Georgia: the aftermath

As Russian forces begin to withdraw, we are learning more about the events of the short but brutal w

The air inside Tskhinvali General Hospital is damp and stale. The worn floors are empty. There is hardly a sound at all in-side the building where, a week ago, wounded civilians and bloody surgical gloves lay in heaps about the corridors.

Tinati Zakhorova, an exhausted doctor with kind eyes and a tangle of curly grey hair, is sitting alone in a small office, tallying up the dead and wounded in a faded old book. She knows what happened here in this tiny mountainous republic, she says, and who is responsible for it.

"This is the fourth genocide against the Ossetian people by the Georgians. How can we ever go back to living under them?" she asks, adding: "And may heaven open up and God strike the head of Condoleezza Rice."

It will be weeks, or even months, before any culpability can be assigned for this big war over a little country. We may never know the extent to which the Georgian president, Mikhail Saakashvili, informed his benefactors in Washington of his plans to retake the breakaway republic, or whether the Russians ordered South Ossetian militias to open fire on Georgian peacekeepers to goad them into a trap.

But amid the chaos of the war's aftermath, residents on both sides of the battlefield have already made up their minds. Zalina Ikoeva, 52, is lying in traction at a hospital in Vladikav kaz. Her leg was shattered by an explosion as she hid in her basement during the initial Georgian attack.

"I was lying there in the basement and I called my sister on my mobile," she said. "I asked her: 'Where are the Russians? They're going to kill us all.'"

On the shattered streets of Tskhinvali, where there is strong evidence that the Georgian military fired both tanks and artillery into civilian buildings, the Russians are viewed as liberators. Russian support over the past two decades is the only thing that has kept this isolated and resource-poor statelet from disappearing altogether.

It is Russian bottled water you see being handed out by the truckload and a brand new gas pipeline from Vladikavkaz in North Ossetia to Tskhinvali that you can see on the drive in. The Russian government has pledged $400m to rebuild the city, and the Moscow city government has promised another $100m. The Russian hearts-and-minds campaign trumps anything Georgia is putting out. The tactic is working.

As we roll through the city in a Russian armoured personnel carrier during one of the Kremlin's highly scripted tours, dozens of local residents, mostly elderly, flock to the soldiers to show their support. An elderly man stands and makes the sign of the cross as we drive by. Women blow kisses and shout their thanks as the Russians look down with benevolence.

The mood was summed up by a Kremlin official. "We are dealing with a psychotic dictator, an inadequate person whose actions cannot be foreseen whatsoever," he said. "It will take as many troops as possible for as long as possible to protect the citizens of South Ossetia."

Twenty kilometres across what used to be the southern border of South Ossetia, inside Georgia proper, the story changes. In the northern areas of Georgia now under the control of the Russian military, within the sights of Russian rockets aimed from the hills around Tskhinvali, the majority of the population believe that they are under occupation.

When the Russian aerial bombardment of Gori began, 80-year-old Sasha Berdize ran down to the river and hid along its banks. Walking back from a Russian-run food depot in the city centre, he stops to ask me where I'm from. I'm an American, I say. "Thank God you're here," he replies, his eyes filling with tears.

Gori, where Joseph Stalin was born, is now a ghost town. In the city centre, where block after block of High Stalinist architecture and a towering statue of the former leader dominate the skyline, there is hardly anyone on the street. It is likely, several residents said, that less than 1 per cent of the population is left here.

But Berdize thinks that these things happen. "Misha made a mistake," he says, using a popular diminutive form of Saakashvili's name. "People are allowed to make mistakes in this life." Many Georgians seem willing to cut their president a great deal of slack, even though his dangerous miscalculation and reckless personality have just cost them territory in both South Ossetia and Abkhazia, another disputed rebel enclave on the Black Sea.

Sitting around a picnic table behind an apartment building in the city centre, six friends pass around a plastic jug of home-made wine and a bag of halva. Although they don't understand why this whole mess started, they know how it will end.

"Everything was great with the Russians," says Soso Rusashvili, 57, "but now they've decided they want our land. What can we do about it? We're such a tiny country."

Rusashvili doesn't blame Saakashvili or George W Bush for his problems, but neither does he want to stay in a land under occupation. He makes me write his name in both Russian and English. Can I send him a letter of invitation so that he can move to America, he wants to know. He would work in construction or drive a taxi, he says - anything to get out of here.

This article first appeared in the 25 August 2008 issue of the New Statesman, How to survive the recession

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 25 August 2008 issue of the New Statesman, How to survive the recession