Jeremy Corbyn’s leadership and the single market

At this year’s Labour Conference a row was sparked with accusations from Labour’s right-wing, and their media allies, that debate on Brexit was stifled.

The reality, sketched out by Alex Nunns in a Red Pepper article, was there was a full debate and an indirect vote in the form of the arcane sounding ‘reference back’ which was heavily defeated.

The right-wing groups Progress and Labour First are campaigning for Labour to commit to remaining in the Single Market through membership of the European Economic Area (EEA). After their set back at conference they pledged to take their argument to “…every constituency Labour party in next 12 months”.

An example of this is a resolution to a constituency party:

“This Constituency Labour Party:

Notes the August publication of the Government’s position papers on a range of EU withdrawal matters including future UK-EU customs arrangements;

And believes that these recent papers reveal that the current approach risks job losses, and loss of rights for workers;

Further, notes the Treasury estimate that moving from the “soft” Brexit of the European Economic Area (EEA) (which could see tax revenue fall by £20bn) to the “hard” Brexit of a Canadian-type deal is estimated to cost an additional £16 billion each year, and that if the UK defaults to WTO trade rules, then the annual tax loss may be as high as £45 billion (four times the annual public expenditure on English GPs);

And believes that Labour must urgently campaign against austerity that has harmed our public services;

and therefore calls upon the Labour Party to adopt a policy of remaining in the European Customs Union and Single Market through membership of the EEA”

Reversing the referendum result

Jeremy Corbyn addressing the Labour Party Conference 2017

The reference to campaigning against austerity is just a superfluous red herring. However, framed as it is the resolution appears to demand reversing the referendum result, of maintaining the status quo. It does not put forward alternative means of accessing the Single Market, for example, by joining the European Free Trade Association (EFTA).

The resolution seems oblivious to an obstacle put in place by the EU themselves. In their Article 50 fact sheet they write in answer to the question of revoking Article 50:

“It is up to the United Kingdom to trigger Article 50. But once triggered, it cannot be unilaterally reversed. Notification is a point of no return. Article 50 does not provide for the unilateral withdrawal of notification.” [My emphasis]

The resolution ignores political realities such as the widely held view that preventing Brexit would be undemocratic and that the majority, 70% according to a recent poll, think that Brexit must be enacted. There is the additional complication that two-thirds of Labour voters voted remain while two-thirds of Labour constituencies voted leave – giving Jeremy Corbyn a difficult hand to play in uniting Labour’s support.

As an aside, on the question of preventing Brexit – an irony is that the behaviour of the Tory ‘Hard Brexiteers’ in making Brexit an expensive train crash may itself put the question of a second referendum on table. But for the Labour Party to lead calls for another referendum, for reasons already outlined it would be tactically foolish at this stage.

The resolution also shares a illusion common to ‘remainers’ and ‘leavers’ across the Brexit debate that the negotiations are primarily about trade.

The EU is not just an economic project

The EU is not just an economic project it is also a political project, which marks it out from most other trade blocks.

The Commission’s Chief Negotiator, Michel Barnier, reflected this in a press briefing:

“…Unity is the strength of the European Union and President Juncker and I are determined to preserve the unity and the interest of the EU27 in the Brexit negotiations. This determination is shared by all governments.”

He went on to make clear that the UK would not get a deal that would make it attractive for other members to leave.

In this respect the interests of trade is subservient to, and flows from the strategic imperative to preserve the cohesiveness of the EU. Unfortunately that is often pushed to the background in the Brexit debate and apparently ignored by the UK in the talks with the EU.

Not all trade the same

Rotterdam Port

The failure to fully appreciate the EU’s strategic interests has led to the widespread belief that the nature of the trade relationship between the UK and EU compels the EU to accede a ‘good trade deal‘ because otherwise, it “…would be an extraordinary act of self-harm”.

The example of the automotive sector is often held up, where the manufacturing is integrated across borders. But not all trade is the same, for services and especially finance the picture is different.

There is a trade deficit in goods but for services, financial services in particular, there’s a surplus. According to a House of Commons Briefing paper (Number 7851, 17 August 2017) ‘Statistics on UK-EU trade’:

“The UK had an overall trade deficit of £71 billion with the EU in 2016. A surplus of £24 billion on trade in services was outweighed by a deficit of £96 billion on trade in goods.”

“Services accounted for 40% (£96.4 Billion) of the UK’s exports to the EU (£241 billion) in 2016. Financial services and other business services are important categories of services exports to the EU.”

The finance industry may not have many fans but objectively speaking it is an important sector of the UK economy, worth nearly £125 billion and employing around 1 million in 2016.

Finance is a sector, unlike the automotive industry, where the UK faces powerful competition from Germany and France and other centres meaning there is a material interest in undermining the competitiveness. There has been hard lobbying for companies to relocate away from London to mainland Europe.

So, even on the narrow issue of trade the widespread assumption that EU would readily come to a ‘good trade deal’ granting the UK’s wishes is not necessarily the case.

Labour manifesto a good working formula

The triggering of Article 50 has launched the EU and the UK into uncharted territory. There is uncertainty in regards to what the EU will do to protect its strategic interests and what individual countries will demand in respect of advancing or protecting their own interests.

In this regard the leadership’s approach, set out in the Labour Party Manifesto, provides a good working formula:

“We will prioritise jobs and living standards, build a close new relationship with the EU, protect workers’ rights and environmental standards”

This gives a set of criteria to judge negotiations against while maintaining the flexibility to react and adapt to circumstances as they unfold.

Motions like the one above should be rejected not just because they are devoid of realism and strategically naive, but as one delegate to conference spelt out to great applause, the real intention is “…to undermine Jeremy Corbyn’s leadership”.

Gary Hollands

14th October 2017

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Addendum

EU red lines and Labour’s principled approach

There is lot of carping from sections of the media that Labour won’t set out the details of the deal it would negotiate with the EU.

But that, so to speak, is putting the cart before horse – The EU is a geopolitical project as well as an economic one.

The Chief Negotiator, Michel Barnier made it very clear that the priority governing EU’s approach to negotiations was the cohesion of the EU27.

In addition, the EU is adamant the UK will not get a deal that would make it attractive for others to consider leaving. As former Polish Foreign Minister Radek Sikorski succinctly puts it, “It has to be seen that Britain’s advantage is less than membership”.

So everything in the negotiations, including trade, flows from those geopolitical imperatives.

Which gives Labour two practical problems.

  1. The EU will have red lines but those red lines have not yet fully materialised – It is likely they won’t become clear until negotiations move past the current phase on the EU’s three requirements
  2. Labour is not in position to test by negotiation what and where those red lines are – The Tories are in control, if that’s the correct term for it, of the process

In any situation of volatility or transition there will be a certain formlessness while events are in a state of flux, making it difficult to be precise.

Which means that it may only be possible to sketch out a general position as a starting point – A position that is drawn from principles while events themselves help fill in the details.

That is where Labour is now, its position is a good working formula drawn from its principles that:

“We will prioritise jobs and living standards, build a close new relationship with the EU, protect workers’ rights and environmental standards”.

That principled approach allows a set of criteria to judge negotiations against while maintaining the flexibility to react and adapt to circumstances as they unfold.

GH 21 October 2017

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North Korea: Fire and Fury

They will be met with fire and fury like the world has never seen.. This thinly veiled threat of nuclear annihilation from Donald Trump was the latest round in the trading of insults between the US and North Korean regime.

It’s not just mere insults being traded, in their game of one-upmanship the North Koreans fire missiles over Japan and the Americans fly bomber squadrons along the North’s coast.

This ‘sleepwalk’ to war is nothing more than a battle to maintain global hegemony but it would be ordinary Koreans paying the heaviest price. Their true interests lie in a united Korea based on democratic economic control.

Dress rehearsal for war

Kim Jong UnKim Jong Un supervises missile launch

This latest confrontation over North Korea’s Nuclear missile programme is another stage in the phoney war between the Democratic People’s Republic of Korea (DPRK) and the US since the armistice in 1953.

PJ Crowley, Former US Assistant Secretary of State, summed it up for the BBC:

“The end of the Korean War in 1953 technically represented a cessation of hostilities between the two sides. But in reality there has been open hostility ever since.”

Every year the US, which still has nearly 30,000 troops on the peninsula, and South Korea have held large military exercises which include:

“… surgical strikes against North Korea’s nuclear, missile and command and control facilities. It also specifically calls for “decapitation” raids by Special Forces to neutralize North Korea’s senior leadership”

As John Delury, professor at Seoul’s Yonsei University, observed on these exercises:

“The US and South Korea can call the joint exercises defensive and regular as much as they want, but it’s not defensive if you’re sitting in Pyongyang.”

Given that one of the participants in these exercises is the world’s most powerful military, the reaction of the North Korean regime is perhaps unsurprising, calling them a dress rehearsal for war.

Nuclear weapons, a regime insurance policy

Contrary to the utterances of figures such as Nikki Haley, the US ambassador to the UN, North Korea’s leader Kim Jong-un is not some madman begging for war. The Global Times detailed the regime’s motivation of self-preservation:

“In spite of their progress, Pyongyang is unlikely to be bold enough to preemptively attack the US and its allies. This would be nothing more than suicide. It also runs contrary to the true purpose of North Korea’s missile research – to extend the life of its regime.”

The North Korean dictatorship has witnessed the fate of of other regimes opposed to US interests. In particular the overthrow of Iraq’s Saddam Hussein and Libya’s Colonel Gaddafi. PJ Crowley writing in the same article above outlined those lessons learnt by North Korea from the US’ overthrow of the two dictators:

“First, the removals of Saddam Hussein by the Bush administration and Muammar Gaddafi by the Obama administration – two leaders who contemplated nuclear weapons but didn’t actually build them – led Pyongyang to a simple conclusion: an actual nuclear capability is the ultimate regime insurance policy.”

Sleepwalk into war

Antonio GuterresUN Secretary-General Antonio Guterres

The missile and nuclear advances made by North Korea has brought into range important bases such as Guam and civilian areas of the US mainland. Richard Parker, an American journalist in an analysis for the Politico Magazine, wrote:

“If Kim can credibly threaten Guam, he threatens the United States’ ability to fight all but a short war on the Korean Peninsula—not to mention the U.S.’s ability to fight another major war elsewhere. As threats go, this one is surprisingly precise, credible and strategic.”

Basically the problem with the missile programmes of smaller rivals, such as North Korea and Iran, is that it gives them the ability to disrupt pre-emptive strikes by the US. So while military action may seem to be counter productive and risky it is compelled by geopolitical interests.

This means that the window of opportunity for regime change is narrowing, giving a powerful motive for a pre-emptive military action by the US.

However there are countervailing pressures against war. The civilian cost could be huge given that the South Korean capital Seoul is just 55km from North’s artillery arsenal and there are military facilities in and around the North’s capital, Pyongyang.

The economic impact would be global, Reuters quoted economists Gareth Leather and Krystal Tan:

“South Korea is heavily integrated into regional and global manufacturing supply-chains, which would be severely disrupted in the event of a major military conflict.”

There is also the real risk of the conflict widening. It is probable that China would intervene in the event of Kim Jong-un’s regime falling to prevent both a US push to its border and the humanitarian fall-out.

In light of these risks some policy makers are contemplating living with a nuclear North Korea but freezing their development. Lawrence Korb, a former US assistant secretary of defence, suggested direct talks with the North with an offer to formally end the Korean war, also added:

“Eventually that’s how you’re going to settle this. You’re going to have to recognise North Korea as a nuclear power – you want to stop it where they are, and guarantee their sovereignty,”

However, proposals from China and Russia of a ‘double suspension‘, suspending the North’s nuclear programme and the US’ and South Korea’s military activities, have been rejected out of hand.

The current stand off between North Korea and the US is clearly not sustainable. The US is ratcheting up the pressure with the imposition of ever tougher sanctions. But for the regime self survival outweighs the pain of sanctions, all they do is delay the outcome – Something will have to give…

The deteriorating relations between North Korea and the US has raised fears of the crisis spilling over into conflict, the UN Secretary-General Antonio Guterres warned that, We must not sleepwalk our way into war..

Risks of regime change

Farm in North KoreaNorth Korean farm

Regime change carries risks of the economic collapse of the North, the impact of which would spill over into the South.

A combination of regime priorities, bureaucratic mismanagement and sanctions has throttled economic development in North Korea. Its GDP at $28 billion (2013 est.) is barely above the levels of the late 80s and is dwarfed by South Korea’s $1.411 trillion (2016 est.).

Comparing GDP per capita throws the differences between north and south into even sharper relief. In the South it’s at $36,900 (2015 est.) compared to the North’s paltry $1,700 (2015 est.).

The regime’s diversion of resources into military expenditure means that North Korean industry has suffered years of under investment. Its poor state means that it would collapse in the face of of direct competition from the south.

The agricultural sector, which employs nearly 40% of the workforce is inefficient, labour intensive and held back by fuel and farm machinery shortages.

This shows the scale of the problem if the US did manage to overthrow Kim Jong-un. The rebuilding of North Korea would consume enormous sums.

South Korea is not the West Germany of 1990 that absorbed the east, it does not have the resources to integrate the North. China is quite right in warning of a humanitarian disaster in the event of regime change but It would also jeopardise the stability of South Korea.

Harness the resources of a united Korea

Neither the North Korean regime or US capitalism are the slightest bit interested that it would be ordinary Koreans paying the price in the event of war.

The regime in the north is only concerned in protecting its privileged and parasitic position. The south is led by a supine and corrupt elite reliant on the US for protection. For the US, South Korea is a useful tool in its battle to maintain it global hegemony and to contain a rising China.

But behind all this geopolitical jostling is a colossal waste of the talents of the Korean people.

The region is fantastically rich in natural resources and the working classes of both North and South Korea excel in many branches of technology.

Only a North and South Korea reunited on the basis of democratic control of the economy can fully harness the talents and resources of ordinary Koreans and deliver real peace and security…

Gary Hollands

26th September 2017

Venezuela at a crossroads

..the only thing Venezuela has in abundance is chaos, this is the verdict of most of the mainstream media on the crisis in Venezuela.

The home of Chávez’s Bolivarian revolution is beset by violent anti-government protests set against a background of economic problems.

Supporters of Chávez and his successor, Maduro, accuse Venezuela’s elites of economic sabotage and colluding with foreign powers to overthrow the government.

Venezuela has reached a crossroads with the choice of taking the revolution forward or the ‘Chavismo‘ movement being drowned in blood.

Gains of the Bolivarian revolution

Hugo Chávez Hugo Chávez

Hugo Chávez‘s Partido Socialista Unido de Venezuela (PSUV formally MVR) came to power on a radical programme of reform after the 1998 election. Most of his support came from the working classes and sections of the middle classes that had experienced worsening circumstances over the previous decade.

Ordinary people made huge gains under Chávez and these continued even after the financial crash of 2007/08 hit oil revenues:

Economic problems put gains at risk

There are without doubt deep economic problems in Venezuela and those problems have taken a sharp turn for the worse over the last two to three years. For an economy that relies on oil for 95% of its exports the aftermath of the 2007/8 financial crash would have presented huge difficulties for whoever was in government. The Legatum Prosperity Index shows that the economic decline is not a problem isolated to Venezuela, other oil states are suffering similar problems due to collapsing oil prices.

Many media reports on Venezuela are simply repetition of opposition claims and studiously avoid context. A comparison between Venezuela and the region sheds a different light. For example, on malnutrition, the most recent data (2014) on death rate per 100,000 due to malnutrition for Venezuela is 1.34, Columbia 3.70, Brazil 4.21, Chile 2.86 and in Honduras, where a US backed coup in 2009 overthrew Zelaya, it’s 8.00.

Venezuela has been experiencing shortages of everyday items from baby nappies to cooking oil. The opposition lays the blame at the door of the government but the reality is much more complex.

Smuggling by Columbian gangs, in collusion with corrupt officials, has had a noticeable impact. It is such a problem that a think tank specialising in international crime, InSight Crime, was moved to comment that;

“The profits of the contraband industry are so huge that it has corrupted the officials on both sides of the border.”

Maduro and his supporters accuse the opposition of economic sabotage, pointing to importers who use government allocated dollars to speculate on the black market instead of importing food.

However, it should be pointed out that some of the policies followed by the Maduro government has exacerbated the problems faced by the poor.

Currency devaluations have raised the price of imported goods and stoked inflation and the differential between the official and black market rates have served to drive the rate up further to the currently over 700%.

The decision to prioritise paying the national debt over imports reduced dollar holdings added to the shortages of basics which in turn has given a further impetus to inflation – leading one trader to cynically remark; What is bad for the country is not that bad for the bondholders…

The combination of corruption, economic sabotage and the crash in oil prices means all the gains that were made are now being frittered away.

This is the backdrop to the wave of anti-government protests that have swept Venezuela.

Opposition campaign of strikes and street protests

Venezuelan opposition protests Opposition street protests

The opposition, under the umbrella of the Democratic Unity Roundtable (MUD) launched its current campaign in April. Tactics have included an unofficial referendum against the forming of the National Constituent Assembly, strikes and street protests.

The opposition organised a referendum against the Constituent Assembly which was heralded a great success. But the reported turnout of 7.1 million was less than the the 7,363,980 votes cast for the opposition during the 2013 presidential election and lacked independent election monitors and verification.

The opposition also boycotted the vote for the Constituent Assembly. Their supporters in the west such as the US and the EU declared the elections illegitimate. Human Rights Watch (HRW) backed opposition claims that the turnout was just 12% not the 41% stated by the Electoral Council.

A further twist was added when British technology firm Smartmatic, suppliers of the voting machines used in the Constituent Assembly elections, made a statement 2nd August claiming that the turnout was inflated by; “at least one million votes”. These allegations were denied by both the election monitors, Consejo de Expertos Electorales de Latinoamérica (Ceela), and Venezuela’s National Electoral Council (CNE).

Strikes

The opposition have also organised strike actions but a notable absence has been the working classes or trades union support.

The Washington Post for example reported on the July 20th strike:

“Wealthier, pro-opposition neighborhoods of eastern Caracas were shuttered and silent until early afternoon, when improvised blockades left them almost entirely cut them off from the rest of the city…”

“…In neighborhoods of western Caracas traditionally loyal to the ruling party, some stores were closed but bakeries, fruit stands and other shops were open and hundreds of people were in the streets, although foot and vehicle traffic were about half of what they would be on a normal weekday.”

The strike actions are in reality employer lockouts with very little support among the poor or the working class.

Foreign interference

The US’ policy towards Latin America was bluntly spelt out by Republican Congress member Mark Sanford:

“I believe in the Monroe doctrine; our hemisphere is our backyard and we ought to be watching it awfully closely.”

The US was accused of helping plan a coup when CIA Director Mike Pompeo said he’d had discussions with regional allies on the question of a transition from Maduro’s government:

“I was just down in Mexico City and in Bogota a week before last talking about this very issue, trying to help them understand the things they might do so that they can get a better outcome for their part of the world and our part of the world.”

Given the US’ bloody history in the region and their policy of installing and supporting right-wing dictatorships there is very good reason to believe that they’re exploring the option of a coup.

What the prospect of foreign intervention does illustrate is the weakness of local capitalism and its narrow base of support.

Opposition closely aligned with the elites

The protests shows the opposition forces as overwhelmingly and urban middle class in character and closely aligned with the elites.

MUD, their western allies and mainstream media wring their hands over the plight of the Venezuelan poor. But the opposition did not use its control of the National Assembly to aid the poor. Instead they proposed legislation that included privatisation, land grabs from indigenous people, state subsidies to privately owned import firms and disposing of social housing.

In common with capitalism internationally the opposition’s programme is to solve the crisis on the backs of the working class, the poor and the vulnerable.

The fear is not dictatorship but expropriation

Constituent Assembly members Members of Venezuela’s new constituent assembly

The Constituent Assembly is a device for Madura to overcome the stalemate with the opposition in the National Assembly and also the splits in his own circle. Monduro depended on mobilising the working class for the vote’s success but that help will not be for free. The Venezuelan masses will expect the Constituent Assembly to deliver a way out of the problems they face.

Maduro has developed a pattern balancing between the classes, with appeals to the opposition for compromise contrasting with mobilisations of the working class while simultaneously leaning on the the armed forces for support – classic signs of ‘Bonapartist[1] tendencies.

All this makes for a high degree of unpredictability. The accusations are that Maduro’s Constituent Assembly is aimed creating a dictatorship, but what the opposition and their western backers fear is not dictatorship but expropriation.

Defend the revolution

Venezuela is at a crossroads, huge gains were made in areas such as healthcare, education and housing under Chávez which are now in danger of being reversed.

Relying on the bonanza of high oil prices Chávez and Maduro stopped short of taking the strategically important sectors of the economy under democratic worker control.

The Chavismo movement needs to unite the working class on a socialist platform and take the revolution forward.

Given the recent examples of coups d’átat in the region and the vicious nature of some of the opposition, the alternative will be the drowning of the movement in blood…

Gary Hollands – August 7th 2017

Notes and references

1. This is the ‘Bonapartist‘ state which Marx first observed in Louis Bonaparte’s regime which was established by a coup in December 1851. Whether Maduro can gain full command of the armed forces as Bonaparte managed is something that remains to be seen…

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