Why I’m intemperate about freedom of movement

Note (1st October 2019): The post below was written in April.  Today at the Conservative party conference, Home Secretary Priti Patel smirked while she declaring she will “end the free movement of people forever” as if that were driving a stake through a vampire’s heart. The Labour party, on the other hand, has made some progress, the party conference voting overwhelmingly to support free movement; yet Shadow Home Secretary Diane Abbott makes clear that the leadership doesn’t feel bound by that – so, despite the appearance of progress, my plague-on-both-your-houses must stand.

The original post: It pains me to see the leadership of the UK Labour Party doubling down on its opposition to continued freedom of movement between the UK and the other 27 countries of the EU. A few impressions:

Westminster politicians don’t understand this issue, because they are typically more inward-looking, less international, than their constituents. British political careers famously begin at university and of course continue within the UK, with the MP being somebody who has devoted years to getting the support first of party members and then of voters, almost all of them UK citizens. The upper levels of the civil service are likewise extremely British. Contrast that with work in most sectors of business, education, or the health service, where an international cast of both co-workers and customers/clients/students/patients is the norm, and where careers often include opportunities for work abroad. My guess is that, relative to other Britons of the same age and education, most Westminster politicians, whatever the party, don’t have a clue of the extent to which freedom of movement within Europe has become a part of the lives – and the identity – of many of their constituents.

The university where I teach, a mile and a half from the Palace of Westminster, might as well be on a different planet.

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Even soft Brexit gives the oil oligarchs what they want

Putin – whose name I use here as shorthand for the entire oligarchy of not just Russia but all major fossil fuel exporters – wants to prevent the emergence of international institutions which would be able to bring climate change under control. That is because the control of climate change would require destroying the oil and gas business, and with it his wealth and power.

To this end, two of the central objectives of the oil oligarchs have been the installation of a US government which is hostile to international cooperation in general and cooperation on climate in particular; and the fragmentation of the European Union. Trump, and Brexit; more broadly, a science-denying Republican party, and resurgent nationalism in every European country and region.

Even soft Brexit will be enough for Putin

I will explain below why these two political objectives, in the US and in the EU, are necessary – and, unfortunately, probably sufficient – for Putin’s ends. But first let me just say that, for Putin’s purposes, any Brexit will do, Hard, No Deal … or the softest of soft, as long as Britain withdraws from the political institutions of the EU. Continue reading

Have-your-cake-and-eat-it, Lexit style: Paul Mason gives a master class in the transitional demand

Paul Mason, writing in the New Statesman last week,  gave a nice rendition of Jeremy Corbyn’s rule-maker-not-rule-taker position on Europe. Mason, like Corbyn, focuses on the EU’s regulations on state aid, which both men claim conflicts with Labour’s plans.

Mason makes a kind of have-your-cake-and-eat-it argument. But unlike the sunny Tory-Brexit vision of the benefits of being in and being out both arriving effortlessly, Mason demands having the cake and eating it. He’s ready for battle, though the battle is all for show – he knows his demands won’t be met; indeed, he makes the demands because he knows they won’t be met.

European law places substantial restrictions on subsidising and aiding individual companies, though there is considerable disagreement as to whether the measures in Labour’s platform would fall foul of this: for a view contrary to Mason’s see Biondi and Tarrant. What is clear to all is that the rules on state aid are evolving through the EU’s internal processes, and that leaving the EU would mean leaving losing influence over the evolution of the rules. It is also clear that the closer the UK remains to the EU – is in particular, the closer its integration with the Single Market – the more closely it will need to align with EU regulations, not least those on state aid. That’s the quandary. Now see what Mason does with it.

Mason says he wants the UK to be in the Single Market but with an agreement which allows the state to “subsidise, aid, restructure and, where necessary, nationalise companies”. He acknowledges that it is not clear whether, as things now stand, EU state aid regulations would actually conflict with Labour’s programme, but he raises two spectres: one is that Brussels even now is planning to exact vengeance on the UK because it’s leaving, and that Brussels’ wrath would be redoubled with the advent of the long-awaited left-wing Labour government; the other is that Brussels will fall under the sway of a “right/far-right coalition” (though the far right of course is also hostile to the EU’s state aid restrictions…).

So what does Mason want, in return for his precious support for remaining under single market rules?  “I want an advance, legal and binding agreement that European rules will not now, and cannot in the future, sabotage a Labour government’s programme.” (the underlining is Mason’s)

Sure, and I want a unicorn for Christmas.

Consider first that we’re talking about an international treaty. Treaties don’t work like commercial contracts – governments withdraw from them as they choose, and there’s really no way to hold them to account for it. And, as Mason correctly notes, the EU’s own treatment of the state aid problem keeps evolving. He frames the problem as one in which the UK, having renounced its right to help write the rules, should make its participation contingent on rules being frozen in place for the UK, even as they evolve for other Single Market members. That simply won’t happen: “legal and binding” is a unicorn.

Second, even if HM Government could find and capture such a unicorn, Mason is writing as a partisan of a Labour party that does not have the privilege of negotiating the details. Whatever concessions this government does negotiate, they will certainly not be specially geared to facilitate the implementation of the Labour election manifesto. For the same reason, we can’t credit the Times’ report linked by Mason, of an anonymous “senior Brussels source” (how vague is that attribution) claiming that the “real battle” in the negotiations with Britain is over state aid rules due to Brussels’ fear of Labour: does the Times want us to think the reason for lack of progress in Brexit negotiations is that the Tories are not allowing Brussels to construct an agreement that will protect Margaret Thatcher’s legacy from a future Jeremy Corbyn government? (I know that the previous sentence is strange, but that does seem to be what the Times, and Mason, are claiming.) The best explanation for the Times story is that it is an attempt to plant a meme helpful to the Tory soft Brexit camp, in their battle with the hard Brexit camp: the Times is telling fellow Tories that Brussels is just offering them tough love, protecting them from the spectre of corbynism. Only a fool would believe this, but Mason seems to put his readers in that category.

Third: even if there were to be a pre-Brexit general election which resulted in a Labour majority, and that election were to occur soon enough that Labour could negotiate the final deal with the EU, and Brussels were not as determined as Mason claims it is to sabotage Labour… even if all of those things, why on earth would the EU agree to allow any Single Market member to provide whatever state aid it wanted? We need to keep in mind why restrictions on state aid are so important to the functioning of the single market.

The fundamental reason for state aid restrictions in the Single Market is to prevent races to the bottom: mutually destructive subsidy wars. Countries can shield themselves from subsidy wars with trade barriers, but the Single Market abolishes those – that’s why the EU’s internal restrictions on state aid are so much more exacting than those of the WTO.

To accede to Mason’s demand of an unfettered right to “subsidise, aid…” etc. UK companies, public or private, would be to let the UK act like a state or city in the USA. That means giving massive tax subsidies to particular companies in exchange for building (or not closing) a plant or an office. For a taste of what that means read about the long-drawn-out beauty contest of American cities offering free everything to Amazon in return for the privilege of hosting its “second headquarters” (its home city of Seattle having become too small for the company), and bear in mind that this is just one current example of something that happens every day, all over the USA. It starves local public services in the USA of revenue, and undercuts small businesses that don’t have the bargaining power that big corporations do. Of course the EU would, and should, refuse to allow this within the Single Market. It’s not about whether nationalization can happen within the EU (it can): it’s about whether individual corporations can hold up the Exchequer for bespoke tax rebates. The EU has no reason whatsoever to let the UK use this tool for “industrial policy” as it steps (halfway) out the door.

Mason is a clever and well-informed person, who cannot possibly believe that his demand has any chance of being met. I believe that, technically, he is making what in the Trotskyist political tradition is called a transitional demand. That’s a demand that you know cannot be met. Often, of course, people make demands that won’t be met, as a bargaining position, expecting or hoping for compromise. The transitional demand is different: it is made to be rejected, to demonstrate that the end you seek cannot be achieved within the current system.

Mason’s demand on state aid is a perfect example of this. It is meant to achieve two things: first, for Mason to be able to claim to support Single Market membership while not in fact doing so in any meaningful way; second, to show –  when the Tory-EU negotiators fail t accede to Mason’s demand – that the UK has no place in the European single market. This would be comical if it were not so close to the position of the Labour leadership.

 

Trump, Putin, CO2 and EU, redux

Open Democracy has just published a my piece on Trump, Putin, climate change and the EU (the connection is perhaps not blindingly obvious – I hope that list of items has piqued your curiosity. You can read more here). Continue reading

Cyprus and re-regulation

The Tax Justice Network dishes dirt on what the “financial services” industry of Cyprus was selling. So will the EU really close this business down in Cyprus? And will it roll on from that to the many other tax havens (or what the TJN people call “secrecy jurisdictions”) either in the EU or under the protection of various EU states? It could, in the end, go that way.

We can hope that this is a step on the road to bringing the financial sector under control. Continue reading