Another Europe is possible

Economic and financial crisis

Economic and financial crisis

The view of the European United Left/Nordic Green Left Group in the European Parliament is that the solution to the ongoing economic and financial crisis is not to continue with the same policies that have created this crisis, but a policy that puts the needs of people first and not those of the market.

EU leaders' austerity drive continues to work for the rich and powerful by maintaining an economic system that puts the needs of financial markets ahead of social concerns. The austerity measures being applied by undemocratic means in the EU countries worst-hit by the crisis reflect the failure of the EU's neoliberal architecture. We urgently need to reverse this policy and deliver solidarity and job creation within an economic system that serves people not profit. Austerity is avoidable; it is a political choice that puts the interests of some above the interests of others.

Austerity Kills

Austerity is proving to be a deadly poison. It allows neither a rebalancing of public accounts nor economic recovery, because it sacrifices workers, social protection, jobs and people’s welfare. During this term of office, the European United Left/Nordic Green Left group put forward several proposals for growth and jobs: the introduction of a EU minimum wage and a minimum income; the defence of public social security through the development of a training-related social security system in Europe; an end to social and fiscal dumping; taxation on capital at the same rate as on employment; a genuine tax on financial transactions; a European alliance against unequal free trade through the introduction of visas; a programme of major projects and the boost of a new industrial and agricultural policy; the development of research, innovation and education; the creation of a European fund for human, social and ecological development.

EU 2020 Strategy

When the EU's 2020 strategy for "smart, sustainable and inclusive growth" came under scrutiny in the Parliament, it was given a cool reception by the GUE/NGL group as a whole, which criticised the Commission for side-lining MEPs in the negotiation on the strategy and of replacing the failed Lisbon Strategy with one that paves the way for an even greater concentration of wealth.

Economic Governance

The GUE/NGL repeatedly outlined its alternative proposals to a package of Commission legislative proposals, the so-called six-pack, aiming to strengthen the Stability and Growth Pact, to keep euro zone countries' budgets and fiscal policies in check and to prevent the deepening of the financial crisis. GUE/NGL proposals include: a Pact for human and environmental development, employment, social progress and against poverty, accompanied by an investment plan for social and industrial policies requiring that pensions, industrial relations, public services, especially social services and health care, are excluded from any budgetary austerity plans. As the six-pack progressed through Parliament, it met with strong resistance from the GUE/NGL. With this package the EU is forcing citizens to pay the costs of the economic crisis after having raised billions of Euros to save the banking system that caused it.

Financial Transaction Tax

A tax on financial transactions has been considered by the GUE/NGL Group as an urgent and necessary tool to oblige the financial sector to contribute to public treasuries in Europe and throughout the world. For many years, the group supported the idea of a Tobin tax on financial transactions. Since the current financial crisis began, it has called time and time again on the Commission to come up with legislation. Although the Group considered that the proposal finally adopted in July 2013 was not perfect, notably when it comes to the lower rates for derivative products and pension funds, it said it was still a step in the right direction. Later on that year allegations that attempts were being made to delay the implementation of the financial transaction tax, based on a leaked document from the Council, sparked an appeal from the Group to stick to the original proposals expected to be adopted by 11 EU countries in January 2014.

Credit Rating Agencies

These agencies were considered by the Group to be one of the root causes of the financial crisis. Their actions of degrading member states' ratings fuelled speculation. The group repeatedly called for the work of the agencies to be undertaken by a public and democratically controlled institution.

European Semester & Fiscal Compact

The European Semester, a cycle of economic and fiscal policy coordination for the EU and the Euro zone in particular, and the agreement on a separate treaty on a fiscal union, to be known as the "Fiscal Compact Treaty" but nicknamed the "Austerity Treaty" by the Left, were among the solutions put forward to solve the crisis. The Group criticised both as being anti-democratic. The group maintains that only radical measures to prevent speculation on the markets will be able to put a definitive stop to the crisis. Instead of this, with the adoption of the Fiscal Compact Treaty, there would be a further increase in the one-sided focus on austerity policy and the destruction of social cohesion.

Tax Fraud, Tax Evasion and Tax Havens

The Group considers that rules should be tightened on multinational companies which have administrative offices in one member state and activities in another, purely for tax purposes and that those individuals evading taxes should expect to be harshly punished. Similar treatment should be meted out to anyone in Europe who is aiding and abetting tax evasion and aggressive tax planning. Only clear rules and their clear and obvious application can help to counter tax fraud and tax evasion. States which deny transparency and distribution of tax-related information must in future consider that they will end up on the black list of tax havens, as well as those states which levy no, or merely nominal taxes, which then also grant tax breaks, if no real economic activities or corresponding presence can be demonstrated. The European Union and its member states should act as a role model.

Insider Dealing 

Since the start of the crisis, hundreds of billions of taxpayers' money has gone to bail out banks that took huge risks in their pursuit of profit. In addition, insider dealing, when people use information that is not publically available and then trade for their own profit, has been rife. The GUE/NGL wants financial markets brought under control with much stricter regulations, bans on certain products and sanctions against anyone caught abusing the system. Insider trading is difficult to prove but there have been no attempts to do so. What we see is impunity. What's needed is concrete action and firm sanctions. We need a financial market that serves society and people.

Short Selling And Credits Defaults

Speculation was seen by the Group to be a major factor in triggering the crisis, while credit default swaps (CDSs) and short selling were major factors in heightening the crisis. These instruments degenerated into purely speculative instruments. Some people in the financial sector seem to have incorrectly regarded or misused these instruments as a personal licence to print money. As a result, entire economies suffered, along with nation states and, above all, the people of the countries concerned. The group called for a de facto ban on naked short selling and the prevention of speculation in the future as well as strict regulation and a strong supervisory authority in Europe.

Basic Banking for All

GUE/NGL is of the opinion that the EU must make it possible for the 30 million citizens who have not yet a bank account of their own to become part of the normal financial system. Without a bank account, things which we take for granted soon become insoluble problems. Renting a flat, signing a contract with an electricity supplier or joining the modern world of work is almost impossible in most countries unless you have a bank account. We believe that all of this should not be allowed to fail simply because the banks are aiming to maximise their profits. We will only have a functioning social market economy and a modern internal market when the banks genuinely take on this responsibility. A basic account should be provided free of charge or at least at a reasonable charge. Access is another important point. We must keep the bureaucratic obstacles to a minimum for consumers who rely on a basic account. Financial exclusion goes hand in hand with social exclusion.

Banking Union

Although the Group recognised that there was a need for a banking union, it was critical of the way the proposal was being put together. First of all, on the issue of democratic control it pointed out that the EU would control monetary policy instruments, EU monetary policy and, if this proposal went through, banking supervision would also become the EU’s responsibility. Secondly, if everything goes wrong, if the banks fail, the responsibility for paying for this failure falls to Member States' taxpayers and it remains a national responsibility. Thirdly, the fact that monetary policy continued to be tied to inflation, which is a secondary issue in the current climate and not to job creation and growth, as it should be. Finally, the limits of the proposal meant we would be left with the patchwork system we had before, which might end up generating more problems than it solves. The group considered it was up to the Council to put in place the necessary framework for full banking supervision, that a dedicated and democratically controlled body should be responsible with the European parliament recognised as the relevant body for controlling the European Central Bank's supervisory branch.

European Central Bank

The Group reiterated its view throughout this term of office that the role of Parliament is fundamental for the definition of European policy, particularly in relation to the economic crisis. As citizen's representatives, the group considers that Parliament must echo the concerns of the people. Ignoring them would mean adding a crisis of democratic legitimacy to the economic crisis. In view of widening economic recession and unemployment in the Eurozone, with debts worsening instead of being resolved, Parliament must maintain a clear position on the course being followed by the ECB. The issues are decisive: the limits of the ECB’s mandate and democratic control. Today, transparency defines an important part of the European political regime. A regime in which a single power exercises an unlimited, self-defined mandate without democratic control, with no obligation of transparency, has a name: dictatorship. If Parliament becomes irrelevant, it would mean allowing a dictatorship of the ECB. We want an ECB that benefits the economy and society, not financial speculation.

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