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Leaving Afghanistan: is it finally time to be positive about this blighted nation?

The Afghan presidential election has been declared a success – but as the west finalises its pull-out, what the country's prospects?

There is seldom an excess of good news coming out of Afghanistan, but until the triumphant success of the presidential election on Saturday 5 April, optimism was in notably short supply among the Kabul-based foreign press corps. There were good reasons for this. As the election drew closer and the number of attacks by the Taliban increased, Kabul was particularly badly hit and institutions associated with foreigners or the foreign-backed government were targeted with remorseless precision. In January, a suicide attack on a popular restaurant, the Taverna du Liban, killed 21 people, 13 of them foreigners. The Serena Hotel was hit on 20 March, killing nine; and, in what could have been a bloodbath of about two dozen foreign (mostly American) aid workers and their children, an attack apparently aimed at a guest house followed on 28 March. The Independent Election Commission was attacked the following day, just two weeks after four of its staff had been kidnapped in the eastern Nangarhar Province. The interior ministry was hit by a suicide bomber on 2 April, killing six more.

In all, three foreign journalists have been shot in the past month alone: Nils Horner on 11 March and, on the day before the election, Anja Niedringhaus and Kathy Gannon. Many expats in Kabul fled, the government closed several restaurants and guest houses used by foreigners, and the foreign press corps seemed understandably and uncharacteristically rattled. Their reporting at times reflected that sense of panic.

The steady crescendo of attacks added to the growing sense of exhaustion with the apparently interminable conflict: 13 years after the west went in to Afghanistan in the aftermath of the 11 September 2001 attacks, to destroy al-Qaeda and oust the Taliban, the troops were now withdrawing with neither objective wholly achieved. What remained of al-Qaeda had moved to the Pakistani borderlands and elsewhere, while the Taliban now control swaths of rural southern Afghanistan. Casualties among Afghan regiments on the front lines are reaching levels that are said to be unsustainable: as many as 800 police and army are being killed every month and some regiments have lost 50 per cent of their fighting troops; a few in Helmand have desertion rates approaching a similar level.

If the Afghan troops were exhausted, their American backers increasingly seemed to have lost any remaining interest in the bloody complexities of the Afghan conflict that they had fought so long and with so little obvious gain. “No one is talking about Afghanistan in Washington any more,” says Mark Mazzetti, the Pulitzer-winning New York Times security correspondent based in the US capital. “There is deep fatigue in DC and across the US over America’s longest war. It is no longer high on anyone’s priorities and in addition the White House feels a deep animosity against Karzai.”

This all matters very much, because the western-installed government in Kabul relies almost entirely on western financial support: without sustained backing it can’t pay for elections, the army, the civil service, medical and educational facilities or tele­communications. If the funding stops, or is significantly reduced, the government is unlikely to be able to defend itself – just as happened to Mohammad Najibullah’s regime, which fell to the mujahedin in 1992 after Mikhail Gorbachev cut off the money and the arms supply from the Soviet Union. “The changes which have taken place in Afghanistan since 2001 may be irreversible,” says Barnett Rubin, who recently stepped down as an adviser to Obama’s special representative for Afghanistan and Pakistan. “But they are also unsustainable.”

There were many other fears – the stuttering economy, the increasing reliance of the economy on aid and narcotics, government corruption, the poorest and most illiterate population in Asia – but looming over them all was what one Afghan official described, mixing two English metaphors, as the white elephant in the room: Afghanistan’s age-old ethnic divisions, which many observers feared could be exacerbated fatally by an indecisive election outcome.

If no one succeeds in gaining a 50 per cent majority in the election (as seems likely) there will be a run-off on 28 May, and in all likelihood it will be between a Pashtun and a Tajik candidate. That could in turn put huge stress on the principal fault line that has divided the country ever since it assumed its modern borders under Dost Mohammad Khan from the late 1850s onwards.

Afghanistan has always been, like Lebanon, a country built less on any geographical or ethnic logic, and more on the contingencies of 19th-century imperial politics. Indeed, considering its ancient history, Afghanistan has had only a few hours of political unity. More often it has been “the places in between” – the fractured and disputed stretch of mountains and deserts separating its more orderly neighbours.

For much of its history its provinces formed the warring extremities of rival empires. Only very rarely have the parts come together to attain any sort of coherent state in its own right; and as the more gloomy commentators have pointed out, it need not take much to rip the country apart again and exacerbate tribal, ethnic and linguistic fissures in Afghan society: the old rivalry between the Tajiks, the Uzbeks, the Hazaras and the Durrani and Ghilzai Pashtuns; the schism between Sunni and Shia; the endemic factionalism within clans and tribes and the blood feuds within lineages. After all, Afghanistan briefly splintered in a patchwork of warlord-controlled ethnic fiefdoms in 1993-94, between the collapse of the mujahedin regime and the rise of the Taliban.

Just before this month’s election, some of the more perceptive observers noted that despite the bomb attacks there were huge queues forming to register voters across the country and excitement at the well-attended rallies; but still, caught up in the fear generated by the Taliban assault on Kabul, few predicted what was to come on election day. For, in just 12 hours on 5 April, the general mood changed from anxious and frightened to jubilant and triumphant. The scale of participation in the election was unprecedented – so vast, that all over the country ballots began to run out as early as midday.

More than a third of all Afghan provinces reported shortfalls, so unstoppable was the enthusiasm of the electorate. Despite heavy rain, nearly twice as many people – an extra two and a half million Afghans – voted in this presidential election as in the previous one in 2009: seven million out of a total electorate of 12 million. There were the odd attacks on remote polling stations and 1,200 complaints about fraud. But this was nothing compared to the mess that had been predicted, or the fraud that took place in 2009. For the first time in its history, Afghanistan was going to witness a relatively peaceful transfer of power by the ballot box in a remarkably unflawed election.

By the evening of 5 April, few could disagree that the political landscape had changed in a fundamental way. “Despite the cold and rainy weather and possible terrorist attack, our sisters and brothers nationwide took in this election and their participation is a step forward and it is a success for Afghanistan,” said a relieved President Karzai in a televised official statement.

Most excited of all were the Kabul elite, who had worried that all they had built up was about to disappear. “Huge huge day for Afghanistan,” tweeted the media mogul Saad Mohseni, owner of Tolo TV, Afghanistan’s biggest channel. “A historic event ends peacefully with millions casting their votes. A massive victory for our people . . . and a massive kick in the face for the Taliban . . . Politically, this is the beginning of the end for [them].”

One reason for the unprecedented turnout at election rallies and in the election itself was the exceptional quality of the presidential candidates. They are, by any standards, an unusually smart and talented group. According to all the opinion and exit polls, there are three front-runners among the eight candidates who have just stood for president. The most brilliant is Dr Ashraf Ghani, or, as he renamed himself for the election, Ashraf Ghani Ahmadzai. The new nomenclature is important: Afghanistan is still a semi-tribal society where clan and ethnic allegiance means a great deal and can bring in block votes from rural areas.

The Ahmadzai are one of the two leading clans of the Pashtun Ghilzai tribe; their only rivals are the Hotaki Ghilzai, among whom the Taliban leader Mullah Omar is the clan elder. The Ghilzais as a whole are the rivals of the Durrani Pashtuns, whose two leading clans are the Popalzai and the Barakzai. Hamid Karzai is the chief of the Popalzai and his preferred successor – and Ashraf Ghani’s main rival for Pashtun votes – is Zalmai Rassoul, who is a Barakzai from the royal family. Behind the sophistication, sharp suits and cosmopolitan CVs of all three leading candidates for president lie the tribal blocks that have defined Afghan politics for a century and a half: Ahmadzai Ghilzai v Hotaki Ghilzai; Ghilzai Pashtuns v Durrani Pashtuns; Pashtuns v Tajiks.

According to the polls, at the time of writing, Ashraf Ghani leads the race; and there is little doubt that he is the best qualified of the three contenders. A PhD from Columbia University, former World Bank official, former chancellor of Kabul University and minister of finance, Ghani has a quick wit and a formidable brain. When I was researching my book on the first Afghan war, Return of a King, Ashraf was one of the first men I visited in Kabul and the hours I spent with him in his austerely beautiful library house, filled with books, good rugs and Nuristani furniture, were probably the most revelatory of any in the whole five-year research project.

Although his specialisation in history lies well down his list of interests, coming far behind anthropology and economics, in a two-hour tutorial he gave me a long list of all the principal Persian sources for the war, many of which he was able to take down from his own shelves.

On my subsequent trips to Kabul, Ghani sent round any other books or snippets he had found, always refusing any sort of payment. Yet the same straightforward frankness and lack of dissimulation that makes him such a generous host and dedicated scholar can also cause him to be irritable and irascible. When he disagreed with some remarks I had made at a lecture in Delhi last year, he steamed straight up to the podium at the end and told me I was talking “bullshit! Bullshit!”

A Farsi video of him describing the writer and Tory MP Rory Stewart as the “son of a donkey” is still doing the rounds in Kabul. It dates back to a feud Ghani embarked on a decade ago when he accused Stewart’s Turquoise Mountain Foundation of lifting furniture designs from those developed by his wife, the Begum Rula Ghani, a formi­dable figure in Kabul society and a force in her own right.

An old friend of Ghani’s told me he feared his temper almost as much as he admired his mind. “I’m very fond of him – he’s a smart guy,” he said, “but he can be super-temperamental and is capable of totally losing the plot. I can’t even count the number of times he has thrown me out of his house. I can understand how frustrated such a bright man must be by all the idiots in Kabul – but it does worry me. If he doesn’t have the right handlers if he gets to power, he is the sort of man who could easily order an execution in a fit of anger one evening, and deeply regret it when he calms down the following morning – by which time it will be too late.”

When Ghani first stood for election in 2009, he lost so badly that the media dismissed him almost as a joke candidate. But he learned from his campaigning errors and has worked hard to make himself more appealing. As he already had strong support among the new urban youth, he concentrated on winning over rural areas. As well as adding the tribal suffix to his name, he has made himself look more tribal and less of an urban technocrat: he has grown a rather elegant salt-and-pepper beard and in his campaign photographs is usually seen wearing a mountainous Ghilzai turban.

Ghani’s most controversial – and arguably cleverest – move was to form an alliance with the Uzbek warlord and alleged war criminal General Abdul Rashid Dostum, who controls huge vote banks in the north. In 2009 Ghani had denounced Dostum as “a known killer”. This time he offered him the chance to become vice-president. “We need to come to a politics of inclusion, not exclusion,” he explained to Christiane Amanpour of CNN. “We must have people in the system who fought each other; without bringing these elements to genuine reconciliation and peace, we will not move towards stability.”

Like Ghani, his Tajik/Pashtun rival Dr Abdullah Abdullah is fluent, sophisticated and intelligent; but he is a smoother, suaver, less academic figure than Ghani. Ghani wears immaculately pressed white shalwar kameez; Abdullah Abdullah prefers bespoke Savile Row suits. Ghani’s home is full of low Afghan wooden chairs; Abdullah has beautiful Italian furniture. He also owns an extremely rare and valuable collection of Company School paintings of life in Afghanistan by the Delhi artists brought to the country by the British Elphinstone mission from 1808 onwards. His most recent wife, a gifted young analyst, half his age, is described by those who have met her as “the Penélope Cruz of Kabul – only much more beautiful than Cruz”.

Of the three candidates, Abdullah is the most engaging company: witty, charming and irreverent. When I last paid him a visit, he expressed irritation that Tom Ford, the then creative director of Gucci, had declared Karzai to be “the chicest man on the planet”. “I liked what Tom Ford did at Gucci,” he said, brushing a speck of dust off his cuffs. “But I would dispute that judgement.”

Abdullah rose to power as the adviser to the Tajik war hero and “Lion of the Panj­shir”, Ahmed Shah Massoud, and his house and election posters are covered with images of his former boss and hero. In the winter of 2000, a few months before Massoud was assassinated by al-Qaeda on 9 September 2001, Abdullah Abdullah was part of the secret meeting at which Massoud and the then almost unknown Hamid Karzai met on an island in the middle of the Oxus river to discuss how they could co-ordinate political action against Mullah Omar and the Taliban.

At the International Afghanistan Conference in Bonn, which followed the US defeat of the Taliban in December 2001, it was Abdullah and his Tajiks who supported Karzai for the post of provisional president. “Never before had someone from one part of the country asked someone from another part to rule in their stead,” Abdullah remembers. “It was a historic moment. I played my part. But I was very naive. I thought under his leadership we would build Afghanistan into a modern state, step by step. It was
doable, had we not missed so many opportunities. Many of those opportunities will not be repeated.

“For me, it is even more sad that I was part of this from the beginning. We had so much hope for a new start, and so many worries today. Now a new generation is looking
forward rather than looking to the past. But the great golden opportunity of 2001 will never be recovered.”

Abdullah was Karzai’s minister of foreign affairs from 2001 to 2005. They soon fell out and have had a difficult relationship ever since, especially after Abdullah withdrew from the 2009 election when it became clear that the polls were hugely rigged in Karzai’s favour. Abdullah chose not to take part in the run-off, citing his lack of faith in the ability of Karzai’s administration to hold a “fair and transparent” second round. “I have great respect for his father,” Abdullah told me, “but Hamid? Let’s just say he is one of the greatest actors that Afghanistan has ever produced.”

It was partly to thwart Abdullah that Karzai encouraged a third major candidate to stand. Zalmai Rassoul is a bespectacled former nephrologist who was chief of staff to his cousin Zahir Shah, the last king of Afghanistan, when he was exiled in Rome. Rassoul was fast-promoted by Karzai to be his minister of foreign affairs. A nephew of the great king Amanullah Khan (1892-1960) and a senior member of the royal family, which the Karzais have served faithfully for three generations, he is described by one of his friends as “a shy, moderate, blue-blooded, cigar-smoking, wine-drinking aristo”. He is widely said to be Karzai’s preferred choice as successor.

Rassoul is the oldest, greyest and least charismatic of the three presidential front-runners: on the two occasions I have met him – once at an audience in President’s Karzai’s office and the other at a dinner party thrown by the French ambassador – he was almost completely silent. On campaign, he reads prepared speeches and looks ill at ease having to kiss babies and perform all the usual idiocies of electioneering. Yet he is also said to be intelligent and urbane, an able administrator, and fluent in French, Italian and English, as well as most of the regional languages. It is also said he warms up slightly over a glass of cognac at the end of dinner.

The intelligence and polish of the candidates, and the enthusiasm with which Afghans have embraced them, are not the only reasons for the uncharacteristic optimism in Kabul. The election took place without accusations of large-scale rigging or any Taliban “spectaculars” to disrupt voting. This reflects the fact that security, though far from perfect, has not collapsed since Nato troops withdrew from front-line combat roles at the end of last year. For nearly a year, Nato has been doing almost none of the actual fighting in Afghanistan and its role has been limited to training; yet there has been no clear change in the battle lines between the government and the Taliban: security may have got worse in northern Helmand, where few from the government now venture at all, and also in Badakhshan; but to balance that it has improved notably in and around Kandahar. In July last year I travelled in complete safety to the Karzais’ home village of Karz, several miles outside Kandahar, a journey that would have been impossible a year earlier.

Moreover, it is becoming increasingly obvious that Afghanistan has changed beyond recognition since 2001. It is the fastest-urbanising country in Asia. Its cities have grown exponentially – Kabul alone has 20 times the population it had in 2001 – and people are travelling much more widely. Television, the internet and an ebullient media have opened many minds. Schools are opening everywhere, and while there is much that still needs to be done, literacy is growing fast. The Taliban may be capable of causing widespread disruption but few believe they can roll back over the country and retake Kabul or the north. They remain a rural Pashtun force, with few supporters north of Kabul.

Afghanistan’s regional relations are also a cause for some optimism. Karzai success­fully balanced the role of its important neighbours and manipulated India, Pakistan, Iran, Russia and China, as well as the US and UK, to advance Afghanistan’s geopolitical and economic objectives. Just as the Ottoman empire survived for a century because none of the powers that surrounded it could allow any of their rivals to benefit from its collapse, so Afghanistan is likely to survive intact because a stable and peaceful Afghanistan is in the interests of all of its neighbours.

The one anxiety is Pakistan, whose army has long been fixated on the idea that it cannot allow a pro-Indian government in Kabul and, because of that, has long turned a blind eye to the Taliban operating from bases in its territory. Nevertheless British diplomats in Islamabad take the view that the Pakistani army has changed its views and policy in the past couple of years and now fears internal jihadi instability more than it fears India.

Certainly Pakistan’s terrible self-crucifixion seems to be consuming the country at the moment, and there is hope that who­ever wins the election in Afghanistan may be able to improve relations and persuade Pakistan finally to crack down on the Quetta Shura and take out the Afghan Taliban bases within Pakistan’s Federally Administered Tribal Areas.

What then of Hamid Karzai? There were many predictions that he would never give up power without a fight, and would find some pretext to delay or rig the election. But Karzai is acutely aware of his pivotal role in his country’s history and has become much more concerned with his legacy than anything else. He lived up to all his promises to oversee a peaceful transition of power.

However much he may be disliked by US officials, he remains popular as a unifier in Afghanistan and he will be remembered as a historic figure.

At our last meeting, I was able to ask him about his rule and hopes for the future. It was Ramadan and we were sitting at the desk in his office, eating our way through a huge platter of Afghan fruit: melons, grapes, figs and mountains of tiny Afghan cherries. Due to the fast, most business in Kabul had come to a halt and Karzai, having more time on his hands than usual, had agreed to spend three evenings with me talking about Afghanistan’s future.

I asked him first if he had any regrets.

“No,” he said. “I think I’ve done well. I stood up to foreign powers. Which I would do again. I did my best with the neighbours. Which I would do again. I established good relations with India, China, Russia, the Arab world. Managed, against all odds, relations with the west.”

And what of his own future?

“I will stay here. I am building a place just over the wall, near the French embassy. I am looking forward to taking a few days off. To have my own time. To relax. So I can recuperate fully.”

You feel this has aged you?

“People tell me it has aged me a lot. Just today, during the prayers, a friend of mine told me I look like an old man.

“I do look like an old man. I look much older than 55.”

So what was he most looking forward to, leaving the prison of this palace?

“I don’t feel imprisoned – not at all. I feel responsible, not imprisoned. And when I no longer have this responsibility, I’ll be free like a bird to go around this lovely country. I will visit people, go to bazaars . . .”

Could he really do that?

“Security is a fact of life all over the world, not just Afghanistan. The US president has much more security than I do when he goes out on to the streets of America.”

Did he really think he could stay in Kabul safely?

“Why not? I am optimistic.”

Wasn’t it delusionally optimistic to be so hopeful? Didn’t he think civil war was a possibility?

“This idea is just part of the American psychological warfare against me,” he replied, launching into what is now an obsession of his: the ill-intentions of the US “Deep State” to weaken and fragment Afghanistan.

“They keep telling the Afghan people that if they are not here after 2014, Afghanistan will collapse, Afghanistan will go into civil war, and all that. It’s complete rubbish.”

And he thought the future was bright? Even with the Taliban controlling so much of the rural south? Even with the economy in such a bad way?

“I am very optimistic,” he repeated. “Let me be clear. As long as the west has nothing bad up its sleeve for this region, Afghanistan will do very well. Mark my words.”

Afghanistan has been through so much in the past 40 years – the 1973 coup d’état, the 1978 Saur Revolution, the 1979 Soviet invasion, the 1.5 million deaths and six million refugees in the decade of resistance that followed, the collapse of the mujahedin government and the civil war of 1992-96, the seven long years of Taliban medievalism and Arab Afghan/al-Qaeda encroachment, and most recently the 100,000 casualties of the past 13 years of fighting between Nato and the resurgent Taliban. In that war, the US alone has already spent more than $700bn, enough to build every living Afghan a luxury apartment serviced by world-class health and education facilities – and to throw in a top-of-the-range Land Cruiser for each and every citizen, too. Instead, at the end of this, Afghanistan remains the poorest country in Asia, the joint most corrupt country in the world, boasting the highest illiteracy rate and worst medical and educational facilities outside a few war zones in sub-Saharan Africa. Even in the best-case scenario, it will take it several decades even to approach the living standards of Pakistan or Bangladesh.

Against this background, it may seem mad to share Karzai’s optimism. Certainly, there are many reasons to hesitate to do so. Every Afghan I know well, however patri­otic they may be, has an exit strategy in place: a second passport, a secret bank account far away, a small apartment somewhere safe and relatively peaceful, just in case Kabul does go belly up.

Equally, there are a million things that could still go wrong: the withdrawal of US military and civilian aid; Indo-Pak rivalry leading to renewed support by Inter-Services Intelligence for the Taliban; the collapse of the fragile Afghan economy; or a growing Pashtun/Tajik fracture following a disputed election run-off in May.

But this month, for the first time in many years, it has been possible to suspend disbelief and to imagine a happy ending to this long and tragic tale. With foreign troops in Afghanistan, it was always possible for the Taliban to portray themselves as a legitimate, patriotic resistance movement fighting for freedom from foreign rule. With those foreign troops now either withdrawn, or locked up in their barracks, and with a free vote having taken place across the whole of Afghanistan, without systematic rigging, and with unprecedented public support and swaths of the population standing up to be counted as democrats, that legitimacy of resistance is now over. It is possible to hope that a new era of Afghan history might have just begun.

William Dalrymple’s “Return of a King: the Battle for Afghanistan” is published by Bloomsbury (£9.99)

This article first appeared in the 09 April 2014 issue of the New Statesman, Anxiety nation

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 09 April 2014 issue of the New Statesman, Anxiety nation