The Decline of Europe and the crisis of the Left – part I ο

The document “The Decline of Europe and the crisis of the Left” was discussed and voted on, at the end of the 3^rd conference of Internationalist Standpoint (ISp) which took place between March 30 and April 3, 2025.

Following the tradition established by ISp from its inception, we avoid rewriting the documents in order to have them updated. Our emphasis is more on the description of processes rather than a summary of events and statistics.

When updates are required on specific issues, we prefer to produce separate resolutions. This is what we did, for example, with the resolution on the impact of Trump’s election.

The initial draft of the present document was prepared in the period November and December of 2024, and that is the reason why some of the facts, figures and developments described are a few months’ old. Where an update was necessary, we did it in the form of a footnote.

The document will appear on ISp’s website in three parts.

1. On September 9, 2024, Mario Draghi, presented his long-awaited report, requested by the EU Commission, on the state of the EU. In a report of about 400 pages, he made dire assessments about the state of the EU economies, explaining that the EU is far behind the US in productivity and in a number of sectors also behind China. According to his report, the EU is still basing its economy on industries that dominated the world economy 20 years ago, but has not been able to be part of the rise in new industries since then. Essentially Draghi was describing the further loss of ground in the context of the historical decline of the European powers and the risks of failing to face up to the challenges in the new and direct confrontation between the US and China.
2. His answer to the problems, was more neoliberal policies and more deregulation, combined with greater EU convergence especially in the banking sector and defence; and with expenditure to the level of 800 billion euros annually for the next 10 years to support private and public investments. This figure represented a massive 5% of the EU GDP, whereas at present the EU budget represents no more than 1% of the EU’s GDP. This funding would be provided by common EU loans.
3. Draghi’s report builds upon the Letta report (“Much more than a Market”, April 2024) and aligns with the proposals by sections of the European establishment regarding the need for a multi-speed Europe – specifically the creation of a Euro-core through the enhanced cooperation among a select group of countries. Despite the extensive integration of the European economies, the ruling classes of individual countries have retained significant control over their banking systems strategic enterprises and fiscal policies, thus preventing the establishment of a truly continental capital. The EU is faced with a cumbersome and contradictory institutional framework, reflected in divergences on foreign policy, on defence, on migration, etc, leading to slow decision-making procedures or even partial paralysis. Despite the structural focus of Draghi’s report, discussion naturally concentrated on the figure proposed by Draghi to finance his proposals.
4. The German government reacted within hours to reject it. Common funding for common European public and private investments and for common Research and Development, would mean that Germany, with a budget deficit of 1.9% and a public debt at 63% (i.e., very close to the Maastricht criteria which are considered as the corner stone of the Eurozone) would accept financing countries like France with a budget deficit of 5.3% and a public debt of 112.4% of GDP and rising, Italy with a budget deficit of 7.4% and a public debt of 142.4% (expected to rise to 148% by 2029) and so no and so forth. Common funding of common loans, as a general rule, is something that cannot be expected to happen because clashes with the “national” interests of different powers in the EU.
5. Germany, France and the other industrially developed countries of north Europe, find it easy to point the finger to the countries of southern Europe and impose brutal terms on them in the name of the common interests of the European “common home” (this was the expression used in the not-so-distant past) but they refuse to sacrifice their national interests for the “common good”. German capitalism will not accept the destabilization of its own self for the sake of financing further “progress” of the EU edifice, particularly in a period of serious economic problems as will be shown further on. It will use such funding for its own interests, to strengthen its position at the expense of the rest of the EU countries (particularly the south), as it has been doing since the creation of the EU and especially the Eurozone (EZ).
6. On the other side, the President of France, Emmanuel Macron in a recent (October 2, 2024) interview with Bloomberg said the following:

“The EU could die; we are on a verge of a very important moment… Our former model is over — we are over-regulating and under-investing. In the two to three years to come, if we follow our classical agenda, we will be out of the market.”

Macron is not as ambitious as Draghi. But he is equally pessimistic about the future.

7. A quick glance at major events that marked Europe in 2024 will show the further retreat of the EU in the global economy; a deepening political instability, largely linked to the further general rise of the Far Right; the weakening of the German-French axis which has always been the backbone of the EU and its decision making centre; the further decline of the parties of the Left; a retreat of the class struggles that had an upsurge in the course of 2022 and 2023.
8. The European powers are squeezed between the US and China due to the trade war that the US initiated and between the West and Russia on the war in Ukraine. In both occasions they are the main losers. From a strategic, long-term perspective they have had to stick to their alliance with the US, but this is costing them a lot. Some strategic corridors that wove together a greater Euro-Asian integration have, in fact, been severed (from Nord Stream to Sino-European railway connections). Germany’s economic strategy centred on exports to Asia and Chinese supply chains, is now called into question, starting with a recession and a restructuring that is impacting its productive core (notably the automotive sector).
9. In many countries, concern and dissent are growing over the erosion of social and democratic rights. Mechanisms of discipline, control, and oppression of social defiance are multiplying; the right to strike and demonstrate is under attack; stringent repression is being directed at pro-Palestine protests with widespread use of force and arrests. The support for the Israeli state in its genocide and ethnic cleansing in Gaza has fostered greater awareness and resentment toward European (and US) imperialist policies, particularly among young people. Movements opposing the ongoing process of “social militarization” across the continent are also developing, even if in sporadic, or subterranean forms. These are important factors impacting on consciousness, even though mobilizations sometimes adopt nationalist or neo-camp frameworks, which obscure the class character of the issues.
10. The situation for the European powers will become even more complicated in 2025, after the victory of Trump in the recent (5 November 2024) elections in the US. On a global level there is nothing positive that could come to the aid of the ailing European economies. On the contrary, the international background, economically and geopolitically can only deepen the crisis of European capitalism, opening up the possibility of new conflicts in the EU, disruptions and rearrangements.

International Background

The Economy

11. In 2022 the perspectives for the world economy, among all the major economic and financial think tanks internationally, were very gloomy. There was near panic after the rise of inflation and the geopolitical earthquake caused by the war in Ukraine, and the main prediction by most economists was one of a hard landing for the global economy. This did not materialize, despite the rise in interest rates from the region of 0% to around 5% for the EU and more than 5% for the US. In this period there was a historical bullish rise in the US stock exchange and internationally – entirely unexpected. S&P 500’s index rose by about 60% in the course of the past two years: from 3,577 on 12 October 2022, to 5,762 on 30 September 2024.  Now there is again a new surge of optimism after the US Federal Reserve and the European Central Bank entered a new cycle of lowering interest rates.

12. However, the situation remains very unstable. Average growth rates for the previous period and those expected for the period ahead are the lowest ever since WWII. And the “time bomb” at the base of the global economy remains unresolved: that is the high debt, public and private. This, has actually increased in the course of the past years, after the end of the pandemic, which were supposed to be years of restraint in order to tackle rising inflation. Global debt reached a new high of $315 trillion, accounting for 333% of global GDP, in the 1st quarter of 2024. Roughly 2/3 of the global debt is driven by the advanced economies. Overall global debt expanded by more than $100 tr. in the last decade. And in nominal terms it increased by 21% since 2020, following the Covid pandemic. This situation, with huge bubbles in the stock exchanges and in real estate, at a time of low growth rates and high budget deficits and debts can simply not continue. Sooner or later, it will come down with a bang and will be reflected on the real economy most probably causing a serious recession.

The return of Trump

13. The majority of the European bourgeoisie was in favour of Harris winning the presidential elections in the US and it did not try to hide it. The same was true of the more serious bourgeois media and the main bulk of the capitalist class in Britain and in the US (with notable exceptions like that of Elon Musk). The outcome of the November 5 elections was quite a shock for the ruling classes of Europe and America, not only because Trump won the race but also because of the extent of his victory and the defeat of Harris.
14. It is obvious that Trump represents a big challenge for the US and the international working class and social movements. He will attack democratic, trade union, women’s and LGBTQ2+ rights. He will give a further impetus to conservative and reactionary ideas and organisations in the US – including fascistic ones. He will encourage the rise and boldness of far-right parties and governments internationally. Having said these, we need to repeat what has been analysed in previous material of ISp that he does not represent fascism in the US, as sections of the Democratic Party (DP) tried to argue, hoping that in this way they could win the elections. The working class and the social movements will need to rise to the challenges that Trump represents to their rights – this is a matter related to class struggle in the US, Europe and internationally. It is also related to the perspective of the rise of new left forces that will challenge both the GOP and the DP, rather than getting trapped in the “lesser evil” illusions, cultivated by the DP and the petit bourgeois left currents.
15. One factor which is related to the development of class struggles in the US is that Trump could very well be faced with a serious recession in the US economy. It will in fact be strange if the contradictions that have piled up in the US economy do not cause the bubbles to burst and a recession in the US, in the coming period. This will certainly undermine Trump’s present appeal. The US working class has not faced the defeats and betrayals of the kind that the European working class has faced – it is therefore in many ways in a better shape than its European counterparts to fight. The US working class is “fresh”, in the sense that it comes from a period of relative successes and fighting spirit.
16. From the point of view of the international impact of Trump’s election, he has already declared that he will raise new, much higher barriers to trade with China, implementing a horizontal 60% tariff on all Chinese imports. That he will implement additional tariffs of 10%, 20% or more, on all imports, including from US’ allies. That he will stop the war in Ukraine and that he will stop financing European NATO. Trump is blackmailing the European members of NATO to increase defence expenditure to at least to 2% of their GDP, refusing to finance their “protection”.
17. It is not possible to predict at this stage how far Trump will go with what he’s declared. But even if he does not apply his declarations to the full, all of these policies represent time bombs in the international situation, economically and geopolitically. The increase in tariffs, giving the US economy a further push into protectionism, will have as a direct result the further fall of the rates of growth of the global economy and the rise of inflation. They will cause a stronger reaction from China, which up until now has responded mildly to the US and Europe’s protectionist measures. These factors will undermine growth in both the US and Europe as well as globally.
18. Additional arms expenditure by the European powers is further destabilising the European economies which are already overloaded with high budget deficits and public debts. If Trump withdraws from supplying Ukraine with arms, the European powers will find themselves having to spend more, at least for a while, to keep Ukraine fighting – in a war, however, that cannot be won. In any case the European countries will have to increase arms expenditure, in the context of the new global arms race that is in progress, further weakening their economies. The increased arms expenditure, inevitable in the present epoch of global confrontation for domination, already in process and intensifying, can have a certain impact on the economies, but it cannot solve any of the fundamental problems at the base, as it will come up against the high budget deficits and sovereign debts.
19. World capitalism is faced with a multi-level crisis, as analysed in other material by ISp. US protectionism is a reflection of the weakness of the US economy to compete in the international markets and to keep its share of world production and trade, it is not a reflection of a position of strength. Trump is a symptom of this crisis, as is the general rise of the Far Right internationally. Trump’s policies will not solve any of the contradictions of US capitalism. His rise itself, and particularly his return, is a symptom not only of the cyclical crisis of capitalism but also, and more importantly, of the historical decline of the West – of US and Europe, in an epoch of intensified antagonisms, a new arms race and social militarization.

War

20. The main European powers have been following the US “blindly” in its confrontational economic and geopolitical policies, towards China and Russia, in the recent years. This will continue as the main trend, although it is correct to say that if Trump goes over the top, the European powers, especially Germany and France, will have to take initiatives to present a semi-independent stand. But this won’t stop the decline of Europe. Some spokespersons of European powers, not surprisingly many coming from the “progressive”, so called, parties (social-democratic, centre left) claim that Trump’s rise provides an “opportunity for Europe”, to stand on its own feet and develop an independent stand and presence in the world situation. Such reformist illusions miss the point: Europe’s decline and crisis in not the result of “mistakes” or miscalculations by the European ruling classes; they have an objective cause; they are rooted in the development of the capitalist system. In the course of the 20^th century the centre of power moved from Europe to the US, in the present epoch it is moving to Asia and particularly to China. The US and Europe can try as hard as they wish to fight against these processes, but this battle is impossible to win in the long run; they can delay the rise of China (and Asia) but they cannot stop it.
21. The two major wars of the period we are passing through are further weakening the European ruling classes. Despite the huge efforts of the West to isolate Russia, they have failed. Economic sanctions have been implemented only by NATO’s closest allies (Australia, New Zealand, Japan, S. Korea) while even the historical US allies have not followed suit (from Mexico to Saudi Arabia, from Chile to India). The recent (October 2024) meeting of BRICS took place in Russia, with 36 heads of state present, as well as the Secretary General of the United Nations.
22. The interests of the US and EU ruling classes were expressed, once again, in their support for Israel despite the genocide in Gaza. This facilitated the struggle to expose the classic propaganda methods of the West that appeal to democracy and peace, in the eyes of working-class people, to discredit the international regulatory system and to expose their hypocrisy.
23. The war in Ukraine has essentially been judged. Russia will keep the annexation of Crimea, the Donbass and the occupied territories (and in this sense will win the war) and this cannot be changed either by the F-16 fighter planes that Ukraine has been given, nor by the long-range missiles that can hit targets up to 300 km into Russia that the US, Britain and France have agreed to allow Ukraine to use. The war is judged by the forces on the ground, and despite whatever damage the long-range missiles can cause Russia, they cannot stop the advance of Russian troops in East Ukraine. Nor can they stop the Russian troops from, sooner or later, pushing the Ukrainian army out of the Kursk region; the invasion into Kursk by the Ukrainian army was a blunder, offering Ukraine no strategic advantages, only weakening their defences in Donbas.
24. The Middle East will remain in flames. Israel is fighting a war on many fronts. But it cannot have the victory it wants in the end – it cannot eradicate Hamas or Hezbollah; it cannot eliminate Iran. While it has achieved significant military results it cannot hope to stabilize the area. Syria will remain an uncontrollable country for a long time where armed fundamentalist militias and Turkish influence will be on the rise. All parts will be preparing for a future round. And Iran, an official ally of Russia and China now, as a member of BRICS, will want to acquire even more advanced military capabilities, including nuclear weapons. Russia, been treated by the West as a pariah, will be more than willing to help and it is an open question if the West can stop this.

Environment

25. Environment remains a key issue in the global situation, with catastrophic floods, heat waves, dissertation, fires, and food crisis, with all estimates indicating that the “fight” against the 1.5^oC rise has already been lost and the question is whether the 2^oC can be avoided. On the present trajectory the planet is heading for a 3^oC rise according to the UN.  October 2024 was 1.65^oC warmer than pre-industrial levels; it was the 15^th month out of the last 16 in which temperatures have exceeded the 1.5^oC threshold. This year will once again be the hottest on record and Earth will likely register an average reading of over 1.5^oC above pre-industrial levels for the first time (at the end of 2023 it is estimated that it rose by 1.49C).  
26. Yet, CO₂ emissions go from one record level to the next. According to the Global Carbon Project, the global emissions of CO₂ due to fossil fuels are expected to reach new highs in 2024: +2.5% compared to 2023. The UN annual meetings on Environment, known as COP, always inadequate anyway, are more and more turning into a tragicomic event. This was the case particularly with the last two, held in the United Arab Emirates (COP28, in 2023) and in Azerbaijan (COP29 in November 2024). Here, it became clear that the people in power were more interested in promoting deals to sell their fossil fuels, rather than leading the fight to eliminate carbon emissions.
27. Trump is determined to ditch the Paris agreement on limiting the temperature rise to 1.5^oC, but what is very indicative, at the same time, is that the key leaders of the EU, its president Ursula von der Leyen, the German Chancellor Olaf Scholz and the French President Emmanuel Macron did not attend the last COP in Azerbaijan. They all have other, more important, priorities…   
28. The increasing levels of climate change and capitalism’s inability to reverse the danger it presents, have an important impact on consciousness and can play a role in shaping new political developments in the direction of the anticapitalist Left. The problem of green energy is a problem of the capitalist mode of production, not one of generation or storage capacity. We can produce enough KWH to sustain a good life, it just cannot be done within a system that it based on profit. It is the duty of revolutionary socialists to propose transitional programmatic measures aimed at building a green, sustainable, collectively-owned system of energy production transportation and storage while pointing out the limitations that the capitalist system imposes in this field.

Inequality

29. Despite the crocodile tears of numerous spokespersons of the capitalists, inequality continues to rise unabatedly. If we use as poverty line 5 $ a day, then 40% of the world’s population live in poverty. And if the poverty line is $10/day, then 62% are in poverty. Currently international development assistance is a little over $100 bn a year. This is more than 5 times less the annual income flows out of the poor countries to the rich. According to UNCTAD (United Nations Conference on Trade and Development) net resource transfers from developing to developed countries have averaged $700 bn a year, even after taking into account foreign aid assistance. Compare this with what workers and youth see happening at the tops: Elon Musk, just to site one example, “invested” around $130 million to help Trump win the elections and in a few days after Trump’s victory he saw TESLA’s shares rise by around 30%, i.e., by about $200 billion! [[1]]
30. War, inequality, environment, women and LGBTQ+ issues, in the more general context of economic hardship and worsening living conditions for the huge majority, remain key issues in determining consciousness globally. This has not yet taken concrete forms politically; it has not been reflected in an anticapitalist/socialist consciousness on a mass scale; nor has it been reflected in the creation of political formations reflecting the interests of the working class and the oppressed in society. But it is a matter of time, before consciousness rises further, gives rise to new social movements and takes political shapes. Marxists need to patiently and energetically intervene and prepare on the basis of these perspectives.  

The second part will be posted on Friday April 18

[1] This changed in the first months of 2025, when Trump’s policies lead to a collapse of the NY stock exchange. See ISp Resolution on the US