central banks that guarantee the socialization of losses to banking, a voracious capitalism that commodifies social services and that, above all, wishes to privatise social security. Ideologically, the academy, the institutions and the US leaders direct this Politically, it is multi-polar, highlighting the growing strength of Merkel in the European Union. Strategically, nobody knows what will happen, because the finances of the most powerful economies, if they had a heart, would have reasons that reason does not know. Without knowing about them, we do not know anything. The future Europe is at risk in this whirlwind. Its leader, Merkel, takes advantage of the signals of European disintegration, because this provides the best conditions for attracting capital, with securities at negative interest, and advantageous conditions for her electoral hegemony. In return, the spiral of debt in the peripheral countries or austerity in the others leads, by the rules of the Euro, to unstoppable processes of internal devaluation - to an increase in absolute exploitation and the transfer of surplus value of national economies to the international So political regimes in Greece, Portugal, Spain, Italy and France lose their capacity for cohesion; the main parties are weakened or are wrenched apart, with possible sudden electoral changes, sometimes favouring forces that represent anti-systemic revolt and sometimes populist forces with EUROPE AND PORTUGAL: THE The Portuguese problem, as with some of the other countries in the EU, is in the first place a democratic issue because it is social. An immediate response to this problem is a democratic struggle against the blackmail of the debt and the resulting ausWithout repudiating the debt, Portugal and others in the same situation will experience social disintegration, driven by the transfer of financial revenue guaranteed on present and future taxes, thereby accentuating the neoliberal project of reducing worker's incomes for the benefit of capital. Unless the left leads the opposition to this, populism will occupy its space. In response to the debt, big social mobilizations have developed in recent years. This is one of the elements explaining the election results of October 2015, where the Bloco Esquerda enjoyed the biggest electoral increase of any party. This would not have been possible with a political platform that did not centre on rejecting the blackmail of the debt. The Bloco's programme included not only a concrete proposal on the debt but an explicit declaration stating that, if negotiations with creditors and the European institutions did not permit a solution, exit from the Euro would be the only remaining alternative. To form a left majority against the debt, i.e., a government which rejects austerity and the debt in favour of wage earners, public services and investment, requires an alliance. A left government against the Troika will emerge from this alliance. To work towards such a government, it is necessary to defeat the right, mobilise the workers, win hegemony over the centre and put forward a viable solution that changes the political landscape. For such a transformation, it is necessary to concentrate our forces on an understanding between parties and on agreement based on the rejection As Syriza's strategy in Greece showed, the struggle for a left-wing government has a flag, the rejection of the debt. The right and the radical centre will use the fear of exit from the Euro as the main political argument because this can swing elections. As Syriza's experience showed, a government can only advance if it acts with tactical rigour, concentrating on the decisive argument: the debt. As has been exemplified in Greece, there is only one plan B to support the restructuring of the debt - exit from the The proposal of a plan A has disappeared from Portuguese political debate. This proposal started from the principle that the best solution for Portugal and Europe consisted in a constitution for a federal European state. Portugal would be a province of that state, which would of course be led by Germany. Such a solution is not acceptable: it would be an historical regression from which the only exit for Portugal, or any other country of the European periphery, would be a high-intensity conflict for its inThe federalist proposal is a farce because neither a doubling of the budget to 2%, for example, nor the same management of a single currency necessarily requires the European government of a European state. It certainly calls for common rules and reinforced cooperation, and therefore a hegemonic sovereign authority. In this sense, the federalist proposal intends to submit the left to the acceleration of the authoritarian project of the European bourgeoisie. The left that opposes federalism neither can, nor should desist from struggle at the European level. It cannot expect the forces of federalist centralism to see reason as it is against against their social interests. The left cannot oppose a cordial federalism to a fierce federalism. It has to overcome the forms of federalism, which destroy deThe blackmail by the European authorities to break down the Greek government shows that a decision that leads to conflict will always be political and the fruit of the relationship of forces. It also shows that the discourse of "another Europe" is empty. To appeal to otherness when the dominant forces in Europe are applying austerity and the European institutions are dedicated to strengthen the extractive economy is an exercise in distraction. It is necessary to abandon this discourse and focus on concrete measures to overcome the actually existing institutions. To achieve a new relationship of European forces it is necessary that governments of the left be elected which follow the mandate of their electors. This requires clarifying alternatives and, in particular, plan cancel the debt, via European negotiation or, if necessary, the unilateral imposition of a moratorium and cancellation, which can lead to an exit from the Euro. This is only possible with a left government and a radical change in the relationship of forces, so popular mobilization is determinant. A left government will not be constituted by the centre or by a new formation of their political forces. To overcome it is necessary to want to win and know how to win, it is necessary to reject the strangulation of wages, pensions and public services. A left-wing government requires that the left has a left policy. The democratic problem of Portugal is the blackmail of financial capital and the left government must confront this financial capital. There is no smart austerity; no means of austerity which is worth it. A new government which accepts financial blackmail will create more austerity and more destruction because every day the imposition of the rules of the Budgetary Treaty will be worse, as it is already clear. The idea of alleviating the conditions of financial blackmail to strengthen Merkel, or a recovery in Europe thanks to the Draghi Plan or the Juncker Plan, is just naivety. The German government, with Merkel's alliance with the Social Democratic Party SPD), demonstrates how the system of domination is protected. The President of
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the Euro-group, the Dutch Finance Minister, is living proof of how these neoliberal social democrats assume the role of Merkel's Prussian Cavalry. A new government in Portugal cannot count on the European institutions; it has to count on its people and their allies on the popular left in Europe. A left government must be committed to initiate negotiations to repudiate the debt from day one. If a proposal for cancellation of the debt is not accepted by the European authorities, the best answer would be the unilateral imposition of a moratorium on the debt payment, negotiations with various creditors of an exchange of debt for securities of a lower value linked to future growth, A left government needs to be strong enough to impose a fiscal revolution, creating the means for a reorganization of the productive system, including reindustrialization for employment, import substitution, energy and environmental reconversion and a focused investment on these lines. A left government should be prepared for conflict, including the pressure to force an exit from the Euro. In The dictatorship of the debt; (2012 with Mariana Mortágua), we wrote that, politically, exit from the Euro would only be acceptable to the population "when there is absolutely no other alternative, when they have exhausted all the alternatives, when survival requires it. There is only one condition in which exit from the Euro may become necessary for the Portuguese people, and that situation cannot be ruled out: if, due to a collapse of the European institutions and rules, the independence of Portugal was questioned and there was no other solution than to leave the European Union and, consequently, the Euro, to regain the power of decision-making. And yet it is necessary that the majority of the population commit itself in this respect, so that the strength of the popular movements and the defence of the interests of labour are reinforced." I maintain this view. Exit from the Euro will not be made easy. The German government won't authorize an unconditional loan to promote the policies of a left-wing government that had to exit the Euro. Even if the German government was seeking to impose that exit as Schäuble tried in relation to Greece, no funding is likely - it would seek to make such a An exit from the Euro under Merkel's orders or those of a right-wing government would mean a class struggle with no quarter given against the workers, to accelerate the process of capital accumulation for the exclusive benefit of part of the oligarchy. It would not guarantee cancellation of the debt; on the contrary, this could be a way of accentuating the transfer of income from labour towards capital through austerity. A left that is confused over this hypothesis does not deserve to survive, because it would fall on the side of austerity and savagery. Whoever defends exit from the Euro without cancellation of the debt will not succeed in resolving the democratic In the battle against the debt, if a left government was forced to leave the Euro it must be with the support of the people, mobilised to reject the threats of Merkel and of financial capital, standing up for democracy. The effects of an exit from the Euro are profound and can be justified only by a national emergency, led by a government committed to massive social mobilization. Only the democratic power of the peo ple ensures the strength to take the neces sary decisions in this context. Those who ignore this high intensity risk are not prepared to fight for power. Exit from the Euro is however the only alternative when there is no debt restructuring in the negotiations. Firstly, because exit from the Euro restores a national currency, and therefore allows imposition of the conversion of all public debts in Euros to the new currency, subject to national legislation, devaluing this debt; secondly, it allows the control of capital and the management of devaluation; two measures that favour the creation of investment and the revival of So, whoever wants to prepare a left policy must submit a proposal taking into account all the scenarios and the best alternatives for each, including exit from the Euro for the devaluation of the new escudo. A study of the way to control the short and medium term negative effects of a possible exit from the Euro has to consider the fol• Portugal runs the risk that the new currency, the escudo, would be for some months merely scriptural, so that internal transactions take place in foreign currency. Its circulation will tend to decrease and it will be dependent on a European Central Bank with which the country can enter into conflict, so a short term issue of provisional notes would be necessary; • Depositors will feel threatened and will withdraw their deposits in Euros. Measures should be taken to generate confidence in the banking system, which must be publicly
The immediate impact of the increase in import prices following devaluation will only
29 *International The blackmail by the European authorities to break down the Greek government shows that a decision that leads to conflict will always be political and the fruit of the relationship of forces. later be compensated by an increase in exports, which will depend on demand. Hence there must be an emergency plan for energy, transport and medicines; • Interest rates will tend to rise, with effects on the distribution of national income to the detriment of debtors. Inflation will rise, which will be detrimental to wages and pensions, so it will be necessary to take compensatory tax measures for the popu• The legal redefinition of the value of the internal debt, in defence of debtors, and the effects of this on the banks' balance sheets, will require a systemic resolution (which would be already be necessary with the restructuring of public debt); • A study is needed of the forms of social redistribution of the benefits that devaluation would give the export sector; • There must be institutional restructuring, including the new definition of the legal functioning of the Bank of Portugal and other public banks, and the administration of This study must also include: • Confirmation that there is majority support exit from the Euro, taking account of the power of the President and the need for a parliamentary majority that could eventually overcome the latter's right of veto;