Countering the neoliberal privatisation of services

Will the COVID-19 pandemic drive further privatisation of the services sector and a new wave of austerity, or can we expect a departure from neoliberal orthodoxy, towards re-municipalisation and increased public investments? These were just some of the questions posed in an online debate with Dr Dieter Plehwe and Dr Mirjam Katzin on 11 November.

The COVID-19 pandemic has shown the injustice and inefficiency of the privatising, outsourcing and commodifying of vital public services. It has also exposed the inadequacy of the current system in dealing with the mass job losses from national lockdowns, magnifying levels of inequality already worsened by several decades of austerity. However, there has also been growth in awareness of the importance of such services in times of crisis, underlining the need for strong, public, services.

Read the full article at Rosa Luxemburg Stiftung - Brussels Office. 

COVID-19: The EU has failed a test of solidarity. The price will be more austerity - and worse.

The European Union (EU) has been tested over its response to the COVID-19 pandemic - and it has been found sorely lacking. The resulting lack of vision, of solidarity in times of crisis, raises fundamental questions about the long-term viability of the bloc.

As the economic crisis caused by COVID-19 deepens, we have now entered the worst downturn since the Great Depression. The economic and political consequences are already massive – and will continue to grow.

In the space of just one month, International Labour Organisation predicted worldwide job losses grew from from 25 million to 305 million, with working hours lost equivalent to 124 million full time jobs in the first quarter of 2020 alone. By contrast, the crash of 2008-2009 led to the loss of approximately 22 million jobs worldwide.

The global economy was already heading into a downturn when the latest novel coronavirus struck. But it is now experiencing a unique crisis, one reaching deep into the productive sector and challenging established orthodoxies.

Panicked economic and social lockdowns to contain the pandemic have ground much production to a halt, while consumption has also shrunk massively. With millions now working from home, and millions more frontline workers all but sacrificed to the market, the logic of capitalist production and social organisation doesn’t seem quite so “logical” any more. The EU sits perched on a cliff-edge.

[Read the full article in TELESFORO MONZON eLab / Euskal Herrigintza Laborategia here, in Brave New Europe here, and in The Left in Berlin here].

Coronabonds or bust? - Gridlock over EU response poses an existential threat

The European Union’s response to the coronavirus pandemic has exposed a dangerous lack of solidarity between member states, as longstanding divisions over the future of European integration frustrate the fight against the coronavirus and the downturn it has caused – the worst since the Great Depression. After weeks of bungled responses, old fault lines between “north” and “south” have re-emerged, a marathon Eurogroup meeting on April 7 failing once again reach agreement. The European Union (EU) sits perched uncomfortably on an economic and political precipice, and the consequences could be massive.

The coronavirus pandemic has triggered a human catastrophe and economic crisis worldwide, with panicked lockdowns grinding economic gears to a near-halt. The global economy – already heading into a downturn when the coronavirus struck – is now experiencing a crisis that reaches deep into the productive sector of the economy, but the EU response has been patchwork and incoherent, a series of reactive and inadequate measures not equal to the scale of the problem.

The initial response came from national governments, most of whom instinctively closed their borders, locking down society and – eventually – industry. As the walls went up, desperate appeals from Italy for assistance fell on deaf ears, unheeded by all but China and Cuba, and Italy’s ambassador to the EU, warned that Europe’s leaders risk “going down in history like the leaders in 1914 who sleepwalked into World War I”. It was beginning to look like “European solidarity” was an idea for fairer weather.

The EU’s response

The European institutions shifted clumsily into catch-up mode, the European Central Bank (ECB) proposing a package of 120 billion euro to ensure liquidity in the financial and banking sector the same day that its President Christine Lagarde declared the central bank was “not here to close spreads” in sovereign debt markets. This brought a furious response from Italy, casting doubt on whether the ECB would provide member states the necessary support.

The ECB then announced its “bazooka” response – a €750 billion package of Quantitative Easing (QE) named the “Pandemic Emergency Purchase Programme” (PEPP). To allow the rapid expansion of public debt and facilitate heavy government spending, the ECB can buy large amounts of government and corporate debt until the end of the year, with significantly more flexible rules than previously. It suspends the 33% purchasing limit on national bonds, includes Greek sovereign debt and the ECB will target short-term debt maturing in as little as 70 days. State aid rules have also been loosened.

Crucially, the “general escape clause” of the EU’s Stability and Growth Pact (SGP) was activated – pausing a mechanism responsible for imposing austerity on member states through inflexible deficit and debt limits and structural reforms. Unprecedented stuff – but still not enough, and concerns remain about what the short duration of the PEPP will mean for EU member states’ capacity to service the resulting debt during a recession.

The burgeoning crisis quickly spilled over into a high-stakes political showdown across the EU. When the Eurogroup – the eurozone’s finance ministers – met on March 24 to draft a longer term “pandemic crisis support” tool. The main proposal was fresh loans under the European Stability Mechanism (ESM), the EU’s 410 billion euro bailout fund that allows eurozone members to draw a credit line worth 2 percent of their economic output – with conditions. This option is strongly supported by fiscally more conservative countries, like Germany and the Netherlands.

[Read the full article in TrademarkBelfast and Rosa Luxembourg Stiftung - Brussels' Post Brexit Europe here].

Europe’s Coronavirus Battle

The coronavirus pandemic has exposed longstanding divisions in the European Union, with the issue of eurobonds dividing the north and south – and solidarity in short supply.

An extended March 26 meeting of the European Council failed to reach agreement on which economic tool the European Union (EU) should deploy to combat what is predicted to be a severe recession caused by the coronavirus pandemic, instead kicking the can down the road for a further two weeks.

With the coronavirus pandemic triggering a human and economic crisis worldwide, and panicked lockdowns in member states grinding economic gears to a halt, the European economy sits on the verge of a depression and total shutdown. National governments across the EU took the lead in combating the virus, closing borders and businesses, and in some cases with significant spending programmes to protect workers, jobs and businesses from the resulting downturn. As appeals by Italy for urgent assistance went unheeded by all but China and Cuba, and it was beginning to look like “European solidarity” was an idea for fairer weather.

Playing catch-up, the European Commission muscled-in on border closures, while on March 12 the European Central Bank (ECB) announced an initial €120 billion package aimed at ongoing liquidity in the financial and banking sector. A further 37 billion was mobilised from existing EU funds, but it was soon obvious that the disaster posed a threat of several magnitudes greater than anticipated.

[Read the full article in Tribune Magazine here].

English woodlands under Tory threat

Plans by Britain’s Conservative Party government to sell off all of England’s public forests have sparked a rural revolt and mass public outrage across the country.

Prime Minister David Cameron’s Tory government has announced that it plans to sell off 15 per cent of all English land managed by the government-owned Forestry Commission by 2015 – the largest sell-off the Government can authorise without an act of parliament – for around £100 million.

There are also plans to sell the remaining 85 percent, and a clause in a new Public Bodies Bill would give the Environment Secretary the power to do so – the biggest change in land ownership in England since the Second World War.

The Forestry Commission manages over 250,000 hectares – almost 20 percent of the total woodland in England – comprising approximately 1,500 forests, including the New Forest, the ancient and beautiful Forest of Dean, and parts of the famous Sherwood Forest.

The public forest estates in Wales (126,000 hectares) and Scotland (660,000 hectares) – also managed by the Forestry Commission – remain under the control of the devolved assemblies in those countries (rather than the UK government). There are no plans to sell off the Scottish forests, and the Welsh Assembly has said it will keep forests in public ownership.