Faced with a crisis almost as grave as war, social democrats must act in concert to end the toxic policies of austerity
All these words are Greek: crisis, chaos and apocalypse. Or, if the world was cleverer, this could still end in catharsis, and renewal. Market furies tear the heart out of Europe, first Greece, then Spain, Italy and France, and finally the world; so even beleaguered pro-Europeans give the euro's survival no more than a 50:50 chance. If all that's left is a tight little German and northern league, why would the EU stay together after that? The guttering flame of the European idea is hard to keep alight in this hurricane.
But it's not impossible. Look how decisively the French and Greek electorates reject the austerity economics that is killing growth in most of the EU. The tide of opinion is turning when even Standard & Poor's at last admits: "Austerity alone risks becoming self-defeating". The policy is tested to destruction. A patched-together coalition between old parties that brought Greece to its knees through corruption and cronyism only won because its pledge to get a better deal was marginally more convincing to a despairing electorate, short of food, medicine and fuel. But anti-austerity was the only message. Either default on debt or repay only once solid growth makes it feasible: more austerity leads back down the death spiral vortex.
If the new government gets no genuine relaxation of impossible bailout terms, more cuts may propel such protests that the radical Syriza will find itself in power shortly, after its meteoric rise from nowhere. How comfortable to be opposing, just a hair's breadth from power. It was not sour grapes (courtesy of Aesop, another Greek) for Syriza leaders to claim this is where they prefer to be for now.
In Britain gleeful anti-Europeans gloat "I told you so", with smirks on the faces of Norman Lamont, Nigel Farage and the rest. David Cameron on Monday yet again wagged his finger emptily at Germany, telling it to intervene, a bizarre stance from one who shares its austerity policy. In all the years of behaving badly to its neighbours, Britain has never been so ignored or so irrelevant to the key decisions taken by its vital trading partners. Despite sad reminders of Gordon Brown's worst traits at last week's Leveson hearings, compare and contrast Cameron's vacuity with Brown's finest hour: when no other leader stepped up, Brown galvanised the world to take fast action with a market-stunning £1trn rescue at the G20 in 2009. Cameron couldn't galvanise a flea circus.
Instead, his party wallows in a European crisis that will blow back at Britain. True, the blizzard will conveniently white out George Osborne's egregious economic errors, the zero growth and double-dip. Roll on a referendum, urge the Europhobes, but in or out of what? Their fantasy is that Britain can slip away to the European economic area on pick'n'mix terms, undercutting EU currencies and irksome trade rules: why wouldn't Europe wreak revenge for our obnoxious behaviour all these years?
At today's G20 no leader emerged to take the initiative, Barack Obama being deep in an election campaign, from which he may not return, and each country protecting its interests. Germany could save Greece, but not Spain and Italy. Germany could let the European Central Bank act as a firewall guarantee. It could allow inflation to ease the path, and embrace growth before debt. But faced by a choice between breaking the euro and abandoning German orthodoxy, Angela Merkel and her party would rather let most of Europe go: she has failed to warn her people of the enormous costs of that. Neither Obama nor Cameron could be seen to pay to save Europe – nor China, nor anyone else; and yet they all know the far greater cost of global collapse.
This is a return to the 1930s, Keynesians say: look where that leads politically. Or is this a dark echo of the first world war? Civilised countries thought protectionism and trade wars could never lead to bloodshed. But the world is no saner now than it was then. Countries pulling up drawbridges, undercutting and cheating each other with worsening relations in times of declining living standards, can still lead to European bloodletting. Look at the venom – the sneering at Greeks, Italians and Spaniards, lazy southern layabouts: blaming ineffective governments nastily morphs into blaming whole nations of inferior people. Germans are again represented as spike-helmeted automatons, bidding for a fiscal and political union that would reduce proud nations to town councils under Berlin's thumb. Germany v Greece on the Euro 2012 football field may be a comic coincidence this week, but nobody should dismiss the seriousness of the EU's "never again" founding purpose.
Europe's impasse needs new purpose, after the old economic certainties helped cause this cataclysm. Even if the EU scrapes through, that's not enough. What then? François Hollande and Ed Miliband are calling a summit of social democrats this autumn to challenge dogma and forge a growth and jobs programme for construction and investment. Keynesian parties need to draw Europe-wide strength and credibility by working together. Hollande proposes a £120bn redirection of EU funds to an emergency growth programme: he should throw in the CAP, too.
Abolishing tax havens, co-ordinating fair tax instead of destructive competition, ending secrecy of wealth and property ownership, cutting defence overspending by France, Britain and Greece: politically hard decisions are easier if social democrats can inspire people with the value of standing together, not falling apart.
The G20 may prove that there is no averting imminent calamity. But the rightwing austerians who caused it will have no solutions for its repair. Europe is phenomenally rich, yet has hardly tapped its own wealth. These governments are still in denial over the real depth of the emergency.
Germany imposed a solidarity tax to pay for reunification, taxing incomes, wealth and property. Britain has barely touched the abundance of its vast undertaxed wealth. This government can never rally the nation to unite in a crisis after hitting the weak hardest, with wealthy lifestyles remaining unchanged. The coalition may well fall apart sooner than expected: Labour needs to stand more ready than has yet been the case, with a radical alternative – easier to do as part of a Europe-wide appeal. In wartime bonds are issued to finance a national emergency by encouraging (or, from the rich, coercing) investment in a time of crisis. What Europe needs to escape slump is a war footing – but this time without the war.
