Brexit – what next?

So far in the debate, or shouting match should that be, over the EU, there has been little or no examination about what might happen if there were to be an out vote.  Lots of claims and counter-claims, but not much light. There is no doubt that the UK would survive and could indeed prosper outwith the EU. The real question rather is what kind of country and economy would the UK have to become?

Various academic studies have looked at the options that might be available to the UK after a Brexit vote. Some overlap a bit, so I reckon that there are in reality only four options for life after a no vote. I have excluded the Swiss model, which involves a series of bilateral agreements with the EU. This model has proved somewhat unsatisfactory for both parties and the EU has made it clear that it would not repeat this kind of arrangement. The four remaining options are therefore as follows:

1. The Norwegian model – joining the EEA (European Economic Area). This involves full membership of the Single Market with all that implies, including the free movement of people. The UK would have no say in the rules governing the Single Market and would still have to contribute to the EU budget. On the other hand the UK would no longer be part of the common agricultural or fisheries policies.
2. The Turkish model – joining the EU’s custom union. This gives continued access to the Single Market, but only for goods, not for services. The UK would also be subject to all the EU rules governing that part of the Single Market.
3. The WTO model – effectively no special arrangement with the EU. Trade would be bound by WTO(World Trade Organisation) rules on tariffs. Again would only cover goods and not services.
4. A special UK agreement with the EU. This is the option that most Brexit supporters want, at least on the right. The UK would get continued access to the Single Market on its own terms and would be able to opt out of the bits it didn’t like – free movement of labour etc.

As regards the Norwegian model, this would seem to be the most easily achieved, yet the worst outcome for the UK, especially those who want out of the EU. Getting out of the common agricultural and fisheries policies would be a very high price to pay for giving up all influence and votes in the key decision making bodies. This model would also mean that the UK would remain subject to all the rules that the Eurosceptics most dislike about the EU.

The fourth option, a special UK deal with the EU is difficult to envisage. It relies on the rest of the EU regarding the UK as so important that they would do almost anything to keep the UK in. Not sure if there is any evidence this is how the rest of the EU sees the UK. Sure, they would like us to stay, but not at any price. This option effectively abolishes the Single Market and would seem more of a pipe dream that a realistic possibility.

This leaves the second and third options as the ones most realistically available. There is probably not a great deal of difference between the two models. Both models would however require quite significant changes within the UK. As a paper from OpenEurope puts it: “Britain will only prosper outside the EU if it is prepared to use its new found freedom to undertake active steps towards trade liberalisation and deregulation.”  It is not difficult to see why the right wing in Britain is so keen on leaving the EU!

In practical terms this trade liberalisation and deregulation would mean some rather unwelcome developments. Much of what remains of health and safety regulations and protections for workers would be open to further attack from our nasty Tory government. In addition, UK firms and workers would find themselves exposed to whole new levels of competition from low-cost countries. Finally, OpenEurope conclude that in order to be competitive outside the EU, Britain would need to keep a liberal policy for labour migration. As the paper notes with some understatement, these developments would be politically very sensitive.

So far most of the campaigning for an out vote has been by those on the right. It is relatively easy to see why. They by and large favour a deregulated economy with as much trade liberalisation as possible. This is not a view shared by all on the right of course. UKIP’s opposition seems to be more a combination of political – sovereignty, and opposition to immigration. As the above shows, it may not be possible to achieve all that those opposed to the EU want.

On the other hand there is a growing number of people on the left who also support leaving the EU. I do find this a bit perplexing. Leaving the EU and in particular leaving the Single Market is not going to do anything for the (already) precarious rights of workers. Claims that the EU is an undemocratic, neoliberal club are also a bit far fetched in my view. Furthermore it is not at all clear how the UK leaving is going to make any positive difference to this state of affairs. As I pointed out in my previous post, to the extent that the EU is neoliberal and pro-austerity, that is because the voters in almost all EU states have voted for neoliberal and pro-austerity parties. Just how the UK leaving is going to persuade voters in Germany, Finland, Slovakia etc to become more left wing is a bit of a mystery to me.

In short it seems to me that none of the likely post Brexit options offer the UK much, at  least from a left, progressive perspective. I can understand why some on the right would welcome leaving the EU. And for this reason we need to examine much more closely the implications of a No vote and what that might mean for the economy and society.

The EU – a failure of the Left

The EU has come in for a lot of battering over the last year or so. With the prospect of an in/out referendum on the horizon, this battering is likely to reach apocalyptic proportions. While most of the attacks on the EU have come from the right in the Tory party and UKIP, ably assisted by their friends in the media, some on the left have willingly joined in. For those on the right the EU is too interventionist and too protective of the rights of workers. While those on the left accuse the EU of being a capitalist club. Both hold the EU to be undemocratic and run by unelected bureaucrats in Brussels.

Both sides are wrong in their description of how the EU works. It is not run by bureaucrats, elected or unelected, nor is it undemocratic. I was pleased to come across an interesting article on Bella, by Alistair Davidson, outlining why the left should support the EU. The article also contains a very brief and succinct description of how the EU works and where the real power lies within the EU. “There is a tendency in Britain to blame “the EU” as though it is a government apart, but in fact EU policy is largely driven by national governments in the Council of the European Union. The so-called European Parliament is actually a second chamber like the House of Lords. It is the national governments who appoint the Commission and the national governments who control the equivalent of the Commons. We have a right-wing EU because we have right-wing European governments.” (my emphasis)

This is why I have titled this post as a failure of the Left. The left in its broadest sense has conspicuously failed across the EU. In member state after member state, a majority of voters have elected and often re-elected parties and governments of the right. Often a very nasty right. They have not done so on orders from Brussels or from Berlin. Yet the left, as Alistair Davidson notes above, much prefers to blame the EU, instead of reflecting on why the left has been so often rejected.

That the EU is not some monolithic superstate can be seen in the way the EU has responded to two very different and difficult challenges in the last year or so. I refer to Greece and the ongoing refugee crisis. In the case of Greece there was a very clear and consistent approach by the EU. On the other hand there has been the exact opposite when dealing with the arrival of hundreds of thousands of refugees. There has been and continues to be, no clear and consistent approach to the refugee crisis. Yet it is the same EU in both cases.

Why was the EU able to respond in such a clear and consistent and united way to the crisis in Greece? This was because, as noted above, we have right-wing governments across the EU. All of them in favour of austerity as the only way out of the financial crisis. Wrong headed we would all agree, yet this was the position of nearly all the democratically elected governments within the EU. As they were all imposing austerity measure on their own populations, it was hard to see why they would not insist on the same measure for Greece. Remember too that it was not the EU that created the financial mess in Greece. A democratic vote in Greece does not trump a democratic vote elsewhere.

The Commissioners who led the negotiations with Greece were able to do so confidently because the had the unified support of all the other 27 member states. Not sure how this can be described as undemocratic. While the Commissioners led the negotiations, it was perfectly clear that the key decisions were all taken by the elected government ministers of the member states. It seems rather perverse to suggest that the likes of Wolfgang Schäuble or Angela Merkel or François Hollande are faceless bureaucrats. We may all agree that the choices these politicians made was wrong, but we cannot deny their right to make the decisions. Again the key question should be why has the left failed so miserably in getting left-wing governments elected across the EU? Blaming Merkel or the EU achieves nothing.

When it comes to the ongoing refugee crisis which started last spring, we see the EU working in the complete opposite direction. Or perhaps not working at all, might be a better way of putting it. For in this case the member states have been and remain unable to agree on a common response to the refugees. Each country has acted on its own behalf, with little or no attempt to find common ground with others. The EU Commission has made all kinds of pronouncements and suggestions, but to no avail. This illustrates perfectly the powerlessness of the EU Commission. Though full of ex-politicians, the Commission is essentially a civil service. And like all civil services it does what its masters tell it to do. The masters here is the Council of Ministers, where the representatives of all the 28 member states meet to decide on policy and action. Or not, as in the case of the refugee crisis.

For better or worse the EU does not have a government. The Council of Ministers or the European Council are the supreme decision making bodies in the EU. The Parliament has a role to play, but not of initiative, and the key decisions remain in the hands of the governments of the member states. Alas, when they cannot agree on a common response, we get inaction or muddling through. As we can see with the refugee crisis. Again, though deplorable, I find it hard to see how this is undemocratic.

In both cases the left has had little constructive to say. I am still not aware of any consistent programme of action from the left on how the EU should respond to the refugee crisis. No doubt there are suggestions from various groups on the left, but there does not appear to be a clear and consistent approach by the left.

In the case of Greece, even the left of centre governments of France and Italy supported the hard line taken by their colleagues. While some on the left have opposed austerity from the beginning, the broad left has not. This failure to oppose and challenge the need for austerity is to my mind the single most important reason for the failure of the left across the EU. Simon Wren-Lewis in his blog has written much about this failure. His most recent post contains this criticism of the left: “Austerity is a trap for the left as long as they refuse to challenge it. You cannot say that you will spend more doing worthwhile things, and when (inevitably) asked how you will pay for it try and change the subject. Voters may not be experts on economics, but they can sense weakness and vulnerability. If instead you restrict yourself to changes at the margin, you appear to be ‘just the same’.”

I agree wholeheartedly with Simon Wren-Lewis on this score. It is not enough for some radical parties to challenge the dominant ideology of the right. They will never win power on their own. The broad left needs to somehow find a way of coming together in coalitions to win power. Not to simply endorse an austerity lite programme, as the socialists in France and Spain have done, but to challenge the whole mythology about austerity.

However this will require some hard reflections on all sections of the left as to why they have so conspicuously failed to make this challenge. So far it seems many on the left prefer the easy route of just blaming the EU.

 

 

Finally – a new Catalan government

Just over three months after the elections Catalunya has a new government and a new President. The long running saga of farce and high drama finally came to an unexpected end last Saturday. The two pro-independence groups in the Parliament reached an agreement at the 11th hour. The new President is Carles Puigdemont from Convergència Democràtica, the Catalan Liberal party, and he was voted in as President on Sunday. Why did it take so long to reach this outcome? This post gives an overview of the recent comings and goings in Catalunya.

The arithmetic

At the elections way back in September of last year the two pro-independence coalitions won an overall majority of the seats in the Parliament – 72 seats out of 135. However the larger of the two coalitions – Together for Yes, JxSí, won 62 seats, six short of an overall majority on its own. JxSí was thus dependent on the other pro-independence coalition – the Radical Left Popular Unity party, CUP, for the necessary votes to get its candidate, Artur Mas, elected as President.

CUP play hardball

Alas for JxSí, the CUP had campaigned resolutely against Artur Mas during the election campaign, claiming he was too right wing and tainted with corruption. After the elections, the CUP stuck rigidly to their guns. Two extraordinary assemblies of the their membership were held. The first resulted in a tie between those who supported voting for Mas and those against. The second eventually decided to maintain CUP’s opposition to voting for Mas. Everything pointed to a dissolution of the Parliament and fresh elections in March. Then, out of the blue, at the last moment a compromise was reached. Arthur Mas would stand aside and a close associate of his, Carles Puigdemont, would become the JxSí candidate for President.

A pyrrhic victory for CUP?

Though the CUP has doggedly stuck to its guns over not voting for Mas and has achieved its wish, the cost to the party may turn out to be more damaging than accepting Mas. The first point is that both groups had already, as early as November, agreed on the road map to independence. So all that the CUP was arguing about was who should lead this transition to independence. Secondly, the price that the CUP will now have to pay for getting Artur Mas to stand aside seems to be very high.  The CUP has now given written assurances that two of its MPs will join with the JxSí parliamentary group and vote with them at all times. This assures that the new government will have a majority even if the other 8 CUP MPs vote against the government. In addition the CUP has publicly agreed that in no circumstances will its MPs vote against the government in a motion of confidence. Effectively this means that the CUP is pretty much hamstrung for the rest of the parliamentary term. All this just to get someone else as President. Seems a very high price for purity!

Who is Carles Puigdemont?

The new Catalan President is 53 years old and from the province of Girona. He is a journalist by profession and founded the English language journal Catalonia Today. He was until yesterday the Mayor of Girona city council. A member of Convergència Democràtica, he was elected to the parliament in September as part of the JxSí coalition. He is also a very close ally of Artur Mas. Judging by his performance in the parliament during his investiture, he seems to be a very confident, sympathetic and articulate politician.

What next?

Now that the Presidency has been sorted out, the new government can begin to implement the nine points in the Road Map to Independence that the parliament approved way back in November. This will involve the creation of all the institutions that go to make up a new republic – treasury for example. Inevitably this will lead to a rupture with the current Spanish state. Already the Spanish constitutional court has ruled the Road Map as unconstitutional. The new Catalan government will just ignore these rulings from Madrid and persevere with the creation of a new republican state.  This process will also involve negotiations with other countries, especially the EU. The intention is that this new Catalan republic will be declared within 18 months.

The Spanish and EU response?

This is where things get really interesting and potentially violent. All the main Spanish parties, with the exception of Podemos, are rigidly opposed not only to Catalan independence, but to the right of Catalans to determine their own future – the right to self-determination. No referendum will be allowed, ever. This has been the mantra up to now. Will it change? Faced with the insistence of the new Catalan government to move ahead with creating a new state and ignoring the decisions of the Madrid government, what will the Spanish government do? Arrest the members of the Catalan government? Send in the troops? Dissolve the Catalan parliament and impose direct rule from Madrid?

Just as uncertain is how the EU will react to all this. Not just at the formal, collective level, but how will the individual member states react? Hard to see them all, or indeed any of them, just ignoring the clear democratic wishes of Catalans as expressed in last September’s election. Will they try to persuade the Spanish government to agree to a referendum? Interesting times lie ahead.