Left Opposition in Germany
For implementing its prestige project, the fiscal contract, Germany’s government has to change the constitution and therefore depends on the votes of the opposition.
Negotiations on this issue will take place until 13 July, and DIE LINKE will join them on different levels.
Why we cannot Support the Fiscal Contract
The fiscal contract explicitly proposes a constitutionally embedded debt limit for all participating nations. We disapprove of this for the following reasons:
- First of all it is economic reasons that speak against the contract: It will become more difficult to perform an active stabilization policy as well as a formative policy of finances, for example in order to induce a socio-economic turn
- Secondly, the fiscal contract stands for an assault on democracy, since national parliaments are obliged to cede their budget rights, in case they breach the wrongful requirements of the contract
- We also disapprove of the contract for socio-economic reasons: The principle of competition among states will not lead to a budget consolidation through the introduction of higher taxes on assets and corporate profits, but will be primarily executed at the expense of employees and the recipients of state subsidies.
The fiscal contract is a threat to the European integration process. It will be the reason why many countries will associate the EU solely with austerity cuts and the deconstruction of democracy.
Taking all this into consideration we cannot approve of a compromise with the coalition. Additionally, the claims of SPD and the Greens show significant weaknesses.
The Growth Pact
The SPD and the Greens, similar to France’s president Hollande, demand that a development and employment agreement shall be added to the fiscal contract.
The project bonds for financing infrastructural projects, which had been discussed in connection with this matter, will prove to be nothing but a drop in the bucket. The same thing can be said about the required immediate action program to fight youth unemployment as well as the EUR 10 billion for the European Investment Bank. The development agreement proves to be rather a PR-campaign than a political programme that is worth being called by that name.
The Financial Transaction Tax
In fact it is time to stand up to FDP’s stubborn blockade and be determined to introduce Europe-wide measures. Concerning this issue, the SPD, the Greens and DIE LINKE take the same stance. Furthermore it would be sensible to speak up against various attempts of maceration.
Nevertheless: The financial transaction tax is a tool for financing global matters, as to say development aids and worldwide environmental and climate protection; similar to what Attac and the “Tax against Poverty“-campaign are demanding.
The German parliament must not sneak away from its responsibility towards the rest of the world, only because it needs the funds resulting from a transaction tax to overcome the Euro crisis.
Subsequently, other sources of revenue must be found. Therefore it is appears strange that the Greens’ claim for a property tax cannot be found any longer in the paper they published together with the SPD: Different from the financial transaction tax, whose introduction also depends on other European governments, some of them being stubborn, the German government could achieve much more by itself as far as a property tax is concerned.
The Debt Redemption Fund
The SPD and the Greens took the idea of a debt redemption fund on board that had been elaborated by the “Expert Advisory Board for the Assessment of Economic Development“. According to this concept the participating states would outsource debts exceeding 60 per cent of their GDP to a common stock and receive temporary financial aid in form of the bond issues of the stock (Eurobonds). In response, the participating states would be obliged to commit to a debt limit and a clearance plan, which would already come into effect with the introduction of the fiscal contract.
The financing via a communal fund shall assist the states to gain back the financial investors’ faith. But the goal of emancipatory politics should not be the appeasement of the financial markets, but instead the overcoming of their dictate on a permanent level – e.g. via Eurobonds or the re-organisation of the ECB.
The proposal as a whole is not very promising either: Spain does not suffer from a high debt level; it is its future perspectives that appear dark. Due to the amortisation fund Spain is only entitled to EUR 88 billion, which would barely take away any pressure. The second big insecure case, Italy, would not only have to present a balanced budget – difficult enough – but also pay off debts annually at a level of EUR 50 billion. Nowhere in the proposal it is mentioned how all of this shall be done.
The debt redemption fund might be a nice idea if it comes to teasing the German government with the idea of communitarising the debts but not a practicable solution for overcoming the crisis.
Prospects
We cannot expect much from those negotiations: The SPD is more likely to cast out Willy Brandt than not to agree to the fiscal contract. Therefore the SPD will sell her agreement cheaply, and along with it also the Greens. Against the background of a severe crisis of the EU that questions the European project on a principal level, taxing financial transactions on a tenth of per cent level cannot be considered as a major breakthrough. Even the distribution of a couple of billions for single projects here and there is an inadequate response to the serious problems of the Monetary Union and also the wrong rescue strategy of the German government. Whoever aims to achieve a change in the politics of crisis management has to vote for DIE LINKE.