Link to this page: https://www.socialistparty.org.uk/issue/236/25106
What We Say
Euro - Workers Will Pay The Price
A NEW word - europhoria - has been invented by the media to describe the launch of the euro.
Now that notes and coins have been introduced without any major mishaps in the 12 countries of the eurozone, pro-euro sections of the media are predicting a positive future for the single currency.
The Mirror even described the euro as 'sexy'. Euro supporters are hoping that 'euro creep' (gradual familiarity with the currency) will shift public opinion in Britain in favour and speed up a decision about joining.
The technicalities of the euro's launch may have gone smoothly but its future is likely to be much rockier. The economic backdrop is one of global recession affecting every part of the world simultaneously.
The Socialist has consistently argued that economic, social and political pressures will eventually cause the euro project to break down. The fact that the single currency is now a concrete reality doesn't change this perspective.
The tumultuous events in Argentina graphically expose what could happen to the euro in the future when economic policy is pursued regardless of the economic interests of individual capitalist states.
The Argentinian peso was pegged to the dollar for ten years. This drastically reduced inflation. But maintaining the peso at an artificially high level contributed to a deep recession which has lasted nearly four years.
Faced with mass movements of workers and the middle class, the Argentinian ruling class have been forced to abandon the link with the dollar and devalue the peso in the hope of manufacturing an economic recovery and restoring social stability.
It's not difficult to imagine the capitalist representatives of one of the weaker eurozone countries - rocked by economic crisis and mass protests - deciding that their own interests are better served by breaking away from the euro and reintroducing their own currency. The existence of a single currency means that this would have a dramatic and profound effect, but it would not make it impossible.
As in Argentina, it will be the workers who will pay the highest price in Europe - in or out of the single currency.
This break-up scenario is not the one that British bosses envisage. The majority of British capitalists, particularly those in the export sectors are in favour in principle of adopting the euro at some stage. They fear that multinational investment will be reduced if Britain stands outside and that economic decisions will be increasingly taken by eurozone countries with the British capitalists on the outside.
They are however divided about when would be the right time. They are particularly worried about entering with the exchange rate too high. The launch of the euro has brought some of these differences to the surface again and they are reflected in the division between Blair and Brown. In Italy the Foreign Minister has resigned over the euro, showing how these divisions can have political repercussions.
It is impossible to say whether a referendum about adopting the euro will take place in Britain next year or even in this parliament. But the euro will continue to be an important political factor and could, if Blair risks a referendum, even become the catalyst for workers' growing discontent about the economy, the state of public services and issues such as the renationalisation of the railways.
Whatever happens to the single currency, the European Union remains a capitalist club against the interests of the working class. We are in favour of European unity - but unity of the workers in defence of their rights and for a democratic, socialist federation of Europe.
In The Socialist 11 January 2002: