Tag Archives: EU

The Single Market includes the free movement of people

As people scurry about trying to figure out just what Brexit might mean in reality, much of the focus has centred on the Single Market and the free movement of people. Most Remainers and probably a majority of Leavers seem to want the UK to stay in the Single Market. This makes a great deal of sense, as the EU will remain our largest trading partner. However the Single Market has never been just a free trade area, contrary to the myths propagated by eurosceptics. From its beginning in the 1950s, the Single Market (formerly known as the Common Market) has had at its heart the commitment to the Four Freedoms – the free movement of goods, services, money and people. This is what every country signed up to when they joined the EU. Even those countries, such as Norway, which are not in the EU, but are in the Single Market have to sign up for all of the four pillars, including the free movement of people.

Yet this did not stop many in the Leave campaign from claiming that with Brexit the UK could stay in the Single Market, yet somehow opt out of the free movement of people. Now, post referendum we have almost a bandwagon of people on the left joining in. The latest to do so includes Stephen Kinnock and Seema Malhotra from the Labour party. In an article for the New Statesmen they argue that somehow the UK can impose controls on immigration for EU states, yet remain in the Single Market.

It is rather disappointing that so many people from the left are so quick and willing to advocate limiting the free movement of people from the rest of the EU. So much for the great internationalist traditions of Labour.  It seems Labour will stoop as low as it can to appease voters in its former heartlands.  Nothing of benefit tends to come from appeasement. The undoubted hardships for many across the UK do not come from immigrants, but from the failures of successive UK governments, including Labour governments.  But this not something most Labour party members are willing to discuss. Much easier to just blame immigrants and the EU.

However at this moment the key question is whether restrictions on the free movement of people is even remotely possible. I would suggest it is not. This for the simple reason that the Single Market is a package and the moment you start to demand exceptions the whole thing will very quickly collapse.

The UK wants to keep three of the four pillars of the Single Market – the free movement of goods, services and money – but to establish restrictions on the other pillar, the free movement of people. Which is fine and dandy for the UK and any other member state that has similar concerns. But what about the other member states?

Let us take the free movement of services. For most commentators this seems to equate to protecting the financial sector and the City of London in particular. As Stephen Kinnock and Seem Malhotra put it: The UK should protect its financial services industry, including passporting rights, vital to our national prosperity. Leave aside for the moment just why the Labour party should have suddenly become the saviours and protectors of financial services. Instead ask, why would all the other 27 member states agree to this? If exceptions are to be made to the four  pillars, why not to the free movement of services? What if Germany and France for example were to demand restrictions on passporting rights? Or what if some member states wanted the right to impose restrictions on the free movement of goods or money?

I other words once you start demanding concessions on one pillar of the Single Market, you are effectively calling for the end of the Single Market. If the UK can demand and get concessions on what it wants, there will no argument for denying this right to all the other member states. If the Single Market is beneficial to the UK, which I believe it is, then you accept all its terms and conditions. You cannot expect to pick and choose and not expect others to do the same. As Angela Merkel has made clear the UK will not get to cherry pick the bits of the Single Market it likes.

The UK once again seems to be reduced to pleading for special treatment. At the same time ignoring the concerns of the other 27 member states. We should be given everything we want and they rest should just sign on the dotted line. This line of thinking seems to ignore that the EU has repeatedly made concessions to the UK. The opt outs on Schengen and the euro for example. David Cameron also managed to get some, admittedly minor, concessions for the recent referendum. All to no avail, a majority in England and Wales still voted to leave. So what incentive do the other 27 member state for offering further concessions? Appeasement does not seem to work. It is time to get real about this. Talk of ending free movement of people yet staying in the Single Market is just that – all talk and no substance.

 

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No justification for an early election

All Hail Theresa May, our soon to be new Prime Minister. Last one standing gets the job, no election needed. This is a shame for the members of the Conservative party. An election would also have added much needed mirth for the rest of us throughout the summer as May and Leadsom battled it out between them. However this is a purely internal Tory party matter. They have the right to elect their leader any way they like.

Of course there is the small matter that the leader of the Conservative party is also right now the Prime Minister of the UK. As such there have been some loud calls for an early general election, mostly from the usual suspects, i.e. the opposition parties. However there does not to my mind exist any justifiable reasons for another general election. Not on constitutional grounds, nor on precedent, nor on political grounds.

As regards the constitution, or what passes for one in our non constitutional democracy, we do not directly elect a PM. Only the voters in his or her constituency can actually for for him or her. In a parliamentary democracy we vote for parties and can only do so in our own constituency. 99.9% of voters never, ever, get the chance to directly vote for a Prime Minister. At the last election, if you wanted David Cameron as PM, you had to vote conservative, while if you wanted to vote conservative, you had to do so knowing that David Cameron would almost certainly be the PM. Choice there was none. The same applied to potential Labour party voters. Those who voted for other parties knew that none of their candidates was likely to become PM. So, it seems to me that Theresa May has as much democratic credentials as all other PMs.

Precedent, which is an important part of our non constitutional democracy, also confirms that Theresa May does not require an early election. None of the changes in PM between elections has resulted in an immediate election. At least not in the last 100 years or so. Gordon Brown, John Major, Jim Callaghan et al succeeded to the post of PM without an immediate election. The same has happened in Scotland, Northern Ireland and I am sure, in Wales. There have been three changes in First Minister in Scotland in less than 20 years and none of them felt obliged, or were seriously pressured into calling an early election. So, again, precedent favours Theresa May.

As regards the politics, this too does not warrant another election. What political purpose would an early election have?  The government has not lost a vote of confidence and still has a working majority at Westminster. The Brexit vote is hardly a reason for another election. Though parliament is notionally sovereign and the referendum was technically advisory and not binding, it would be difficult for parliament to just override the result.  Whilst anything is possible, it does not seem to me to be terribly wise for politicians to seek to ignore the result. As Theresa May says, Brexit means Brexit.

This however is where it all gets very interesting politically. Despite Theresa May’s repetitions, nobody, including May herself, knows just what Brexit means. The fine details of Brexiting will provide much scope for argument, disagreements, anger, bitterness, insults and just possibly, some serious negotiations. Once these negotiations or non negotiations get properly started anything become possible. Including an early election. If the government cannot get its preferred position through parliament then it would have no option but to lose a vote of confidence and call for another election. The Tories got us into this mess. It is up to them to get us out of it. Or fail in the process. We may get another election before 2020, but not immediately. Let’s give Theresa May and her merry band as much rope as they need to hang themselves.

 

 

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Without Boris – some clarity, but more questions

Well, who saw that one coming? The rise and fall of Boris in just over a couple days. Boris must have an awful lot of enemies, both within and without the party for this to happen so quickly. From the words of Michael Gove and his wife, it seems that Boris was not reliably Brexit enough. After all Boris was always a bit of a reluctant Leaver, and his vision of a post Brexit UK sounded too close to the current position for many. Too many as it turned out.

The key divide, post Brexit, it seems to me, is between those who will reluctantly accept the result of the referendum, provided the UK stays in the Single Market, and those who want completely out. Without Boris it looks like the outers have won. All the four remaining candidates for the Tory leadership are committed to taking the UK out of the EU. Even Theresa May seems to have come down on the side of leaving the EU completely. The sticking point for her appears to have been the need to control immigration from the EU. Something that is incompatible with the Single Market.

This is potentially momentous. It does clear this aspect up quite considerably. The negotiations with the EU should be simpler, if not easier, and over sooner rather than later. Some arrangement will be needed to ensure access to the Single Market for goods, but it will be almost impossible to get more, access for services for example, without accepting the free movement of people. Which all the candidates have more or less ruled out.

This has made life a whole lot trickier for lots of people, including Scotland’s attempts to remain in the Single Market, let alone the EU. But not just Scotland, the two Irelands and even tiny Gibraltar will feel the impact of the UK leaving the Single Market.

In the case of Scotland this will both clarify and complicate matters. Staying in the Single Market, but leaving the EU, while not optimum, would nevertheless be an acceptable outcome for many. You get most of the benefits, trade and the free movement of people, which most Remainers value highly. It also and most importantly means that there will be no land border between Scotland and England in terms of trade. The downside for those in favour of independence is that this option might well make independence less appealing to some of those No voters who are reconsidering their position.

If, on the other hand, as now seems likely, the UK leaves the Single Market, this makes the choice very binary. The only way for Scotland to remain, not just in the EU, but in the Single Market, would be to become independent. However, with the rest of UK no longer in the Single Market, the trade and other links with rUK would become crucial. England will almost certainly remain Scotland’s most important trading partner. Can we ensure open access to England if Scotland remains in the EU? The question of a hard land border rears its ugly head again. Even those most in favour of remaining in the EU might baulk at independence if it meant restricted access to England.

However these questions are just as important for the republic of Ireland, perhaps even more so. Ireland has always been closely tied to the UK. Ireland has effectively been part of the British Single Market for decades. The Common Travel area ensures hassle free travel across the British Isles. Ireland only joined the UK when the UK did, and may never have done so, if the UK had not. Now of course as an established member of the EU, Ireland will face some very difficult choices if the UK does leave the Single Market. Can the Common Travel Area survive? Will there have to be a hard land border between Northern Ireland and the republic?

Paradoxically, this could help Scotland. If Ireland manages to successfully adapt to the UK leaving the Single Market, while remaining in the EU, then there is no reason why Scotland could not also do so.

The withdrawal of Boris will also impact on the Tory party itself. It is most strange that the Tory party does not have even the option of electing a leader who is in favour of remaining in the Single Market. Remember, most of the cabinet were in favour of at the very least remaining in the Single Market. While some have clearly changed their mind on this, can the same be said for all Tory MPs? This must be dreadful for the likes of Ken Clarke, John Major et al. While they are the old guard, presumably some of the current crop of Tory MPs share their view that leaving the Single Market will be disastrous for the UK. After all around 40% of Tory voters voted Remain. if, even 30% of Tory MPs are opposed to leaving the Single Market, it may prove impossible for the new PM to get this through Parliament. Whilst most people, at least in England and Wales, accept that the UK has to leave the EU, it is less clear how many people will be prepared to accept leaving the Single Market. As the Chinese saying has it, we live in interesting times, and they only look like getting even more interesting!

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Brexit – Will it happen?

A week is a long time in politics, someone once said. Well that was ancient history, as it seems that now, even a day is a long time in politics. At least as far as Leavers are concerned. Barely had the result been announced before we had the hilarious spectacle of leading Leavers more or less confirming that their whole campaign had been a pack of lies. There will be no £350 million coming to the NHS, this was just campaign rhetoric. Even the central campaign claim that leaving was the only way to bring down immigration from the EU has been shown to be a big fat lie. Daniel Hannan on BBC Newsnight stated loud and clear that there would be no reduction in EU migration. Not only that but the free movement of labour within the EU would continue. Hannan told presenter Evan Davis: “Frankly, if people watching think that they have voted and there is now going to be zero immigration from the EU, they are going to be disappointed.” Well, I think going to be disappointed will turn out to be a bit of an understatement.

However things might get even worse for all those who voted to leave the EU. Will it actually happen? Before the UK can leave, the UK government has to invoke article 50 of the EU treaty. Once invoked this sets off a two year timetable, at the end of which the UK will be out of the EU. Having just voted in a referendum to leave, why has the government not already invoked article 50? It seems that the government has no intention of invoking this article, perhaps ever. Even the leaders of the Leave campaign, Boris Johnson and Michael Gove, have stated that the government should wait. For a new Prime Minister to be elected by the Tory party? Longer?

Why all this delay? Tom Short posted on Facebook this comment from the Guardian, which may explain why Boris et al are backing off from taking the UK out of the EU. “And as the day wore on, the enormity of that step (leaving the EU) started to sink in: the markets, Sterling, Scotland, the Irish border, the Gibraltar border, the frontier at Calais, the need to continue compliance with all EU regulations for a free market, re-issuing passports, Brits abroad, EU citizens in Britain, the mountain of legistlation to be torn up and rewritten … the list grew and grew.”

Faced with this prospect it is no wonder that the likes of Johnson and Gove prefer to do nothing and wait and wait. David Allen Green, who blogs as Jack of Kent, has an excellent post in which he details just how significant article 50 is to all this. Or rather, how the failure to invoke article 50 effectively means there will be no Brexit.
How will this go down with all those who did vote to leave, expecting that this would in fact mean leaving, and leaving as soon as possible, preferably immediately? Not very well I imagine. As Green notes, “This will not please Leave campaigners, and rightly so. It means the result of the referendum will be effectively ignored.”

Could something like this actually happen? I have my doubts. Firstly the other 27 member states may try and force the UK to either invoke article 50 or to publicly ignore the referendum result. I cannot see the 27 being willing to just sit around waiting for the UK government to make up its mind. I also do not see the 27 being willing to engage in informal negotiations prior to invoking article 50. I suspect they will want to get this over and done with as soon as possible.

As will those who voted Leave on the basis that leave meant leave. To try and ignore the result in any way would be an enormous affront to democracy. All coming from a group that claimed that the EU was undemocratic! The damage a delay or any attempt to circumvent the result would cause is likely be catastrophic. It would probably make most of those who voted to leave feel even more alienated.

The fact that leading members of the Leave campaign can even consider any of the above, whether it is postponing starting the leave process, or staying in the Common Market, which would include the free movement of people and all these regulations that they claimed were so damaging, just confirms that the Leave campaign was run by a bunch of charlatans, unwilling to take responsibility for what they have unleashed.

Luckily for us in Scotland it matters not a jot what they do or don’t do. If they try to somehow delay or circumvent the result they simply expose themselves as undemocratic and untrustworthy. A perfect reason for leaving the UK. If they go ahead and leave the EU, this provides another justification for Scottish independence. Well done guys!

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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.

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The EU and Greece

Political parties are beginning to gear up for the prospective referendum on the UK’s membership of the EU. Arguments for and against our continuing membership are beginning to take shape. At the moment it looks like Greece, its woes and its alleged mistreatment by the EU will be used as a reason for leaving the EU. The latest to do so was Patrick Harvie, the leader of the Scottish Greens.

In an otherwise balanced article on Europe: the next referendum, Patrick Harvie writes the following:”We’ve seen the disgraceful treatment of Greece by the ‘troika’ which is utterly committed to imposing a hard right economic agenda on Europe regardless of the way people vote.”

Much as I admire Patrick Harvie, this claim is just untrue. It has become a very widespread claim, but it is nevertheless a gross misrepresentation of what happened in Greece. A brief look at what did happen may help to clarify the matter.

The economic mess in Greece was caused by Greeks
The current economic crisis in Greece has been decades in the making. Successive Greek governments presided over mismanagement, corruption and cronyism on a grand scale. This is not the view of an outsider, but the central criticism of most Greeks, including Syriza, who preside over the current government in Athens.

Over decades Greek governments did little or nothing to modernise the country’s economy. Instead they indulged in as much cooking of the books as they could get away with. All this changed with the Euro. With membership of the eurozone, Greek governments could no longer get away with hiding their corrupt practices.

It is to the credit of George Papandreou, that he finally came clean in 2009 about the extent to which Greek governments had lied to its citizens and the rest of the EU. When the true state of the government’s borrowing and tax revenues came to light the government quickly found that it could not borrow any more. The global financial institutions took fright and would only lend to Greece with prohibitively high interest rates. Which effectively meant that Greece was insolvent.

Greece asks the EU for help
Faced with this situation there were very few options open to any Greek government and all of them were bad and nasty. One option was to simply default. Another was to leave the euro and re-introduce its own currency. Or both. However none of these options offered immediate relief to the Greek economy nor to the Greek people. What is more important is that the Greek people by overwhelming majorities have consistently rejected both these options. Opinion polls and election results confirm that a clear majority of Greeks want to stay in the euro and to avoid a unilateral default.

This left Greek governments with only one option. To ask the EU to step into the breach and provide emergency funding to enable the government to pay its way. This help was provided with the assistance of the IMF and the ECB – the infamous troika.
However there is no such thing as a free lunch. The troika, quite reasonably, set out some conditions for their funding. Now we can disagree with the specific conditions set by the troika. I certainly do, the troika’s prescriptions are widely regarded as economically illiterate and counter productive. However the troika is the only show in town.

Greece has accepted the troika’s terms because a majority of Greeks are convinced that the alternatives would be even worse. This is not the fault of the troika. It was the Greeks, all on their own, who got themselves into this mess. Blaming others, whether the troika or anyone else for Greece’s predicament, is not going to help the country move forward.

The EU is not an independent agent
I have one further quibble with Patricks Harvie’s comments. This is when he claims that the ’troika’ is utterly committed to imposing a hard right economic agenda on Europe regardless of the way people vote. Again this is not true. As the article is about the EU, we should just focus on what the EU can and cannot do. The key point about the EU is that it is not an independent body that can act separately from the member states.

The EU is essentially a club formed by the member states. The governments of the member states get together and when there is sufficient agreement, they will adopt a particular policy or regulation. But only where there is either unanimity or a very wide consensus.

This near unanimity, alas, applies in relation to economic policies. Just about all the member states, including our very own UK, have democratically elected parliaments and governments committed to a neo-liberal, austerity agenda. This agenda has not been forced on any country. It is the opposite. It is the member states which have forced the EU to adopt and agree to this austerity agenda.

This austerity agenda is not the result of the EU ignoring the way people vote. It is precisely because the overwhelming majority of voters in EU countries have democratically voted for austerity parties that this has become the dominant policy in the EU. That one country, Greece, has voted for an alternative policy, cannot alter that fact. I assume that Patrick Harvie is not suggesting that the rest of the EU be forced to adopt whatever policy the Greek people want.

If we want to change the current dominant neo-liberal agenda in the EU, then we need to work even harder to convince our fellow citizens in all the member states to vote for parties committed to an alternative economic and social future. Distorting how the EU works will not make that task any easier.

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Corbyn and the EU

It is only to be expected that the new leadership of the Labour party will need a bit of time to flesh out their policies on the main issues facing the country. However the sloppiness of thinking on the issue of the prospective EU referendum is deeply worrying. Corbyn and his inner team will not commit to campaigning for the UK to stay in the EU and this line seems to be based on rather flimsy reasoning.

Corbin himself has stated that he cannot say how he will vote until the Tory government finalises the details of its reformed package. To do otherwise would be to give Cameron a “blank cheque”. A further reason for voting to come out of the EU has been put forward by others in the party, namely that Cameron may succeed in eroding workers rights as part of his deal with the other EU countries.

Both of these approaches seem to be to be not just flimsy, but counter productive. The argument that a possible erosion of workers rights should cause people to leave the EU is simply farcical. In this putative case leaving the EU does nothing, absolutely nothing, to stop this erosion of workers rights. Worse, by leaving the EU completely, it allows our nasty Tory government the space in which to legislate for even greater erosions of workers rights. Leaving the EU will not in itself make a  blind bit of difference to the actions of our current Tory government, which let us remember will remain in power till May 2020.

The “blank cheque” argument is superficially more reasoned, but only superficially. Campaigning to leave the EU is a major, major decision and leaving the EU will be a complex process with considerable consequences for the UK and its citizens. To contemplate doing so, simply on the basis of a disagreement over elements of a renegotiation package is just irresponsible. It must be emphasised that whatever Cameron manages to achieve, if anything, only lasts as long as the Tories remain in power. A future Labour government in 2020 could easily and quickly reverse these changes, assuming they have even been brought into force by then.

Given the parliamentary arithmetic, it may not be possible to vote down any package that Cameron succeeds in reaching with the other EU states. So, it may not be possible to stop these changes, including any erosion of workers rights. But they can be overturned after the 2020 election. They can only be overturned after that election. Leaving the EU in the meantime does nothing to alter that and if the only reason for leaving the EU was opposition to these specific changes in workers rights, does that mean that Corbyn and Labour will be campaigning in 2020 to rejoin the EU? It simply does not make sense.

Of course it may be that Corbyn and those publicly contemplating a No vote, actually want to leave the EU. Which is fine, but they should have the courage of their convictions, and come out openly and say why they want the UK to leave the EU and how this move would benefit British workers. The heart of Corbyn’s appeal was that he was not like the other contenders and would not hide behind meaningless spin. So it is time for Corbyn to come clean and stop hiding behind “blank cheques” and come clean and share with all of us what he really thinks about our membership of the EU.

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Syriza – And Now?

As a former UK Prime Minister once said, a week is a long time in politics. Mind  you, it did not take a whole week for the political situation in Greece to gyrate almost 180 degrees. The big No vote against the EU imposed austerity measures barely lasted a day. Greece has now put forward new proposals which look remarkably like the one they rejected a week ago. These new proposals have even been enthusiastically approved by the Greek parliament. What is going on?

As I and others have consistently pointed out there is a yawning chasm at the heart of Syriza’s platform. This was to end austerity and to stay in the Euro. It was never made clear how they would be able to achieve both. The first, ending austerity, was not and still is not, something that Greece can do on its own. It needs the agreement of the infamous Troika, which is not really just three players, but anything up to 21. To get an agreement on changing the bailout conditions and thus ending austerity, Greece needed the approval of all 18 of the other eurozone members. Some of whom need to get Parliamentary approval to do so. Some are smaller and poorer than Greece, and they find it difficult to understand why Greece needs so much additional support.

The other big problem for Syriza is that while an overwhelming majority of Greeks want both an end to austerity and to stay in the Euro, Syriza never explained what might happen if both were not achievable. In large part this may be because the majority in Syriza regards euro membership as essential for the long term future of Greece. In this they are supported by an overwhelming majority of the Greek population. Polls consistently show anything between 70% and 80% in favour of staying in the eurozone.

However Syriza never really engaged with the people of Greece in terms of what alternatives there might be to not getting an agreement with the EU. Which makes last weekend’s referendum all the more puzzling. It is all very well to say you want to strengthen your hand in the negotiations, but for that you need to be able to threaten the others with something. That something could only be a default and with it a possible Grexit. But this is precisely what Syriza refused to do. It made it crystal clear that a No vote was not a vote for either default or Grexit. So what precisely was the point of the referendum?

Some informed commentators, with good contacts with leading Syriza members, have stated that the Syriza leadership expected to lose the referendum. They had reached the end of the road and wanted someone else to take on the burden of agreeing a new deal, with the extra austerity this would entail. This reading certainly makes some sense and is further borne out by the fact that after the resounding No vote, Syriza had no new proposals in place. It took until late on Thursday evening for their new plan to reach Brussels.

Whatever he expected from the referendum, given the massive No vote, Tsipras had no choice but to continue as Prime Minister. However he moved quickly to shore up his position by getting formal support from the main opposition parties in the Parliament. Hence the big vote in Parliament for the new EU proposals. Everyone now awaits the various meetings which will take place in Brussels tomorrow, Sunday. Most commentators expect the EU to agree on a new package for Greece, though it is by no means guaranteed.

What next for Syriza? If the deal goes ahead then the current financial crisis should end, and the banks reopen. The reforms will need to be legislated for and then implemented. Something that has not really happened up to now. Though the new austerity measures will be hard for many Greeks and completely unnecessary in economic terms, there is still much that a radical left government could do. Not everything depends on money. Once the negotiations are over, perhaps Syriza can spend more time on actually governing and implementing some of the small, but essential changes that will in time improve things for the majority of Greeks. Reducing the rather large military spending for example.

Other radical left forces in the EU need to reflect long and hard on the recent developments in Greece. In particular do not promise to achieve two objectives that are likely to be incompatible. In the case of Greece this was promising to end austerity and stay in the Euro. It is not that these two objectives could not be achieved, but rather that, given the current configuration of power within the EU, it was most unlikely. Power in the EU rests with the governments of the member states. And to the misfortune of Greece, almost all of these governments are right wing governments, some of them very right wing. All are committed to austerity and neoliberalism. All have been legitimately and democratically elected, so this is not a conflict between democracy and unelected institutions.

This should not have been news to Syriza. Which makes it all the more incomprehensible that they pointlessly stuck to their original plan. Which seems to have amounted to nothing more than hoping that the other 18 eurozone governments would be swayed by the eloquence of Varoufakis. In this situation it matters not a jot that Varoufakis may be right. What matters is that the others have the power and Greece did not and does not.

The only alternative to accepting a bad deal was to go for no deal and default and probably leave the eurozone. But the people of Greece, including the Syriza government, have consistently made clear that that choice would likely be even worse. Many commentators have urged Syriza to go for a Grexit, on the grounds that a devaluation would speed up an economic recovery and that anyway, things are so bad that they cannot get any worse.

I think they are wrong on both counts. Those arguing for a return of the Drachma and a massive devaluation point to the likes of Argentina and Canada as examples of where this has worked. This seems to me to ignore both that Greece and its economy is nothing like either Argentina or Canada, and just as importantly the global economy is pretty much stagnant at best right now. In the previous examples, both Argentina and Canada benefitted from rising global demand. Not to mention that Greece imports more than it exports.

As regards the argument that things are so bad, why not just go for it, this seems to me to be irresponsible in the extreme. Just to remind some people, things can actually get worse. In fact things can get a lot worse. The people of Greece need all the support they can get, but false promises of a new dawn are the last thing they need just now. Syriza in government can still make a difference to the lives of the majority of Greeks. Not as much of a difference as they would have liked, but still a difference. Let us wish them well and offer any support we can.

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Is the EU about to implode?

Things are not looking good for the EU at the moment. The recent election of Syriza as the new government of Greece has unleashed some rather disturbing passions. All in response to their reasonable request for a new approach to the debt burdens hanging over many EU states. Unfortunately we are witnessing yet another round of the blame game, this time played out by the member states. As ever Paul Mason in his blog gets succinctly to the heart of the matter – a clash of wills between Germany and Greece. You can read his post here.

As Paul himself recognizes this is all very silly, but alas, potentially very dangerous. The real heart of the matter is how to clear up the mess created by the financial crisis of 2008/08.  A crisis that was not brought about by irresponsible governments. A crisis that was created by individuals and private businesses across Europe. Michael Pettis, an economist at Beijing University has publishes an excellent and detailed overview of this crisis and how it has still to be resolved.  It is a longish piece, see here, but well worth the effort. If Pettis’ article is too daunting, Matthew Klein from FT Alphaville has penned a neat summary of some of the key points. You can read Klein’s piece here.

Pettis concentrates on the eurozone, though it is worth bearing in mind that the crisis started in non euro countries as well, including the UK. Though it is fair to say that the crisis has affected the eurozone more damagingly than elsewhere. Pettis’ analysis is clear that as he puts it, “the euro crisis is a crisis of Europe, not of European countries.”  He calls upon some detailed historical evidence to justify this claim. He goes as far back as 1871 to demonstrate how even Germany has in the past had to suffer similar damaging consequences from too high and too sudden capital inflows.

As many others have regularly pointed out this is not a morality play. And it should most definitely not be presented as plucky little Greece versus nasty Germany. It is worth reminding ourselves that a majority of Greeks have been prepared to vote for parties committed to maintaining the current crippling austerity measures. Even with Syriza’s victory, they and the other anti austerity parties did not win over half the votes. So some Greeks, perhaps a majority, seem to be quite happy to see their fellow citizens continue to suffer. Equally not all Germans are to blame for the current austerity fetish which dominates the thinking of just about all governments in the EU. We should not need to be reminded that German workers have had to endure stagnant wages for over a decade.

The reality is that some people and some businesses, in particular the banking and finance sector, acted very, very irresponsibly. This happened across Europe. For every irresponsible Greek borrower, there was an equally irresponsible German banker. Quite why the workers of Greece or Germany should have to pay the price of this irresponsibility is a bit of a mystery.

The failure to resolve this financial crisis is what has caused the continuing economic mess across Europe. Pettis is very incisive on this point, when he writes, “The financial crisis in Europe, like all financial crises, is ultimately a struggle about how the costs of the adjustment will be allocated, either to workers and middle class savers or to bankers, owners of real and financial assets, and the business elite.” Well there doesn’t seem to have been much of a struggle here. All, and it is worth emphasizing this, all EU governments signed up for the current never ending austerity measures, this effectively putting all the costs onto workers and middle class savers.

At  least up to now, for with the emergence of Syriza and an explicitly anti-austerity government in Greece, there may actually be a struggle as to who should bear the costs of resolving the crisis. We can see why the governments of Germany and other right wing governments in the EU want to maintain the current approach. It benefits their key supporters – bankers, owners of real and financial assets and the business elite, to use the words of Pettis. This also explains why they are so alarmed at the arrival of Syriza.

What this does not explain is why have all the traditional mainstream left parties across Europe also signed up for this austerity nonsense? For this seems to me to remain the key political question. Just think of the roll call of once proud and once powerful parties of the left who now are fully signed up with their right wing counterparts – Labour in the UK, the SPD in Germany, PSOE in Spain, PS in France and of course PASOK in Greece.

Why did they all do it? What led all these self defining parties of the left and of working people, to become willing cheerleaders for neo-liberalism and never ending austerity? The other key, as yet unanswered question, is why has it taken so long for left critics of austerity to come together and form electoral alliances on an alternative to austerity? Perhaps the rise of Podemos and the victory of Syriza will encourage this process in other European countries.

The danger in all this is that the current crisis descends into a right-wing, nationalist extremism. There are no shortage of parties on the right who are already advocating this as a way forward. The growth in popularity of parties such as UKIP, the Front National and other ultra right wing groups should be a wake up call for the left. For all the faults of the EU, its break-up is most unlikely to usher in any kind of paradise for working people. More than ever we need to be building alliances across the EU to bring an end to austerity. We need to do all we can to prevent this crisis descending into a Germany versus Greece contest and instead work to bring working people across Europe together to hold rapacious bankers and business to account.

 

 

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What do Eurosceptics Want?

The recent brouhaha over the appointment of Jean Claude Juncker as the new President of the European Commission is a bit of a mystery. Why is David Cameron and the UK government so frightened of a former Prime Minister of tiny Luxembourg? The Commission has little, if any, real power within the EU. Can anyone remember any, any initiative from the current incumbent, José Manuel Barroso? Apart from some injudicious comments on Scottish independence? Barroso is a bit of a non entity within the corridors of power in the EU. Does anybody really think that Mr Juncker is going to single handedly force the EU into some kind of Federal superstate, so beloved of the Eurosceptics?

The shadow boxing around Juncker is just a side show for the real thing. Which is the attempt by our current Tory led government to renegotiate Britain’s treaties with the EU. Alas, nobody seems to know just what the renegotiation might look like. Much of the pressure for this seems to come from those who want the UK to leave the EU altogether. UKIP and a substantial minority in the Tory party fall into this group. As does much of the mainstream press emanating from London. However most of the Tory party, including David Cameron and George Osborne, want the UK to remain in the EU, and hope that somehow, a deal can be done with the other 27 member states.

This though is where it gets interesting. Just what do the eurosceptics, as opposed to those who want to leave, want? A lot of vague talk about regulations and competitiveness, but little in the way of specific proposals. This morning on radio 4, we had more of this waffle, though David Davies, the former Tory leadership challenger, at least made some attempt to go a bit beyond generalities. He mentioned limits to the free movement of people and the amount of regulations that were handicapping British businesses. At the same time Mr Davies extols the virtues of the Single Market. It makes one wonder if any of these people know what the Single Market involves? For the free movement of people is one of the four pillars of the Single Market, the others are the free movement of goods, services and capital. Together they make up the Single Market. It is a bit naive to pretend that you can curtail one without someone else wanting to curtail the others.

The other issue that Mr Davies raised was the excessive number of EU regulations that apparently are handicapping British firms. Due to these dastardly regulations British firms cannot compete in the global market. It was notable that Mr Davies did not give a single example of these regulations, nor did the BBC interviewer deem it appropriate to ask for some examples. Why let details spoil a good diatribe? Even more surprisingly the BBC interviewer didn’t bother to ask why unnamed regulations were a handicap to British firms, but not apparently a handicap to German, Austrian, Finnish firms for example. It would seem most unlikely that there are any EU regulations that only apply to British firms. So what is Mr Davies actually objecting to? The inability of British firms to compete with their continental counterparts? After all EU regulations, by definition must handicap all EU firms. Has Mr Davies and the Tory party given up on the UK being able to compete on a level playing field with Germany and the other member states? Is the only way that British firms can compete in the global market by operating under lesser regulations than the others?

What exactly are these regulations anyway? Across the EU, the member states have all agreed that an integral part of the Single Market is Health and Safety. Al,l that is except the UK apparently. When eurosceptics object to the EU, they are mostly objecting to the various Health and Safety regulations that have been introduced to ensure there is a level playing field for all firms and producers. These regulations are designed to protect both consumers and workers. It is no wonder that Mr Davies and his eurosceptic friends are unwilling to specify which regulations they object to. It is not much of a rallying cry to say, leave the EU so that you as a consumer will have less rights and that you as a worker will have less protection. For at bottom this is what the eurosceptics want. A UK free from just about all kinds of health and safety and social rights. Their way forward for the UK is as a low wage, low standard economy for the majority and a safe haven for the very rich in the City of London. If you want to protect your rights as a consumer and as a worker, then they are much more likely to be secured in an independent Scotland than remaining in backward looking UK.

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