were wrong, but also because they were irreversible” (my emphasis). “The politics of promises is over”, he said, and that Labour would set out its budget proposals the following week based on an adjustment of €4.5 billion. “We know that there will be decisions that we have to take that will be deeply unpalatable.” Joan Burton told the forum her party had never advocated “burning bondholders” or “sovereign default”[35]. In the following week Labour sought to move away from this consensus and into a clash of rival budgets with Fine Gael: a clash of “adjustments” of €4.5 billion versus €6 billion!

John Gormley’s Dáil angst[36] about sleepless nights may have brought a bucket of ridicule on his head but I wonder how much of the laughter was a nervous response to the grim truth within his remarks. If Eamon Gilmore didn’t feel a chill from Gormley’s perfectly plausible lament for the straitjacket in which all those who accept the 3%-€15 billion-IMF-EU-market parameters (including Gilmore’s Labour Party) find themselves, he must have been wearing an extra woolly to keep out the meteorologically cold spell.

So the shift to Labour and the squeeze which that promises on left candidates, with local Labour newsletters already presenting former left independent activists as trophy recruits, crashes against this candid shift to the right by Labour, so visible to anyone who reads  newspapers or looks at television news programmes. Between Paddy Healy’s ‘enough votes to go around’ collapse of Fianna Fáil and Labour making space by rushing to the starboard side, the ULA could have as fair a chance electorally as it does organisationally and agitationally.

To my knowledge, the words ‘Sinn Féin’ weren’t uttered once, from platform or floor, at the 29^th November rally to launch the ULA. This could be because Sinn Féin is not easy to pin down at the moment. The radical left customarily speaks about a new left alternative to the left of Labour and Sinn Féin. Let us put aside for a minute whether Sinn Féin would be interested in being in an alliance with what they would regard (for the time being) as much smaller forces; the ‘national question’ and the difficulties that Sinn Féin’s organisational culture might present (what about the organisational culture of the present participants, I hear you say). Sinn Féin are taking a far more combative oppositional stand than Labour, distancing themselves from the cartel parties in the arc of austerity. Sinn Féin has made rebuffed calls for an alliance with Labour[37] and some members also see their natural allies on the far left.

It looks though that at this time the party wants to present ’sinn féin’ as the alternative or at least get back to when it could do so. The strange move of Gerry Adams to Louth can be interpreted (as it is actually presented) as a dramatic and audacious bid to capture the leadership of, or a leadership position in, the opposition to austerity.  Again people can carry contradictions around with them all the time but it must begin to become apparent that this noble offer is too contradictory from someone who is transferring from actually (not aspirationally as in Labour’s case) administering austerity in Stormont. On the other hand Stormont is these days one of those faraway places for the Southern electorate and the prospect of a coalition this time with Fianna Fail is rather theoretical. Nevertheless it is all practical enough for the ULA to keep Sinn Féin at arm’s length and for Sinn Féin to disregard the ULA as in any way necessary. Most of those voters opting for a left alternative in the coming election will not grasp the ULA’s criticism of Sinn Féin and both will be straight rivals for votes on the same end of the field.

The 2nd December Red C poll could indicate something other than a solo run by Gerry Adams. Despite previous complaints that he is a liability down South and in RTE debates, he could be positioned to lead a Sinn Féin resurgence as it emerges after all as a left alternative to Labour separate to the ULA and other left candidates. With Sinn Féin rising to 16% in the Red C poll, from 7% in the 2007 general election, the Donegal South West result (a massive 40%) while not repeatable nationally in scale is not merely a local aberration either. Support for Sinn Féin jumped by five points to 16% since the previous poll two weeks before and made them, for Red C, the third largest party! Labour’s support dropped from 27% in the Red C poll carried out on 21^st November to 24%[38].Was Labour ’s support reduced by its public and repeated tack to starboard  during  those ten days? It’s still early and Labour may lose support to it’s left by it’s (even if less brazen) ‘no change’ assurances[39]. Anyway Independents/Others, that’s ULA territory, saw a rise in support of three points since 21^st November to 11%. This category got 9% in the 2007 general election. So a new united face on 29^th November did no harm.

The 29^th November rally to launch the ULA was a short interlude for celebration. The room stood to give Joe Higgins an ovation. That evening Joe embodied what had been accomplished and the spirit to give it a real go[40]. Already we saw from the attendance in the Gresham ballroom what a prize is there once the left got (or began to get) together: that many people who would not join, or even work closely with, any one of the groups alone, will flock to a common front that sinks differences, pools resources, respects disagreement, co-operates and facilitates real participation.

Eddie Conlon, speaking as a member of CIL, and as an independent supporter of the PBPA, said he viewed the ULA as about more than the main organised groups in it. He regarded the rally as a highlight of over thirty years of political activity. He said he could testify as an independent that the two main groups had made a real effort to find agreement and set the alliance in motion. He spoke of the need to build the ULA as a real project; to develop structures.

All this can be lost, of course, but need not be. It is as sure as night follows day that disagreements, misunderstandings, strokes and irritations will come, and soon enough. But we must - unless they are about absolute essentials - swallow hard, get through them, keep our cool, accept losses and lost internal votes along the way.

This alliance must grow too, and deal with others fairly and squarely. It must be open and proactive about inviting other forces in. It must have structures and regular meetings that allow supporters to participate and it must have clear lines of communication and information to all supporters. If individual supporters, not members of a constituent group, cannot have a structured and influential role in the ULA, with meetings to attend where reports are given and their voice is heard, and if they are only offered auxiliary leafleting, postering and canvassing tasks, the project will ultimately fail.

Ann Marie Hourihane, writing whimsically in The Irish Times on 6^th December, on bad omens for these times and that cedar in Meath which has sundered in two, remarked, “Irish history is rich in sunderings as well - look at republicanism, or left-wing movements, or Ronan and Yvonne.” That’s hard to deny! Why should it be different this time (he says, glancing guiltily back at the SLP)? Well, maybe the seriousness of the situation will instil sufficient seriousness to keep the split off the agenda for a while. Sure, didn’t Ronan and Yvonne get back together again?

Appendix 1

A selected bibliography from the international debate and discussion on the marxist left around unity, left regroupment, a New Left, left alliances and organisation (in particular ‘broad parties’ v. ‘revolutionary organisation’).

Website page: Socialist Perspectives (part of the Marxsite website)

Pamphlet: Alex Callinicos, The Anti-Capitalist Movement and the Revolutionary Left (SWP, March 2001)

Journal; Links (DSP Australia, No 23, January-April 2003). Contains a compilation of then recent articles debating left unity.

Journal: International Socialism (Issue 97, December 2002). Contains some of the articles in Links 23, above;

Journal: International Socialism (Issue 100, September 2003) Includes the full article ’The broad party, the revolutionary party and the united front: a reply to John Rees’ by Murray Smith.

Journal: Murray Smith, ‘Some remarks on democracy and debate in the Bolshevik Party‘, Links No.26, DSP Australia, July 2004.

Internet article: ‘Phalanxes Are Bad‘ by Phil Hearse (November 2007)

Blog posting: Posted on Socialist Unity blog , 27th April 2007, Murray Smith, ‘The Radical Left in Europe’.

Blog posting: 18th December 2008; Alan Thornet, ‘What Kind of New Organisation Do We Need?’ A Contribution to the discussion on organisation between former members of the SWP, Socialist Resistance and others who were involved in a process of regroupment after the Respect split.

Blog article: Putting the “Russian questions” on the back burner”, ‘The Unrepentant Marxist‘ blog by Louis Proyect 21^st November 2009;

Journal and Internet article:  David Packer, Revolutionary organisation and its relationship to building a broad left party, International Viewpoint, January 2008,

An example of the case from the other side would be this piece from Louis Proyect:

Journal debate: 1.  International Socialism, No 120, October 2008, Alex Callinicos, Where is the radical left going? 2. International Socialism, No 121, January 2009, François Sabado, Building the New Anti-capitalist Party Alternative versions of these two articles can be found in International Viewpoint, November 2008,

Article: Daniel Bensaid, Notes on recent developments in the European radical left, International Viewpoint, December 2009,

Journal and internet article: Paul Kellogg, Leninism: It’s not what you think, Socialist Studies, 5(2), Fall 2009 and the Australian Links journal,

One of Chris Harman’s last short pieces, on the New Anti-Capitalist Party in France

Document: ‘Building left unity out of the wreckage’ (January 10th, 2010), a document from Socialist Resistance on the left after the various attempts to found a new left in Britain, 

In Britain following on from the ‘No2EU’ alliance a new electoral alliance called ‘The Trade Union and Socialist Coalition’, (TUSC) was established which stood candidates in the British general election. Largely a Socialist Party initiative, Bob Crowe is a supporter, but no trade unions as such are involved. The SWP has joined.

References

[2] Contat, M. & Rybalka, M.A., The Writings of Jean-Paul Sartre, Northwestern University Press, 1974.

[3] Kelly, M., ‘If you thought the bank bailout was bad, wait until the mortgage defaults hit home’, Irish Times, 8^th November 2010.

For example he says,

“September marked Ireland’s point of no return in the banking crisis. During that month, €55 billion of bank bonds (held mainly by UK, German, and French banks) matured and were repaid, mostly by borrowing from the European Central Bank.

Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act. The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.

With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.”

If this is not quite Marxism it is knowledgeable and radical analysis.

[4] http://www.peoplebeforeprofit.ie/node/86

[5] PBP Newsletter, 27^th October 2010,

[6] Hey, this is a reference to peace, not a dig at the SP’s hostility to republicanism!

[7] http://www.socialistparty.net/elections/537-united-left-alliance-to-challenge-at-general-election

[8] http://cedarlounge.wordpress.com/2010/11/30/report-on-united-left-alliance-launch-november-29th-november/

[9] http://www.indymedia.ie/article/98008&comment_limit=0&condense_comments=false#comment275943 (5^th December)

[10] http://www.peoplebeforeprofit.ie/node/459 ; There’s also a report of Richard Boyd Barrett’s outline of the ULA after the launch on RTE television’s Frontline programme here ; also on Indymedia Diarmuid Breatnach has posted a personal account of the meeting and which has begun a discussion thread: http://www.indymedia.ie/article/98371&comment_limit=0&condense_comments=false#comment275958

[11] Irish Times, Thursday, 18^th November 2010

[12] Irish Times, Thursday, 25^th November 2010: minimum wage cut by €1; social welfare cuts of €2.8 billion over

four years; 25,000 less in the public service by 2014; tax net begins at pay €3,000 lower; 10% cut in public service

starting pay; water charges by 2014.

[13] Irish Times, Thursday, 29^th November 2010: 5.8% interest charge on the bail-out; €17.5 billion of the 485 billion to come from Irish funds, €10 billion of which is to go to the banks; no change in 12.5% corporation tax; revenues from sale of state companies must go to pay debt; EU involvement in review of registered employment agreements.

[14] Irish Times, Thursday, 2^nd December 2010: further cuts over €15 billion if targets not met; a total of €6 billion in social welfare and public sector cuts, including pensions, required; a Bill to increase the retirement age; detailed monthly, quarterly, and weekly financial, banking and fiscal reports and data be provided to the commission, the ECB and the IMF; targets for privatisation of ESB and Bórd Gáis.

[15] Irish Times, Wednesday, 8^th December 2010: the lowest paid into the tax net; tax hikes for low-middle earners; €1 an hour off the minimum wage; €8 cut in weekly unemployment benefit; similar cuts in carer’s and disability allowances; €10 cut in child benefit for first and second child; third level registration up to €2,000; the health budget cut by a further €700 million; low-middle public sector pensions cut; €50 transport fee for primary pupils; total estimated ‘fiscal adjustment’ for 2008-2014 of €30.4 billion.

[16] http://www.unitedleftalliance.org/programme-of-the-united-left-alliance-building-a-real-political-alternative/

[17] http://www.unitedleftalliance.org/candidate-pledge/

[18] The editor of the Left Bloc newspaper, Mariana Carneiro, is speaking at a PBPA public meeting on the IMF,

Europe and the economic crisis on 15^th December in the Unite hall, Abbey Street, Dublin.

[19] Cf. Rory Hearne, ‘Why should we be paying for the mistakes of bankers, developers and politicians for the next 25 years?’ Irish Times, Tuesday 12^th October 2010

[20] http://www.socialistparty.net/elections/537-united-left-alliance-to-challenge-at-general-election

[21] Joe Higgins, ULA press launch,  25^th November - Irish Times, 26^th November 2010

[22] Deaglán de Bréadún, ‘United Left Alliance to run in 14 constituencies’, Irish Times - Tuesday, December 7, 2010, http://www.irishtimes.com/newspaper/ireland/2010/1207/1224284926765.html The ULA also said they strongly supported the call by the trade union Unite for a one-day general strike against the Government’s austerity policy.

[23] (Dublin West); Clare Daly (Dublin North), a councillor; Séamus Healy (Tipperary South), a councillor; Gino Kenny (Dublin Mid West), a councillor; Séamus O’Brien (Wexford); Mike Murphy (Dublin South West); Cian Prendiville (Limerick City); John Lyons (Dublin North Central); Annette Mooney (Dublin South East); Conor Mac Liam, husband of health services campaigner the late Susie Long (Carlow-Kilkenny), and Brian Greene (Dublin North-East).

[24] November 27^th, http://paddyhealy.wordpress.com/

[25] “Despite the collapse, those who brought it about …are busily exploiting this devastating catastrophe to re-engineer our economy and society according to an even crueller blue print which more effectively reflects their interests.” Jack O’Connor SIPTU President, 24^th November 2010, http://www.siptu.ie/PressRoom/NewsReleases/2010/Name,11990,en.html ; “There is no map to the future only a set of staging posts on the road to perdition. They will continue to extract ever increasing levels of interest on Irish Government Bonds as long as the current cycle of terror continues”. Jack O’Connor, 29^th September 2010, http://www.siptu.ie/PressRoom/NewsReleases/2010/Name,11960,en.html

[26] Their follow-up to 27^th November, of a lobby of TDs (are they kidding?!!) on one issue, the minimum wage, is a classic Congress side-tracking and demobilising tactic worthy of the petition that replaced and retired the tax marches and of the programme of local and sectionalised non-cooperation (and lobbying of backbenchers!) that substituted last January for the resumption of the public sector strikes when ICTU’s ‘unpaid leave’ deal was rejected.

[27] This sorry state is set to continue it seems with two ‘broad’ anti-cuts campaigns,  the Right to Work Campaign and the ‘rest of the left’ christening their campaign ‘noto6billioncuts’. A third campaign, the 1% Network, overlaps with the latter.

The algebra of left jostling would confuse anyone, and sometimes that confusion is not unintentional. It confuses even the paper of record, as you can see from this report: http://www.irishtimes.com/newspaper/ireland/2010/1206/1224284847867.html. Each of the three mentioned left collections had semi-separate convergences on the Dáil on Budget evening. The ‘rest of the left ‘ rally (noto6billioncuts) has morphed through the wonders of modern technology into a United Left Alliance rally (it wasn’t) in this film of it on Dailymotion: http://www.dailymotion.com/video/xg0fr9_united-left-alliance-rally-dublin-budget-day-protest_news

I may be confused myself at this stage, but as I understand it the left managed to have an all-left rally at the O’Connell Monument after the ICTU march on 27^th November. This was not the ULA but a wider collection which had been meeting to organise for the ICTU and the Budget day events. This collection, which I think is now being styled the ‘noto6billioncuts’ campaign organised the Budget night Dáil rally at six o’clock minus the Right to Work Campaign which had its own march from Parnell Square to the Dáil at 7 o’clock. The 1% Network marched to the Dáil from their spot at the Wolfe Tone monument but to join the 6 o’clock ‘noto6billioncuts’ rally which they helped organise. (How is the head? I am probably confusing you more at this stage and myself too maybe). It is not all black and in bits: though the 6 o’clock rally was formally wound up by the cathaoirleach , Joe Higgins, before the 7 o’clock march attained the Dáil, the march did share the same platform lorry and sound system and some overlap of speakers and speeches. Different cathaoirleach. This material base of cooperation was matched by the eventual mood of camaraderie in the cold as the regiments got all mixed together on the field of action.

[28] Socialist Voice, November 2010, http://www.communistpartyofireland.ie/sv/04-demo.html

[29] http://transitiontownsireland.ning.com/forum/topics/thought-for-the-day?xg_source=activity

[30] http://www.irishtimes.com/newspaper/breaking/2010/1205/breaking12.html?via=mr

[31] http://www.irishtimes.com/newspaper/ireland/2010/1206/1224284847867.html

[32] http://cedarlounge.wordpress.com/2010/12/06/the-new-parties-and-where-they-are-at/

[33] Alliance with the ULA is far from the mind of this Labour councillor, as is any notion of socialism: http://richardhumphreys.blogspot.com/2010/11/united-left-alliance-would-wreck.html

[34] http://paddyhealy.wordpress.com/ and  Paddy says on The Cedar Lounge (2^nd December):

“Clearly, my earlier prediction that Labour +Sinn Fein +lefts could have a numerical majority is being borne out. And this is before the budget! After Jan 1, there will be reductions in the pay cheque, the welfare cheque and the occupational pension cheque. We haven’t seen the bottom of the Fianna Fail collapse yet.” http://cedarlounge.wordpress.com/2010/12/02/the-polls-volatile%E2%80%A6-too-volatile/#comments

See also Helena Sheehan, http://www.facebook.com/hsheehan.

In an extrapolation of the Red C poll, Political Reform.ie said on 2^nd December 2010,

“These figures would also raise the possibility of a left-leaning coalition government especially as ten of the seats in the Independents and Others category would be assigned to left wing candidates such as Seamus Healy, Catherine Murphy, Joe Higgins and Richard Boyd Barrett.”

http://politicalreform.ie/2010/12/02/december-3-red-cirish-sun-poll-fianna-fail-facing-annihilation/#more-1539 )

The prospect of a “left” government had reached the Sunday Independent by 5^th December, as a portent of ruin of course:

“The spectre of a Labour and Sinn Fein-led government, with the support of independent socialist TDs, is now uncomfortably close to reality, according to the latest analysis of voting intentions…Now, detailed analysis of an opinion poll published during the week, and seen by the Sunday Independent, has highlighted the distinct possibility that Labour and Sinn Fein could form a new government with the support of a majority — but not necessarily all — of up to 15 independent TDs.”

[35] ‘Gilmore says “the politics of promises is over”‘, Irish Times, Monday, November 29, 2010

http://www.irishtimes.com/newspaper/ireland/2010/1129/1224284370968.html

[36] John Gormley, Dáil Eireann, 30^th November , 2010:

“It has been stated by Deputies on the other side that the Opposition has been placed in a straightjacket. That is an apt analogy in more ways than one…I have no doubt Deputy Gilmore will sit in my place next year, looking up at the Sinn Féin Deputies who will be criticising him non-stop. All Deputy Gilmore will be able to say in reply, just as we have said, is that he has no choice but to act…Deputy Gilmore will be faced with that lack of choice which will eat him up inside. I wish him well but there is much awaiting him.”

http://debates.oireachtas.ie/dail/2010/11/30/00019.asp#N96

[37] http://brianwhelan.net/post/296824935/labour-rejects-sinn-fein-coalition-plan

[38] http://www.insideireland.ie/index.cfm/section/news/ext/fiannafail001/category/1084

[39] Vincent allows for this too (Irish Times, 8^th December 2008):

“The diving and ducking over policy decisions, the frenetic determination to say nothing at all that will alienate any segment of voters, the driving opportunism, the cynicism of it all. It could do them damage, bring them back to about 15 per cent of the vote and reduce their seats to 30 or less, with Sinn Féin and the Left Alliance gaining at their expense.”

http://www.irishtimes.com/newspaper/opinion/2010/1208/1224285024338.html

[40] Dermot Connolly was unable to attend the launch. He would have been gratified. His contacting, convening and conversation have been central at certain points along this path to coalescence.