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Labour needs to wage war on EU neoliberalism to prevent a Brussels sabotage

Jeremy Corbyn must unite with radical left forces to guarantee that the European Union cannot obstruct a future socialist government. 

Europe, it turns out, is a club that’s hard to leave – and that is as true for Jeremy Corbyn as it is for Theresa May. As the Times reported on Monday, EU negotiators are trying to lock the UK government into rules that would prevent parts of Labour’s radical programme being enacted, even after Brexit.

EU negotiators are demanding a “non-regression clause” effectively copper-fastening Thatcherism into the post-Brexit settlement. If Corbyn breaks it, by enacting a programme of renationalisation and state aid, they are preparing to slap tariffs on British goods, block the City’s access to European markets and, as a “nuclear option”, ban British planes.

So for Labour, the struggle for a European Union of social justice, the amendment of the Lisbon Treaty and the achievement of a majority for progressive parties in the European parliament are not simply acts of post-Brexit internationalism. They have to be part of a self-preservation strategy.

Though it would be very unwise for the European Commission to attempt to “do a Greece” on a Corbyn-led government, they have done unwise things in the past, and may be tempted to do them even more if the European Parliament elections deliver victory for hard right conservatism and neo-fascism in 2019.

There is a clear course of action, both for Corbyn and the wider progressive left in Europe. But before I come to it, I will address the objections of Europhile legal experts who believe Labour’s fears of Brussels sabotage are unfounded.

The bar stool argument goes “there’s nothing in the EU rules to prevent a radical Labour government enacting its programme”. However, this is the exact opposite of what I understand Labour’s Treasury team were told in their “access to government” meetings with the civil service before the June 2017 election.

A more nuanced line says that while a few of Labour’s policies might be challengeable under the EU’s rules, they would not be challenged in practice. Either way, the Times splash came as a bit of a shock to those who had been assuring the left that the EU would regard Labour’s programme with sweetness and light. The Brussels source quoted in the Times said:

“If a Corbyn government implements his declared policies the level playing field mechanism will lead to increased costs for Britain to access the single market because of distortions caused by state aid.” The threatened “nuclear option” of shutting British aircraft from Europe if Corbyn were to renationalise energy and rail assets currently owned by Germany, is straight out of the Schäuble, Juncker, Dijsselbloem playbook of 2015.

For the record, I have no problem in principle with mandating the government to seek membership of the single market, as the Lords did last night. But - as Corbyn said in his Glasgow speech – we would need written assurances and exemptions from the rules of the EEA. Above all, because Britain will in future always be a rule taker.

Outside the EU, and with neither a place on the commission nor the council, nor a group in the parliament, it will, after March 2019, be powerless to change or influence the rules. Hence Labour’s justified determination to make them clear at the point of Brexit.

In an influential paper for Renewal, Andrea Biondi and Andy Tarrant argue that only nine out of 17 economic measures from Labour’s 2017 manifesto fall within the scope of EU laws banning state aid to private companies. Of these, they judge, seven are covered by block exemptions and only two would face problems: the proposed state investment bank and the creation of state-funded regional energy suppliers. “Both,” they conclude, “could be structured to be cleared”.

So what’s the problem? The problem is that European negotiators are threatening overtly to sabotage Corbyn as they did Syriza. I do not want to simply trust the expert but ultimately inconsequential opinion academics: I want an advance, legal and binding agreement that European rules will not now, and cannot in the future, sabotage a Labour government’s programme.

Biondi and Tarrant admit that, even with their benign interpretation of the EU rules, the EC and EFTA surveillance authority “have discretion over the timeframes in which they clear national aid proposals. This could be a potential concern to an incoming radical UK government.” They optimistically state that European governments would speed Labour’s measures through because they are in line with the EU constitutional commitment to a social market economy.

Their core claim is that the EU project, and Lisbon specifically, is not “neoliberal”. For the left, however, the social market economy is the specific European form of neoliberalism: it prefers private over public, vaunts market mechanism over state direction or subsidy, relies on effective competition to make capitalism fairer, rather than strong regulation. The Bad Godesberg principle adopted by the German social democrats in 1959 – market where possible, state where necessary – was never accepted by British social democracy at the time, and has come to embody the neoliberal reflexes through which Germany runs, dominates and exploits the Eurozone.

Labour wants the freedom to subsidise, aid, restructure and, where necessary, nationalise parts of the private sector that are failing the British public. It does not want to, and should not, be structuring its proposals to meet the criteria that were specifically designed to foster privatisation, outsourcing and deregulation across Europe. It should structure its programme primarily to meet the needs of the British people.

The supplementary argument of those who want to remain in the EEA unconditionally – that Labour’s programme would be against WTO rules – is not relevant. China has subsidised, aided, monopolised and dumped to its heart’s content under the WTO – and the only reason we don’t know if a developed country can get away with this is that it has never tried (though Donald Trump is now going to).

We do not want to slide Labour’s social programme under the door of the EU by stealth, hoping we can “get away with it”. When Corbyn told MEPs in Brussels that “neoliberalism is broken” last October, that’s what he meant: not “neoliberalism is a pain in the ass but we can tweak our programme to make it acceptable to Jean Claude-Juncker”.

Plus, the EU itself is a work in progress. In the nightmare scenario, it is entirely possible that a right-far right coalition emerges from next year’s EU elections, mirroring the right/far-right coalition in Vienna. Since everything relies on the Commission, an unelected and totally undemocratic body, no Labour government should leave any hostages to fortune.

I support the idea of Labour trying to keep the UK within a reformed single market: a Norway-plus agreement which gives Britain the specific right to limit free movement temporarily (under the EEA’s article 112-113 of the EFTA Agreement), adopt economic policies such as renationalising the railways as a single state monopoly, end outsourcing of vital public services, require trade union recognition and sectoral bargaining of any outsourced public service, and run a national investment bank on borrowed money.

But if it cannot be achieved, then a deal leaving us inside the customs union but outside the EEA will have to be done.

The important thing in all forms of Brexit is to seek advance guarantees that Labour’s programme cannot and will not be challenged in the European courts. If we were staying inside the EU that would be less important - but because we are a rule taker it is essential. And it is this that has made some EU officials go so crazy that they started ringing up Times journalists and threatening to shut Heathrow.

A third problem is the domestic political reality Labour expects to face as it enacts the most radical left programme any major country has ever undertaken. The “very British coup” scenario is a non-starter. But mild civil service obstruction, combined with destabilisation by private security and intelligence firms, combined with the nabobs of Brussels issuing arbitrary and vindictive rulings, combined with 30-odd Blairite Labour rebels … that’s what Corbyn needs to guard against.

“We can’t do this, prime minister,” sounds more persuasive if accompanied by: “we’ll be taken to the ECJ and your own rebels will not pass it in the Commons, and these rebels are very important people who chair committees and get special briefings on security, and by the way I briefed to the Daily Mail everything I just said”.

So Labour needs to do what European social democracy should have done years ago: go to war on the Lisbon Treaty inside the EU, co-ordinating with any social democratic, green and left party in Europe prepared to join in.

The emergence of Corbyn and Momentum has sparked great interest inside parts of European social democracy, but outright hostility in others. Though Labour remains a member of the Socialists and Democrats (S&D) group in Brussels, what’s needed is a group of left social democrats and greens who actually want to fight neoliberalism. There is very little love lost between true social democrats in the historically democratic countries of western Europe and, say, the leaders of its Romanian, Maltese and Slovak affiliates, each mired in allegations of distinctly non-socialist activities.

Fortunately the time is ripe for a restructuring of the European left. The radical left group, European United Left–Nordic Green Left (GUE/NGL), has been gaining traction but needs to break out of isolation - numerous green parties are split between neoliberals and radicals. On my count, the socialist parties of Italy, France, Austria and Portugal are left enough to want to engage with a left project to reform Europe, plus the youth branch of the German SPD. On top of that, there is DiEM25, Yanis Varoufakis’ alliance of pro-EU leftists, which has gained a certain amount of traction in several countries (such as Croatia and Poland).

The immediate aims a new EU left alliance should not be a detailed programme or a new party. It should be a declaration in principle against three things: austerity, xenophobia and the erosion of democracy.

Neither GUE/NGL nor the S&D group have yet chosen their “spitzenkandidat” for the Commission presidency. The frontrunner for the S&D is Pierre Moscovici, who acquiesced in the Commission’s attack on Greek democracy in 2015, guaranteeing a dire performance. One possible pick for the left is Podemos leader Pablo Iglesias, who would immediately antagonise social democrats on the Iberian peninsular.

However, a third possibility would be for the socialists, the radical left and the progressive greens to stand a single “social justice and anti-racism” candidate: a kind of pan-European Macron of the left.

The three sets of progressives could then argue that their combined group in the European parliament – not the European People’s Party – was the largest party, and that the next Commission president should be nominated by them.

This would, to put it mildly, set the cat amongst the pigeons. The EU’s anti-democratic character – whereby the council appoints commissioners and the right always wins the EU parliamentary election, and neoliberalism is burned into the constitution - has never been properly tested.

If the combined forces of progressive Europe could muster enough votes to win the spitzenkandidat election, the appointed boss of the Commission could then appoint a left-led commission. At this point we would find out exactly how much left politics the EU structures can bear.

I think a Corbyn-led government would be a bomb dropped into the right wing pro-market consensus of Europe. The left inside Labour has the duty not just to see that event as good for us, but good for millions of people trapped amid austerity, corruption and rising xenophobia in Europe.

Paul Mason is a New Statesman contributing writer, author and film-maker. As economics editor at Newsnight, then Channel 4 News he covered the global financial crisis, the Arab Spring, the Occupy movement and the Gaza war. His bestselling book Postcapitalism has been translated into 16 languages. His play Why It’s Kicking Off Everywhere was televised on BBC Two in 2017.