Show Hide image

The New Depression

The business and political elite are flying blind. This is the mother of all economic crises. It has

We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.

Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.

The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.

In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.

In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.

The Grim Reaper has finally spoken:

a boom pumped up by credit steroids and a bust that takes us back to the 1930s

Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' econo­mics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.

But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.

Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.

Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.

But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.

There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.

Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.

Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".

Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.

This is the sad story of the New Labour era.

The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.

There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.

The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.

Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.

So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.

The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.

This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.

This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.

Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.

The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.

One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.

Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)

the global downturn in numbers

    0.5%

    IMF prediction for global growth in 2009 - worst since WWII

    Up to 40 million

    Number of people who will lose their jobs this year, according to the International Labour Organisation

    $9.7trn

    Total pledged by the US alone towards solving the crisis

    3.6%

    Proportion of GDP pledged by the G7 and BRICs countries towards fixing the crisis (1.5% this year)

    2.3m

    Number of US properties that received a default notice or were repossessed in 2008. In the UK, 45,000 homes were repossessed - another 75,000 are expected to be taken in 2009

    14

    Number of major global banks which collapsed, were sold or were nationalised during 2008

    200,000

    Number of European companies expected to fail this year; an additional 62,000 are expected to fail in the United States. These figures represent record levels of insolvency

    52%

    Increase in UK company failures between late 2007 and late 2008

    14%

    Drop in level of Chinese exports during January

    1%

    Current UK interest rates (down from 5% in October 2008). In the US, rates have fallen to between 0 and 0.25%

How the crisis unfolded

13 September 2007 Run on Northern Rock begins when it is revealed that the bank has requested emergency support from the Bank of England

21 January 2008 FTSE suffers worst falls since 11 September 2001

February 2008 Northern Rock nationalised

17 March 2008 JP Morgan Chase takes over the US investment bank Bear Stearns

12 July Mortgage lender IndyMac collapses - second biggest US bank in history to fail

9 August 2007 European Central Bank pumps ?95bn into banking market

7 September Financial authorities step in to rescue Fannie Mae and Freddie Mac

9 September Bradford & Bingley becomes second British bank to be nationalised

15 September Lehman Brothers files for bankruptcy

16 September AIG, biggest insurance firm in the US, receives $85bn rescue package

3 October 2008 US government announces $700bn Troubled Assets Relief Programme

8 October UK launches its first bank bailout plan, making £50bn available

October 2008 Iceland's banks collapse. IMF extends £1.4bn ($2.1bn) loan a month later

24 November Alistair Darling announces a temporary cut in VAT from 17.5 to 15 per cent

23 January 2009 UK enters recession

28 January US Congress passes Barack Obama's $819bn stimulus package

5 February UK Monetary Policy Committee votes to cut interest rates to 1 per cent - the lowest in over three centuries

Michael Harvey

Martin Jacques is a journalist and academic. He is currently a visiting fellow at the London School of Economics Asia Research Centre and at the National University of Singapore. Jacques previously edited Marxism Today and co-founded the think-tank Demos in 1993. He writes the World Citizen column for the New Statesman. His new book on the rise of China, When China Rules the World, will be published in June.

This article first appeared in the 16 February 2009 issue of the New Statesman, The New Depression

AKG-IMAGES
Show Hide image

The longest hatred

Anti-Semitism is resurgent. Where did this poison come from – and is there an antidote?

Jews around the world have recently celebrated Passover, a festival commemorating the exodus of the Israelites from slavery in ancient Egypt. To mark the occasion, the BBC screened a documentary about a modern exodus, the flight of Jews from France. With an estimated 475,000 Jews, France remains home to Europe’s largest Jewish population. But in recent years, rising anti-Semitism and a series of terror attacks have forced out a growing number. As many as 8,000 left in 2014, up from 1,900 five years earlier, a fourfold increase. Most of them are moving to Israel but many are seeking refuge in Britain. French Jewish children now make up half the intake at Jewish schools in London. Anyone who has travelled recently to Paris will have seen signs of the tense atmosphere that French Jewish refugees are leaving behind. Every Jewish building is guarded by soldiers in full combat gear.

Sadly, anti-Semitism in France is only the starkest manifestation of a growing contemporary Jew-hatred in Europe and across the world. The cancerous belief that the world is run by an international Jewish conspiracy shapes the world-view of much of Iran’s governing elite, operatives of Islamic State (IS), nationalist leaders in Slovakia and Hungary, and a major Palestinian political organisation. It even pervades parts of a mainstream British political party, and our university campuses, too. Where did this poison come from, and is there an antidote to it?

 

1. European origins

Conventional religious Jew-hatred is thousands of years old. Across the Christian world, the Jews’ claim to be a “chosen people” and the accusation that Jews killed Jesus led to violent persecution. Throughout Europe, anti-Jewish pogroms were sparked by the accusation that Jews kidnapped and killed Christian children in order to use their blood for religious purposes, particularly in unleavened bread consumed on Passover. One of the earliest cases of the blood libel occurred in Norwich in 1144. Within 150 years, the entire Jewish community was expelled from England. Across Europe, Jews were confined to ghettos and restricted to certain professions, such as moneylending, inculcating an image of Jews as nefarious Shylocks.

Most European Jews were emancipated by the mid-19th century. Thereafter, a new brand of paranoid, racial, political anti-Semitism emerged. As feudal systems fell across Europe, Jews were held responsible for the social and cultural ills that accompanied the collapse of the old order. The Jews were viewed as the vanguard of the department store, which ruined small shopkeepers, of the Industrial Revolution, which gave advantage to the few at the expense of the many, and of a global financial system that enslaved economies through the market and its servant parliamentary democracy. It was in response to this new anti-Semitism, and in particular the Dreyfus affair in France, in which a Jewish army officer was falsely accused of treason amid an atmosphere of intense anti-Jewish bigotry, that Theodor Herzl developed modern Zionism – the re-establishment of a Jewish state in the Jews’ ancient homeland.

Adolf Hitler came to anti-Semitism by way of anti-capitalism, particularly of the “international”, Anglo-American variety, which he accused of reducing post-First World War Germany to the status of a “colony”. The socioeconomic decline of the German middle class after the First World War and particularly during the Great Depression helped bring him to power and make the Holocaust possible.

Jew-haters have thus built on different tropes in different contexts and countries. What unites modern anti-Semites, however, is the conspiratorial belief that Jews run the world. Its foundational text is The Protocols of the Elders of Zion. First published in a St Petersburg newspaper in 1903, and subsequently reprinted many times by Russia’s political and religious authorities, this forgery purported to be a blueprint for a secretive scheme to overthrow all existing governments, institutions and religions and, in their place, to construct a Jewish world empire.

The Protocols was neither the first nor the last publication of its kind but it was by far the most successful. After the Russian Revolution, this fabrication was brought to central and western Europe by White Russian émigrés. In the febrile atmosphere across the continent after the First World War, the Protocols offered a simplistic explanation for global unrest. The Jews served as convenient scapegoats for German and Russian right-wingers, seeking to explain their traumatic defeats, and offered an external and internal enemy against whom to rally their countrymen.

Since the Protocols first appeared, millions of copies have been published and the text has been translated into many languages. But nowhere has it been disseminated more widely in the past half-century than in the Islamic world, where political anti-Semitism is a relatively recent phenomenon.

 

2. Middle Eastern connection

Previously, the Muslim-Jewish relationship was an ambiguous one. While there are verses in Islamic scripture that some have taken as commanding all Muslim believers to kill Jews and Christians, there are also verses urging tolerance towards both.

There were pogroms against Jews in Granada (1066) and Fez (1465) in which thousands were killed. Within the Ottoman empire, however, Jews enjoyed protection as second-class citizens (dhimmis), allowed to practise their religion quietly as long as they paid a special poll tax, abided by various proscriptions, including bans on bearing arms and riding horses, and accepted their inferior status. Up until the 18th century, Jews fared far better in the Muslim world than in Christian Europe.

When anti-Jewish persecution grew more pronounced in the 19th century, responsibility often lay with Christian Arab communities, whose propagation of the European-sponsored blood libel produced the Damascus outrage of 1840 in which 13 leading Jews were arrested and four killed. It was only after the First World War, the Balfour Declaration and the establishment of European protectorates over parts of the former Ottoman empire that growing anti-Zionism provoked violence against Jews across the Arab world. Massacres of Jews occurred in Hebron (1929), Baghdad (1941) and Tripoli (1945). The Grand Mufti of Jerusalem, who resided in Germany for much of the Second World War, urged the Nazis and their allies not to allow Jews to escape to Palestine, but to send them “to Poland” (meaning Auschwitz) instead. Even before the establishment of Israel in 1948, therefore, paranoid, political anti-Semitism had gained a foothold in the Islamic world.

After 1948, anti-Semitism among Arabs was exacerbated by the defeat of their armies by a people traditionally confined to a subservient position in the Muslim world. A tragic consequence of the war was that hundreds of thousands of Palestinian Arabs fled or were expelled and, in response, hundreds of thousands of Jews from across the Arab world, members of 2,000-year-old communities, were now identified as Zionist agents, persecuted and ultimately driven to seek refuge in Israel. The Protocols, which first appeared in Arabic in 1927, and Hitler’s Mein Kampf, partially published in Arabic in the 1930s and fully in 1963, now found even more enthusiastic readers across the region. As the USSR emerged as a political ally of the Arab nations, and the United States forged closer ties with Israel after the 1967 war, Arab anti-Semites increasingly focused on the allegedly capitalist and imperialist character of world Jewry, and on Jewish control over US foreign policy.

In recent decades, this brand of anti-Semitism has become increasingly Islamised. As early as 1950, the seminal Islamist thinker and Muslim Brotherhood leader Sayyid Qutb was writing about “Our Struggle With the Jews”. Qutb claimed that “world Jewry’s purpose is to eliminate all limitations, especially the limitations posed by faith and religion, so that the Jews may penetrate into [the] body politic of the whole world and then may be free to perpetuate their evil designs”. But it was only with the failure of Arab nationalism by the late 1970s that Islamist anti-Semitism really took off.

The founding charter of Hamas, the Sunni Muslim fundamentalist organisation that governs Gaza, refers approvingly to the Protocols and quotes a disputed hadith that says: “The hour of judgment shall not come until the Muslims fight the Jews and kill them, so that the Jews hide behind trees and stones, and each tree and stone will say: ‘O Muslim, o servant of Allah, there is a Jew behind me, come and kill him.’”

The leader of the 1979 Iranian Revolution, Ayatollah Khomeini, declared in his book Islamic Government (1970) that “Jews and their foreign backers are opposed to the very foundations of Islam and wish to establish Jewish domination throughout the world”. Khomeini’s successor, Ayatollah Khamenei, often denies the Holocaust, and he and other Iranian leaders routinely refer to the global dominance of “Jewish” and “Zionist” forces – terms that they use interchangeably.

Iran’s Shia proxy, Hezbollah, has fought to keep Anne Frank’s diary out of Lebanese schools as part of a Holocaust denial campaign and its leader, Hasan Nasrallah, stated that if the Jews “all gather in Israel, it will save us the trouble of going after them worldwide”. However, this did not preclude Hezbollah from targeting a Jewish community centre in Buenos Aires (1994) or bombing Israelis on a bus in Bulgaria (2012).

Even in Malaysia, remote from Israel and home to barely any Jews, anti-Semitism is rife. In 2003 Prime Minister Mahathir Mohamad urged the world’s Muslims to unite against Jews, claiming that although Europeans had killed six million of them, “today the Jews rule the world by proxy”. Just last month, Dr Fouad Bseiso, the Palestine Monetary Authority’s first governor in the 1990s, claimed on Hamas satellite TV that “global Judaism” had caused the 2008 fin­ancial crisis, fulfilling plans revealed in the Protocols. Explicit anti-Semitism is routine in Middle Eastern political discourse. At the same time, this toxic ideology is being reimported into its continent of origin and is now flourishing among disenfranchised Muslim immigrant communities in Europe.

 

3. The reimportation of anti-Semitism to Europe

The embodiment of this new anti-Semitism is the proudly anti-Zionist and Jew-baiting French “comedian” Dieudonné M’bala M’bala. His shows are particularly popular among disadvantaged French youth from immigrant backgrounds. They feature Holocaust revisionism, jokes about the gas chambers and the “quenelle”, an inverted Hitler salute that M’bala M’bala invented. M’bala M’bala also likes to refer to the Shoah as the “shoannas” (as in ananas), likening the Holocaust to a pineapple. In January, he responded to the killings of Jews at a kosher supermarket in Paris by signalling solidarity with the perpetrator, Amedy Coulibaly.

Coulibaly’s armed assault, two days after the Charlie Hebdo killings, followed a pattern that has long been evident in Islamist terror attacks. In March 2012, Mohamed ­Merah killed seven people in Toulouse. Four of his victims, including three children, were murdered at a Jewish day school. In 2014 Mehdi Nemmouche, a French national of Algerian origin, killed four visitors to the Jewish Museum in Brussels. Security services now view this as the first in a succession of attacks in Europe linked to Islamic State. Nemmouche was part of the European network set up by Abdelhamid Abaaoud, thought to have masterminded the November Paris terror attacks that left 130 dead.

Nor is this pattern evident only in Europe. One target of the 2008 Mumbai terror attacks was a Jewish centre, where hostages were tortured before being killed. After the 19 March suicide bombing in Istanbul, where three of the five victims were Israelis, intelligence offers uncovered advanced plans by IS terrorists to murder Jewish children in Turkey.

What is striking about all these attacks is that they are directed against Jews worldwide, rather than Israel itself. In part, to be sure, this reflects the Jewish state’s capacity to defend itself, but it is also a sign that these anti-Semites see themselves as engaged in a global struggle against Jewry, rather than just a regional contest against Israel.

 

4. Resurgence of fascist anti-Semitism

Though Islamist anti-Semitism is the most virulent strain of this hatred today, the old-style, fascist variant is also experiencing a revival in Europe. Far-right parties are advancing across the continent and many are directing their hatred against Muslims and Jews alike. Anti-Semitism is very pronounced in Hungary, home to the largest population of Jews in the eastern European Union. Gábor Vona, chairman of the racist Jobbik, which recent opinion polls rate as Hungary’s second-strongest party, told a rally in Budapest against the World Jewish Congress in 2013: “Israeli conquerors, investors and expansionists should look for a country in another part of the world because Hungary is not for sale.” Vona accused Hungarian “Jews” (pure and simple) of being “anti-Hungarian”. A Jobbik MP called on the Hungarian government to “establish how many people of Jewish descent there are here, and especially in the Hungarian parliament and the Hungarian government, who represent a security risk”.

Another manifestation of a far-right movement motivated by anti-Judaism, sometimes masquerading as anti-Zionism, is in Slovakia, home to a minuscule Jewish population since the Holocaust. In March, Marian Kotleba and his ultra-nationalist People’s Party Our Slovakia made a strong showing in parliamentary elections. Until recently, he wore the uniform of the Hlinka Guard – the militia of the Nazi-sponsored Slovak state – which was an eager participant in the transportation of 75,000 Slovakian Jews to the gas chambers. Kotleba’s party newspaper reprinted a Nazi propaganda cartoon featuring a stereotypical image of a Jewish moneylender. This is part of a broad attack on the West and its values. Kotleba has condemned Roma as “gypsy parasites”, denounced Nato as “criminal”, supported Vladimir Putin’s annexation of Crimea and denounced Western democracy for spreading “dangerous sects and sexual deviations”, all standard themes of the far right across Europe.

Like Nazi ideology, Islamist extremism and far-right fascism are rooted in a deep-seated anti-Semitism that begins by targeting Jews and expands its focus outwards. Islamists and European fascists are convinced that a global Jewish conspiracy runs the world. They regard Jews as the embodiment of the West and as symbols of all they most despise about its values: tolerance, liberty, freedom and democratic capitalism. The West is thus regarded as politically “Jewish” whether it is aware of this or not.

Far from being an exclusively Jewish problem, paranoid, political anti-Semitism endangers us all. It is the harbinger of a broader assault on Western modernity.

 

5. Anti-Semitism and the left

As the heir of the Enlightenment and ideals of the French Revolution, the European left championed emancipation, equality and tolerance in the 19th and early 20th centuries. Thus, it was regarded favourably by Jews. And yet hostility to Jews animated the world-view of some pioneering socialists. For instance, the late-18th- and early-19th-century utopian socialist Charles Fourier regarded Jews as “parasites, merchants, usurers”. They were agents of capitalism and commerce, personified most powerfully by the Rothschilds. Karl Marx, even though he was of Jewish descent, claimed that Jews had made money the “God of the world” and called for humanity to be emancipated from Judaism. It was these manifestations of anti-Judaism that led the German Social Democrat August Bebel to refer to anti-Semitism as the “socialism of fools”.

That Jewish leftists were heavily represented in the leadership of the socialist and communist movement, from Trotsky down, led right-wing racists to equate Judaism with Bolshevism. At first, the Soviet Union embraced this association. In 1931 Stalin declared that anti-Semitism was “the most dangerous vestige of cannibalism” and that “under USSR law . . . active anti-Semites are liable to the death penalty”. The USSR was the first state to grant de jure recognition to Israel, and supported it with arms during the 1948 conflict. However, it turned sharply against Israel and global Jewry from the 1950s onwards.

In the early 1950s, Stalin launched a major anti-Jewish campaign that culminated in the arrest of Jewish doctors accused of poisoning Communist leaders. In 1952, he told the Politburo: “Every Jewish nationalist is the agent of the American intelligence service.” America was the USSR’s principal enemy in the Cold War and its sizeable Jewish community was believed to be at the centre of a worldwide network that was doing the bidding of the new Israeli state, and which had operatives across the globe, including the USSR and communist-controlled eastern Europe.

This anti-Semitic, anti-Zionist campaign was taken up throughout the communist world. Its anti-Jewish nature was clear in the show trials of Jews and their removal from critical positions in local Communist Parties, accompanied by a barrage of openly anti-Semitic propaganda. The most notorious instance of this was the 1952 Slansky trial in Czechoslovakia, during which the state denounced the defendants, not all of whom were Jewish, as “Zionists”, “Jewish capitalists” and “Jewish Gestapo agents”.

After Stalin’s death, his successors upheld his legacy of conspiratorial, anti-Semitic anti-Zionism. Soviet propaganda portrayed “Zionism” as both a tool and a puppet master of US imperialism, peddled the delusion that a state established by Jews fleeing genocidal racism was in fact a Western colonialist enterprise, and depicted “Zionists” as the ideological heirs of Nazi Germany, controlling financial markets and the media. These calumnies were uncritically circulated by the communist press in Europe and seeped into the ideology of Soviet sympathisers on the socialist left. The residue of this can be seen in the former Labour parliamentary candidate Vicki Kirby’s suggestion that Hitler was “the Zionist God” and the Trotskyist former Labour member Gerry Downing’s contention that a capitalist offensive against workers is led by “the Jewish-Zionist bourgeoisie”.

Soviet-sponsored anti-Semitism was reinforced by a third-world romanticism that regarded Zionism as reactionary imperialism and the Arab opponents of Israel as progressive fighters for national liberation who could never be condemned, however radical their rhetoric and tactics.

Western extreme leftists attended Palestinian terror training camps and participated in attacks against Israelis and European Jews. In 1976, operatives from the Popular Front for the Liberation of Palestine and members of the German Revolutionary Cells hijacked an Air France flight and diverted it to Entebbe. They released all non-Jewish passengers and held all Israelis and other Jews of various nationalities hostage.

Conspiratorial leftist, anti-Semitic anti-Zionism did not disappear with the collapse of the USSR. Instead, it mutated into an anti-globalist variant, maintaining the belief that Israel is a vestige of Western colonialism and that “Zionists” are behind the spread of global capitalism, run US foreign policy and seek world domination. The extent to which this poisonous perspective is thriving on British university campuses is illustrated by Malia Bouattia’s election as president of the National Union of Students (NUS). Bouattia has called the University of Birmingham a “Zionist outpost”, on the grounds that it has “the largest J-Soc [Jewish Society] in the country”. While serving as the NUS’s national black students’ officer, she refused to vote for a motion condemning IS and blamed UK anti-terrorism policy on a “Zionist and neocon lobby”.

Further evidence of left-wing anti-Semitism emerged when it was reported that the Labour MP for Bradford West, Naz Shah, until 26 April a PPS to the shadow chancellor, John McDonnell, and a member of a parliamentary select committee investigating British anti-Semitism, had urged the “transportation” of Israeli Jews to America en masse. Shah was consequently suspended from the Labour Party.

Unlike Islamist and far-right extremists, most of the “anti-Zionist” left does not think of itself subjectively as anti-Semitic; many would be appalled at the suggestion. They are often uncomprehending of the nature of Middle Eastern and Islamist anti-Semitism, as evidenced by Vicki Kirby wondering on Twitter why IS had not yet attacked “the real oppressors #Israel”.

One wonders what is more remarkable here: the spectacle of a member of a mainstream Western party handing out white feathers to an extreme Islamist terror group, or her failure to understand that it is primarily waging a global war on Jews and the West, not a regional struggle against Israel. One way or the other, leftist elements who speak of the “Zionist media”, conflate Jews with Israel and generally obsess about Palestine exhibit a structurally anti-Semitic world-view, whether they are conscious of it or not. It is striking that those who spend so much time talking about “discourses”, “dog-whistle politics” and suchlike should show so little sensitivity when it comes to the use of language about Israel, Zionism and the Jews.

All this shows that much of the British student left, and parts of the Labour Party, have “some kind of problem with Jews”, as Alex Chalmers stated when resigning as co-chair of the Oxford University Labour Club in February 2016. A coalition of apparently anti-racist, anti-colonial activists is united in its unwavering hostility to “Zionism”. They demand that Jews and only Jews give up their national self-determination, for the belief in the right to a Jewish state is all that the term “Zionism” means.

The absurdity of anti-racist anti-Semitism is perhaps most clearly demonstrated by a march in 2014 in Toulouse against anti-Semitism, homophobia and other forms of racism that ended in Jewish protesters being denounced as Zionists and urged to leave. When Jews are being chased away from rallies against anti-Semitism, the problem should be clear for all to see.

 

6. An antidote?

Dealing with anti-Semitism has become more difficult since 1945, after the mass murder of the Holocaust, as few anti-Semites, at least in Europe, are now willing to wear that label openly. Anti-Semitism is a virus that has taken so many forms and proved so resistant that it may be impossible ever to eradicate it. Yet we must begin by recognising that anti-Semitism is a world-view, rather than just another form of prejudice. Other groups – such as black people and gypsies – may suffer worse discrimination in European societies every day. Nobody, however, thinks that black people or gypsies run the world.

After the Charlie Hebdo and kosher supermarket attacks, the BBC correspondent Tim Willcox put it to a terrified Jewish woman that a possible explanation for the slaughter was that “Palestinians suffer hugely at Jewish hands”. Leaving aside that no action taken by Israel could justify the killing of Jews merely because they are Jews – in Paris or anywhere else in the world – it is clear that the murders were motivated not simply by a particular reading of the Israeli-Palestinian conflict but by a paranoid, conspiratorial anti-Semitism.

We must ensure that expressing solidarity for the Palestinian cause does not extend to sharing platforms, joining coalitions or marching in rallies that include anyone who justifies genocidal terrorism, invokes the blood libel or denies the Holocaust. We must reject cultural and moral relativism, and establish a new intellectual and political project committed to combating conspiratorial views of Jewish power, whoever expresses them.

We must make clear that the establishment of the state of Israel was a product of global, especially European, anti-Semitism and not the other way round.

We must recognise that, throughout history, the Jews have served as a “canary in the coal mine”, providing early warnings of extreme, xenophobic ideologies on the rise. This is evident in radical Islamism, the most extreme contemporary manifestation of anti-Semitism. While the West thinks it is fighting a war against “terrorism”, Islamists are fighting a war against what they perceive to be a world Jewish conspiracy. Islamist terror attacks are almost certain to be preceded by, involve, or be followed by attacks on Jews, and we must adjust our ­security measures accordingly.

Above all, we must all be aware of the stakes. Supporting Jewish people worldwide against the new anti-Semitism, be it Islamist, far-rightist or leftist, is not so much a matter of demonstrating solidarity, but of ensuring our own survival.

Although the French government has increased security at Jewish institutions, it is clear that governments alone cannot make Jews feel safe in France or elsewhere in Europe. Moreover, with Dieudonné and his ilk claiming that attacking Jews is the best way to harm the “establishment”, some say that governmental protection only stokes their paranoia. Well, as C P Snow said, the only way to deal with a paranoid man is to give him something to be paranoid about. Other European countries must follow France’s example and devote additional security resources to the defence of Jewish institutions across the continent. They must eschew the example of Belgium, where the authorities asked the Jewish community to drop Purim celebrations, pleading insufficient manpower to protect them after the Brussels attacks in March. The symbolism of the “Great Synagogue of Europe” in the political capital of our continent cancelling service
on a major Jewish holiday was shattering.

By dedicating themselves to defending Jewish institutions across the country, the French security authorities have shown that they recognise that paranoid anti-Semitism is a threat to civilised values everywhere. As soon as the rest of the world wakes up to this, and ensures that Jews never again have to flee persecution, the safer we will all be.

Brendan Simms is the director of the Forum on Geopolitics at the University of Cambridge and the president of the Project for Democratic Union

Charlie Laderman is a research fellow at Peterhouse, University of Cambridge. He is the author of “Sharing the Burden: Armenia and the Origins of Anglo-American Humanitarian Intervention, 1895-1923”, forthcoming from Oxford University Press

Note: This article was amended on 12 May. An earlier version wrongly stated that the Quran commands Muslims to kill Jews and Christians and that the Hamas charter quotes a Quranic verse urging Muslims to “fight the Jews and kill them”. These quotations are from the hadith.

This article first appeared in the 05 May 2016 issue of the New Statesman, The longest hatred