Archive : ISG Pamphlets : Even More Unemployment - The Case Against EMU

The case against EMU

Alan Thornett

The European Union today - still inadequate for its own pretensions

So why is integration so important to the ruling classes of Europe? Today the EU, with 15 member states, represents the largest single unit in the world economy. It has a GDP of about six trillion US dollars against five trillion for the USA and three trillion for Japan. It has a total population of about that of the USA and Japan combined. However, as a trading block, in a highly competitive world, it remains inadequate against its main rivals North America and Japan. It is unable, for political reasons, to punch its economic weight. The US and Japanese ruling classes have advantages which the multiple ruling classes allied within the EU cannot match. They have a single leadership, totally dominant currencies, lower social spending and multinationals on average bigger and more competitive than Europe. Tokyo and Washington dominate and politically lead, their power blocks - even a unified Germany and its powerful currency cannot do this in the EU. The EU at its present stage of development, prior to the full implementation of the logic of Maastricht and Amsterdam, is a common market with many (and increasing) features of a nation state. The deepening competition between the power blocs within the global economy is not therefore a battle of equals at the present time. It is the need to resolve these problems which lie behind the Maastricht and Amsterdam treaties and the drive for a European super-state. The successful introduction of the European Monetary Union (EMU) - the single European currency - is a prerequisite for that.

New Labour and EMU

In Britain the issue has torn the Tory Party apart, reducing it to rump of feuding factions. It has divided the labour movement, with the TUC in full support of Maastricht, and thereby inhibiting the fight-back against unemployment and the defence of the welfare state. The election of new Labour, however, has provided the dominant pro-European section of British big business with a government far more willing to do its bidding on Europe.

Despite equivocations, mostly for the consumption of the Murdoch press and the Tory right, Tony Blair and new Labour are fully committed to European integration and its flagship (EMU). Blair’s close relationship with Clinton does not represent an alternative strategic approach to that of European integration. That relationship is based on his wish to emulate the American Democratic Party as an alternative to Labour’s social democratic past and to follow the model of deregulation that Clinton and his predecessors have presided over. Labour is fully prepared to go into EMU with all the consequences for the welfare state - Health, Education, pensions and benefits - which are involved. In fact preparation for EMU has been the cornerstone of Labour’s economic policy since it came to office. This was behind the handing over the control of interest rates to the Bank of England (ending such government control is a requirement of EMU) and was one of the reasons for the acceptance of Tory spending limits for Labour’s first two years of office. These measures led Britain to qualify economically for entry into the first round of EMU. Blair has chosen, however, for political reasons, not to take up this option and attempt to enter EMU at this point.

Blair has two problems: how to win a referendum on EMU, with opinion polls currently running 60-40 against him, and how to enter it and keep Rupert Murdoch (and the Sun) on board for the next election. They are difficult problems. Murdoch is a committed opponent of EMU from the point of view of the Tory right. It is hard for Blair to avoid a referendum given the high profile election pledge on it - other than including it in his next election manifesto, which would give the Tories a platform. Blair therefore holds fire but stands committed to enter EMU as soon as he judges he can surmount these problems. Big resources are already being put in to changing public opinion by persuasion, and if that doesn’t work the frighteners will be brought out and people warned of the ’dire consequences’ of staying outside the forthcoming EMU zone.

EMU will be launched on January 1st 1999. Eleven states have qualified by a combination of repeated cuts in public spending and fudging the criteria at the edges. The exceptions are Britain, Greece, Denmark and Sweden. The problem now is not whether to launch the EMU or whether the technical questions can be solved, but how to launch it, as a stable currency, rather than into a crisis. This is a major problem given the turbulence in the currency markets and the crisis in the Asian economies. It would be a disaster to launch it just before a recession, which may well happen. But the huge expenditure of political willpower which has driven the project this far remains in place.

Despite the determination of the key Governments, there are serious problems with the success of EMU, beyond economic stability. Public opinion remains deeply divided in all the main countries of the EU, as can be seen once again by the relatively narrow result in the recent Danish referendum on the Amsterdam treaty. EMU, however, cannot be allowed to fail from the point of view of its key backers. It is a crucial touchstone for showing in practice the possibility of transcending the established nation-states and creating a truly European ruling class with its own institutional framework or state. EMU therefore represents a crucial watershed - a turning point or a stumbling block - for the future of the EU.

But even more even than that. The European Union is an integral part of an increasingly globalised world economy which has given renewed impetus to the formation of large, competing trading blocs. Intensified global competition between ever-larger multinational companies has resulted in a desire to secure larger home markets, common currencies, and for an institutional framework for the concentration and rationalisation of capital. If the restructuring is to be fully realised it requires federal institutions through the introduction of EMU. Globalisation is leading to greater integration within the European Union on the one hand and the emergence of economic power blocs on the other. The EU is a preparation for the more effective competition with the economies of the Pacific Rim and a North American Free Trade Area (NAFTA) dominated by the USA. It is an integral part of a world increasingly dominated by international capitalist institutions such as the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the Multilateral Agreement on Investment (MAI). These institutions are the driving force of the world-wide neo-liberal offensive against the working class, promoting economic and financial deregulation, privatisation and labour flexibility.

The origins of today’s European Union

It is useful to look back at how today’s EU evolved in order to understand its development today. Early moves towards European integration were a product of post-war politics in Europe. Several factors shaped thinking at that time. After the end of the war, and the occupation of Eastern Europe by the Red Army, western governments wanted a bulwark against ’communism’. The result was the cold war and the practical expression of it was the North Atlantic Treaty Organisation (NATO), which was formed in 1947.Active military confrontation with Stalin (who now had the bomb) was not an option and the cold war developed. From the beginning NATO was dominated by the political and military power of the victorious, post-Yalta USA. This created controversy from the start. The aim of most western European governments was to move towards some form of European integration to avoid another war caused by the historic competition between the main European powers. Germany was willing to follow its own variant of this path because its post-war politicians wanted to demonstrate a break with the past. It also represented the best prospect for an eventual ending of military occupation and for reunification with the GDR. The problem of US involvement, however, would not go away.

The main conflict over US involvement was with France, which under De Gaulle, developed its own agenda as a response. Its project was to enmesh a weakened and divided West Germany into a European framework for rebuilding Europe as a new economic, and eventually political, power with itself at the centre. It wanted to rebuild a Europe that would be able to stand up to the economic power of the USA, not become dominated by it. De Gaulle therefore rejected NATO, and France has remained outside it, developing its own independent nuclear weapons. De Gaulle later vetoed Britain’s membership of the Common Market in 1963 since he did not want, as a member, a country which remained staunchly atlanticist and therefore potentially an American Trojan Horse. British imperialism, as De Gaulle understood, generally opposed the French policy and continued to maintain its strategic alliance with the USA. He was also concerned that the divisions within the British ruling class over the Community would not fit in with the maturing Franco/German alliance which dominated the Common Market. The controversy over the role of the US in Europe was a potentially dangerous conflict of interests, but for the USA at that time the needs of the cold war, and combating so-called Soviet expansionism, were its primary concern.

It was on the basis of this less than unified situation that the first building blocks of European integration were put into place. The European Coal and Steel Community was formed in 1951. The Treaty of Rome which formed the European Economic Community (EEC), known as the Common Market, was signed in 1957, with France, Germany, Belgium, Italy, Luxembourg and the Netherlands as members. In 1968 the EEC became a customs union abolishing export duties between member states. Edward Heath took Britain into the Common Market in 1973, along with Denmark and Ireland. In 1975 Harold Wilson won a "Yes" vote in the referendum on membership against a "N0" campaign led by Tony Benn.

By now French attempts to contain Western Germany by institutionalisation were increasingly at odds with the strength of the West German economy. This reality had influenced the French view on British membership since the growing weight of West Germany would be somewhat diluted by British membership. By the end of the 1970s France, still outside of NATO, had developed its own diplomatic independence and military capability (the Force de Frappe), avoiding to some degree the patronage of the USA. Meanwhile, the US became less enthusiastic over European integration as it saw the emergence of a potential rival block, although it remained its best option for global stability. In any case the world was changing. From the oil crisis in the mid-1970s Europe had to fight its corner with Japan and the USA under conditions of international recession and increasing international competition. Factors which would increasingly shape the developments of the European project.

The Single European Act

By 1979 German and French pressure had created the European Monetary System as a counter to the destabilising effects of the ending of the post-war Bretton Woods agreement which recreated fluctuating exchange rates. This established the D-Mark indisputably as the anchor currency of the Common Market. But more than that it represented a change in the relationship between France and West Germany. Since the formation of the Common Market, France had been the dominant partner. This now changed with the balance of influence swinging towards Germany and the D-Mark. 1979 also saw the first direct elections to the European Parliament.

By the mid 1980s it was clear that the aim of the dominant sectors of the European big business, which were driving the project forward, was far more than what the Common Market had originally represented - a common customs union. The Common Market had evolved and the structures already in place were substantial. There was a Council of Ministers - a series of committees which met regularly and were the effective legislative body of the Community. There was the European Commission with executive powers. There was the European Parliament, the only elected body, which rubber-stamped the decisions of the Council of Ministers and the Commission. There was a high court - the European Court of Justice - with powers internal to the member states. Behind all these developments lay the idea of a continent-wide superstate which could play a more effective world role. It would provide not only a larger home market for the big multinationals but the right framework for restructuring European capital in response to the increasing tempo of capitalist globalisation and intensified competition.

The Singe European Act of 1985 was an extension of these developments, but a very substantial one. It changed the name of the Common Market to the European Community (EC). It was the project of Jack Delors, now the President of the Commission. It was a huge step towards the formal creation of a political rather than just an economic union. The Act strengthened the Commission and introduced qualified majority voting and the Council of Ministers. Margaret Thatcher signed it because she was attracted to market deregulation elements but soon regretted it and has been attacked by the Tory right for it since. Although the EC still had no tax raising powers it could impose budget contributions on the member states.

What she found hardest to accept, however, was the Exchange Rate Mechanism (ERM), which emerged from the Act. The ERM fixed the relationship between European currencies within an agreed band of fluctuation and was in effect the first step towards a single European currency, although, of course, not presented as such at the time. The Thatcher government was forced into the ERM after a time with disastrous consequences.

The Maastricht Treaty, EMU, and the drive for a superstate

The Single European Act led to an even bigger step - the Maastricht Treaty. The Treaty was signed on January 1st 1992 and the European Community became the European Union, (EU). It was a major development coming at the time of two other huge developments in world politics - the collapse of the Soviet Union and the reunion of Germany. Maastricht represented the biggest step yet, toward a European superstate. Its most important proposal was the introduction of EMU by January 1999, controlled by a European Central Bank. The Maastricht Treaty also contained provisions for the development of a common foreign and defence policy and the Social Chapter. All this would take place under conditions where a reunited Germany was poised to increase its economic power still further. It not only had the strongest economy and currency but also had a combined population, after unification, of over 80 million.

The central issue, however, was EMU, which would take fiscal policy away from the member states, one of the most important elements of national economic policy. EMU more than any other factor challenges the post-war European consensus on welfare provision and any remaining adherence to the notion of full employment.

The principle mechanism of EMU was the convergence criteria for membership of it which sets governments a limit of 3% of Gross Domestic Product (GDP) on public sector borrowing and imposed limits on inflation and the national debt. It seriously undermined the ability of member states to conduct fiscal policy and would put control firmly into the hands of an unaccountable central bank mandated to maintain price stability under the inflation criteria. The regulatory function of the member states would be dismantled leaving "sound money" as the sole regulatory criteria.

But it was more than that. A key factor inhibiting the European Union in competing with North America and the Pacific Rim is the existence of the welfare state in Europe. North America and the Pacific Rim generally don’t have it. European employers have long regarded it as a millstone around their necks as far as international competition is concerned. It is no accident therefore that EMU, as it is constituted, with the convergence criteria and then the Growth and Stability Pact - the legal framework under which EMU will function - attacks the welfare state.

Under the Pact, the convergence criteria will continue in force after the launch of the single currency in January 1999 in the form of stability criteria. A ceiling of 3% of GDP on government borrowing will remain and a breach of the criteria will result in huge fines being levied on countries which breach it, forcing them to get back into line on spending. Fines can amount to many billions of pounds - up to 5% of GDP - and will have the effect of compounding cuts in social expenditure, unless there is sustained economic growth. In turn, one of the effects of this is to guarantee capitalist profit margins by curtailing higher taxation that might be imposed in order to repay high government borrowing. EMU is therefore a mechanism for continuous attacks on the welfare state.

EMU will not just regulate exchange rates but lock them permanently together. After that, if the Euro is to remain stable against the dollar and the yen, economic fluctuations between the different members states must be reflected directly in rising unemployment and cuts in government spending rather than in changes in the relative value of currencies.

Labour flexibility - the right of employers to sack workers - is fundamental to this if fiscal regulation is ruled out in controlling the economy. With 20 million already unemployed in the EU, fiscal policy controlled by bankers will further institutionalise unemployment, as it did during the inter-war years, and could create huge depressed regions. Alternatively, depending on the degree of the free movement of capital, production could move to areas of relatively cheap labour, thus undermining bargaining power and trades unions in the best organised countries. All this will hand over far-reaching powers to the Council of Ministers to determine the fate of countries that take part in the single currency.

At the same time the single currency is as precarious as previous attempts to regulate the currencies of the EU. The European Exchange Rate Mechanism (ERM) went into crisis under the impact of recession, and the pound was spat out of it on Black Wednesday after the Bank of England spent a huge £18 billion of its reserves trying to maintain its value. There is little to show that the same pressures will not descend on EMU and the Euro.

The Amsterdam Treaty strongly builds on Maastricht and moves the EU further towards the structures needed for a European superstate. It can be summarised as follows: qualified majority voting is introduced into a number of new areas: customs, research data, health policy, unemployment, equal opportunities and social policy; the primacy of EU law over national law is strengthened; the Schengen agreement becomes a part of the basis of the EU; the role of Europol, the European police force, is strengthened moving towards becoming a sort of EU FBI; further moves towards a common foreign and security policy through the setting up of an embryo Foreign Office called the "Political Planning and Early Warning Unit", and further progress towards a common defence policy.

The trades unions and Tory right

What has made the campaign against EMU in Britain difficult has been the paucity of discussion in the unions on the issue. Direct responsibility for this lies with the TUC, its position on EMU has if anything been to the right of new Labour. The root of the TUC position has been their shift to the right over the past ten years and their refusal to confront the employers in this country in any way whatsoever - social partnership is the watch-word of John Monks and co. From this position they look towards what they define as a social Europe and hope to pick up crumbs from the Social Chapter, meagre as they are, which they are not prepared to fight for here. The position of the TUC in Britain has been underpinned by the European Trades Union Congress (ETUC) which has a similar line. This has meant that across the EU the fight against EMU has been mainly led by the rank-and-file, the unemployed and the socially excluded.

The TUC position has had a major effect on the debates and policies of the individual unions, with opposition to EMU being a minority view within the unions despite the patently obvious effects that EMU will have on jobs and the welfare state which the unions - and the TUC - purport to defend.

A number of unions, even some of the biggest, have policy decisions which are in one way or another against the EMU or the social effects of its introduction. These include UNISON, the T&GWU, the RMT, NATFHE, the FBU and the PFA. But how these policies are interpreted, pursued or even publicised is another matter altogether. Few will make any serious challenge to the TUC. The issue petered out at the 1997 TUC Congress when the movers of key resolutions withdrew them. There has been far more of a challenge at local level, both among trades union branches, regions and trades councils - but the hand of the TUC is always there to try to dampen things down.

This situation has been a major factor in the way the xenophobic Tory right have dominated the media with their particular nationalistic brand of opposition to EMU. The agenda of the Tory right has nothing to do with a progressive working class agenda against EMU, which is based on the defence of jobs, the welfare state and the environment. Their opposition is based on reactionary demands of the defence of the nation state and racism of the worst kind. The task of socialists in Britain is to pursue a working class agenda on Europe whilst remaining completely separate from the Tory right. The role of the unions, however, has a crucial impact on that debate. It makes the debate within the unions over EMU of particular importance.

The reorganisation of capital across the EU and the role of the multinationals

At the end of the day the completion of EMU, if achieved successfully, will create a Europe which meets the needs of the bosses and European and trans-national capital. It will set these interests firmly before social or environmental considerations. It will build a Europe on the principle of international competitiveness within the global economy. It will be an expression, at the European level, of the processes of globalisation on a world scale. Big business interests have been at the forefront of the European agenda from the start. For the last 15 years a major driving force behind European integration has been the European Round Table of Industrialists (ERT). They represent 45 of the largest European trans-national companies including BP, Daimler Benz, Fiat, ICI, Nestle, Phillips and Unilever. The ERT was a major force behind the Maastricht treaty and campaigns for further deregulation within Europe and for global free trade [there is much more detail on the ERT in a later chapter]. The ERT sees the EU as a crucial driving force in the "globalisation" of the world economy in which huge institutions, multinational financial and corporate players straddle many continents and power blocs. Ford or Honda of Europe are still American or Japanese companies, not British, German or Spanish. Courtaulds may employ more workers abroad than in Britain but it is still a British company. This does not mean however, that these companies always operate according to national, or state interests, on the contrary they adopt some global imperatives. Typically, they will shift production around the globe, closing down plant in Europe and North America and shifting tens of thousands of jobs to Asia.

Big employers in the USA and Britain are major players in this globalisation process and they demand a policy of neo-liberal deregulation, labour flexibility and free trade on a global scale. The recent biggest ever bout of mergers of leading European companies is only a hint of what is to come. Just five of these mega-mergers in October 1997 were worth 135 billion dollars! And the trend continues. Investment banks have forecast that there will be only room for one or two financial centres, one or two telecommunications companies and three or four international airlines after EMU. The battle for supremacy in these key sectors is mainly between Britain, Germany and France. An example of the conflicts to come is the recent linkup between British Nuclear Fuels and the nuclear division of Siemens of Germany to float a new joint company. This was recognised by France’s flagship nuclear industry (the biggest in the world) as a threat to its own strategic link with Siemens and their new jointly developed nuclear plant, designed for the dependent world and about to be purchased by Turkey. At the present time the big German corporations are on the rampage again with a spate of mergers and take-overs. The most significant being the recent merger between Chrysler and Daimler Benz, which is effectively a take-over by Daimler Benz. At the same time BMW are fighting with Volkswagen for Rolls Royce.

Some leading multinationals might survive this competition for a period, but rationalisation in the face of huge American and Japanese conglomerates will be an essential feature of EMU. Will France allow some of its weaker industries, but nonetheless national flagships enterprises, to be absorbed by British or German conglomerates? Would Britain allow the City to play second fiddle to Frankfurt? Would Germany allow British Telecom to dominate the field inside Germany, where it is already making some advances? This raises the issue of historically determined national interests and nationally based capital - which is about far more than such symbols as the Queen’s head on the British currency. Are we on the verge of overcoming historically determined social formations and antagonistic national capitals, with the creation of a radically restructured European ruling class? Another factor promoting division over EMU within the British employers is the weakness of some other more traditional sectors. Apart from the cutting-edge industries above, the position of much of British manufacturing industry looks very weak, either in or out of EMU, with many of the best companies likely to be taken over (like Rover) and/or closed down or just driven to the wall by more efficient competition. This explains why some less productive sectors, and not just small businesses, are opposed to moving beyond a common market towards EMU which will facilitate this process.

Thus, while New Labour is attempting to recreate itself as a modern capitalist party, basing itself on an alliance between the working class and the most dynamic sectors of big capital who wish to forge ahead with European integration, the Tories are attempting to construct an alliance composed of the most reactionary and nationalist sectors of small business people, landowners/farmers, reactionary sections of the state apparatus/civil service and the generally smaller, less competitive sections of manufacturing industry.

At the same time the development of the Multilateral Agreement on Investment (MAI) - which represents the worlds 29 richest countries and is designed to "liberalise" international investment - will take this process forward at an even greater rate. It is the biggest plan yet by big business to control national economies and push forward the neo-liberal agenda and drive up profitability.

The response of the European working class

The working class across Europe has not just sat back and allowed all this to happen. The last two years, since the end of 1996, have seen a major rise in the level of class struggle in a number of European countries - though not in Britain. Most of it in opposition to measures taken to achieve EMU or to reorganise capital. 1996 saw the biggest wave of struggles across Europe for decades. These actions followed the huge confrontation in France, at the end of 1995, when millions of workers struck and millions demonstrated across the country in almost every town - even more than in May 1968 - against the Juppe plan. The first big defeat for EMU was the defeat of the Juppe government - first on the streets and then at the polls. It is not so much the immediate settlement that was reached, but the fact that it happened at all. Behind all the calculations of the employers lies the balance of class forces and the combativity of the working class in defending its gains. Academics may muse over the end of the working class (it makes good propaganda) but the employers know differently and the last two years in Europe have made the point clearly enough.

There have been mass strikes in Italy, Portugal, Belgium, Greece and Spain over the past two years, whilst France maintained the highest level of struggle in Europe. Last October in Germany, 150,000 metal workers struck, and the biggest workers demonstration since the Second World War forced the Kohl Government to withdraw proposed cuts in welfare. At the end of November there was a general strike in Greece, while 80,000 French lorry drivers paralysed France with road blocks demanding more pay, early retirement and tax concessions. They won a massive victory. There were more strikes in France involving transport workers, communications workers, energy supply and theatre workers. Last year two million workers struck in Spain against austerity programmes. There were demonstrations of 210,000 in Madrid and 100,000 in Catalonia. In Greece 80,000 small farmers cut the country in half by blocking the roads with their tractors, demanding subsidies and tax concessions. Most of Italy came to a halt when millions struck in support of engineering workers demanding higher wages.

It was these struggles which lay behind the success, last year, of the European Marches Against Unemployment, Poverty and Social Exclusion. Marches were organised from most EU countries to converge on the Inter Governmental conference in Amsterdam. Some of them were on the road for two months. They culminated in a massive demonstration in Amsterdam on June 14th which represented a real social mobilisation against the Europe of the Maastricht Treaty. It was also a truly international demonstration with delegations spanning the continent and with the majority of demonstrators coming from outside of the Netherlands. The marches and the demonstration were exceptional when it is considered that they were opposed by most of the European trades unions, led by the ETUC.

The European Marches had a delegation of 3,000 on the demonstration in November 1997 at the so-called "Jobs summit" in Luxembourg. More importantly the Euromarches became the springboard for the occupations and direct actions which took place in France and Germany at the beginning of 1998. Job centres, government buildings and even high class restaurants were occupied in France by unemployed people protesting about increasing unemployment and social exclusion. In Germany 250,000 people were mobilised in a series of protests in 250 towns and cities. All these events again represented a real social movement developing against the Europe of the bosses.

The EU "Job Flexibility" and the Cardiff summit

The biggest issue within the EU is the existence of 20 million unemployed, a figure which continues to grow. There are also 50 million people living below the official poverty line. The answer to this problem, which emerged from the Amsterdam summit, was increased job flexibility! It was a debate led by Tony Blair. Consequently the decision was taken to make the issue of job flexibility - and hence the employment conditions which determine job flexibility - a matter for the EU as such and not just the member states. It was a major development of policy.

The "Jobs Summit", in Luxembourg in November 1997, was called to begin to implement this decision. That resulted in the decision to develop a common policy on employment conditions - new management techniques. A set of detailed "employment guidelines" were adopted for implementation in the member states and to be monitored at Cardiff and subsequent summits. The details were in an EC document entitled "Commission Adopts Guidelines for Member States Employment Policies for 1998". The section entitled Modernising Work Organisation says the following:

"The social partners are invited to negotiate, at the appropriate levels, in particular at sectoral and enterprise levels, agreements to modernise the organisation of work, including flexible working arrangements, with the aim of making undertakings productive and competitive and achieving the required balance between flexibility and security. Such agreements may, for example, cover the expression of working time as an annual figure, the reduction of working hours, the reduction of overtime, the development of part time working, lifelong training and career breaks.

"For its part, each Member State will examine the possibility of incorporating in its law more adaptable types of contract, taking into account the fact that forms of employment are increasingly diverse. Those working under contracts of this kind should at the same time enjoy adequate security and higher occupational status compatible with the needs of the business."

These proposals are to be regularly monitored:

"The implementation of the Guidelines will be regularly monitored under a common procedure for assessing results: each year from now on, the Commission will report on the implementation by the Member States of the Employment Guidelines. The Commission may present updated Guidelines and - if necessary - propose recommendations to individual Member States.

"The aim is to achieve a convergence process of Member States’ employment policies and to create for employment the same resolve as that applying to economic policy, so that targets can be jointly set, verified and regularly updated."

Tony Blair supported the proposals with relish. His answer to achieving a stable Europe under EMU is the export of British job flexibility to the rest of Europe. He made progress towards this goal one of the aims of the British presidency.

Racism, Schengen and Fortress Europe

The Schengen Agreement was signed in 1985 but did not enter into force until 1995. After Amsterdam, though, it becomes integrated in the Treaties. Strictly speaking, from the day when the Amsterdam Treaty comes into force there will no longer be a Schengen Agreement. Then its regulations will be ordinary parts of EU law.

The aim of Schengen is to fulfil the requirement of the Treaty of Rome to facilitate the free movement of labour (people) inside the Union (free movement exists between Belgium, Luxembourg, France, Germany and Holland) and close borders towards the outside world. This is driven by ideology as well as practical politics. In a Europe controlled by EMU the free movement of labour is necessary if depressed regions and countries are to be avoided. Unfortunately, whilst free movement within the EU is to be welcomed, with the language barriers it is not a practical proposition for large numbers of people, particularly non-professional people. For example, the degree of movement which takes place in the USA following jobs could not be achieved in Europe.

The strengthening of the perimeters of the EU to the outside world, however, is another matter. That is Fortress Europe and that is a mixture of ideology and twisted politics. Those who the Schengen Agreement describes as "aliens" are to be kept out both for racist reasons of national identity and to prevent so-called "economic migration" - people moving to places where they can get a better standard of living or stop being hungry.

At the same time not everyone from outside the EU is treated the same. It is based on the racist ’white list’ principle under which applicants from countries such as the USA, Canada or Australia are treated in one way and applicants from third world countries or Eastern Europe are treated in another.

Although Britain has not signed the Schengen agreement it is not through objections to its racist content. Neither the former Tory Government or new Labour object to the strengthening of the border controls around the EU or the strengthening of internal control of immigration, they were and are fully in favour. What they object to is the abolition (or even relaxation) of internal borders within the EU! The Tory Asylum and Immigration Act, however, is modelled on Schengen principles and involves restrictions on asylum seeker right up to imprisonment in centres such as Campsfield.

But it is not just the strengthening of external borders which is involved in Schengen. To compensate for the loss of internal borders it involves a huge increase in the means of internal control. For this the Agreement contains an arsenal of new measures. This includes the Schengen Information Service (SIS) - the building up of huge personal data banks - in a data system that has got more than 30,000 terminals across member states and with data protection massively ignored. Large amounts of personal information including fingerprints and documentation are included in this system. The system of personal control for an asylum seeker in Europe is therefore being tightened heavily through Schengen. At the same time the principle of "the first asylum country" gives every other member state the right to deport applicants without even reading the application. This automatically excludes anyone refused the right to stay in one member state applying to any other. In other words exclusion or expulsion from any member state means exclusion from the EU itself.

Another interesting fact is that almost 90% of the persons registered in the SIS are unwanted immigrants, among them many asylum seekers. This part of the Schengen Agreement therefore represents a major extension of the powers of the police and the immigration service, making arrest and harassment across borders much easier. These measures have been condemned by both Amnesty International and the UN High Commission for Refugees.

The Schengen Agreement, however, deals with more than immigration. It deals with what it calls public order issues across the member states. A manual produced last year by the working group on police and security under Schengen says: "Co-operation pursuant to this manual shall apply, inter alia, to events where large numbers of persons from more than one country congregate in one or more Schengen state and where the main purpose of the police presence is to maintain public order and security and prevent criminal offences. Examples of theses are sports events, rock concerts, demonstrations or road blockades." The implications for those struggling for a different kind of Europe are clear enough.

Schengen gives the police more freedom to act. Police officers get the chance to cross borders legally and without having to ask. For instance, German police may operate in Denmark without having to ask for permission when they are looking for someone suspected of a serious or not-so-serious crime. Schengen here represents one of the biggest steps towards a "Euro-FBI".

There is a broader issue as well, and that is how state racism in the form of immigration controls underpins racism in society and strengthens the far right. It is a circular process. Measures which start partly as a concession to the right then have to be strengthened to keep the right, the far right and the xenophobes happy. For all these reasons socialists should oppose Schengen and all it represents.

The Socialist Alternative to the Bosses’ Europe

We are opposed to EMU for the reasons outlined above. EMU is the spearhead of a major attack on the post-war gains of the working class across Europe. We are not anti-Europe in any way. We are internationalists and stand for the unity of the European working class, but we are against the kind of Europe being built under the treaties of Maastricht and Amsterdam. We are for the dissolution of the EU or Britain’s withdrawal from it. It is a capitalist club designed to organise the restructuring and concentration of capital to the advantage of the bosses. But our aim is not a capitalist Britain outside of the capitalist EU. We want a socialist Britain in a socialist Europe. That’s why, at every stage, socialists have to propose a Europe-wide internationalist and socialist alternative to the bosses’ project and attempt to make this into a practical perspective.

We cannot abstain on Maastricht or Amsterdam or EMU on the grounds that they will give us just another form of capitalism, or that the global neo-liberal offensive will in the end have the same effect. Every capitalist offensive takes a specific, concrete form. Today, it is the Maastricht process and the drive towards EMU which is the most direct form the attack takes - and it is connected directly to the global offensive. These treaties represent a co-ordinated attempt to drive down public spending through the imposition of the EMU convergence criteria, undermining the post-war gains of the working class and running down the welfare state.

That’s why we support a referendum on EMU. We would prefer a referendum on the EU itself. But if EMU, a crucial stage of European integration, is to be put to a referendum then we will campaign as hard as we can for a no vote. The preparation for a "vote no" campaign needs to begin now. We need a progressive "no" campaign separated from the Tory right and based on the working class case against EMU.

We reject the right-wing nationalist arguments. We do not defend the nation state. We stand for a United Socialist States of Europe, east and west, in solidarity with oppressed peoples of the world. This objective would be a major step towards a world socialist government. We are internationalists who recognise that the material conditions created by capitalist globalisation are only capable of solving the pressing problems faced by the impoverished peoples of the dependent countries if the profit motive and capitalist market is overthrown and replaced by a rational and fair redistribution of the world’s resources. This struggle must include the cancellation of the "third world" debt.

The Europe we want today is one which prioritises the needs of the working class against profit in Europe and internationally, promotes full employment, a shorter - 35 hour - working week, welfare for all, equality and liberation for women, fights racism and defends the environment. We want a real "social Europe" and that can only be a socialist Europe. This does not mean we abstain on battles taking place within the bosses’ Europe, as we do not abstain on important questions or reforms within the existing nation states. We are for the best deal in the EU for the workers and demand the levelling up of all conditions, wages and services, to that of the highest level. In the same way that we are against the national capitalist state and its property forms, similarly we are against a European capitalist superstate and have a perspective of socialist revolution. In order to build such a Europe we are for workers’ solidarity in fighting for their demands against the capitalist trusts and multinationals. We are for building direct links and joint struggles between workers across Europe. This is what the European Marches were about. This is what the Amsterdam demonstration was about and this is what the Cardiff demonstration is about.

Alan Thornett was a leading activist in the car industry for many years and is a leading member of the ISG, British Section of the Fourth International, and sits on the Executive Committee of Respect.

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