Thursday, 18 October 2018

How Rotten Deals Are Done

After the nightmarish Euro Summit talks between the leaders of the Greek government and representatives of its creditors on the 12th July 2015, a seven-page document emerged that outlined the price of Greece’s future as a eurozone member: the Syriza government’s ‘red lines’ on pension, VAT and privatisations would be trashed, deeper austerity would be introduced, and the government would have to create a €50 billion fund which would channel the proceeds of privatisations towards its loan repayments and the recapitalisation of its now-bankrupt banks. The contents were a democratic scandal, especially given the government’s recent victory in a referendum which rejected the creditors’ bailout terms. The Greek authorities were now obliged to ‘legislate without delay’ - and so they did.

Two votes were held in the Greek Parliament – one on 15th and the other on 22nd July – which passed the so-called ‘prior actions’ in full. The government and its creditors had worked quite successfully together to make speed the enemy of dissent. In a total of ten days, the bulk of Greece’s public sector assets had been mandated for privatisation. Moreover, a left-majority parliament had somehow passed the largest austerity commitments in the country’s history. In the two votes, Syriza left-wingers and some moderate dissenters voted against the deal (39 and 36 deputies respectively), but that was not enough to prevent the package passing with opposition support. By holding the votes at the earliest possible date, the government and its creditors had ensured that the measures would receive the least possible scrutiny. The deadlines also left very little time for dissent of either left or right to really organise itself. For their part, the Syriza left were disoriented by the speed with which the successful referendum result had been converted into enthusiastic support for austerity by the Tsipras leadership.

The new laws did eventually split the party, with the Left Platform breaking away from Syriza to form the ill-fated new party, Popular Unity. At exactly the point of the breakaway’s formation, however, Tsipras pulled the same stunt again: not wanting formal opposition to emerge to his left, he called a snap election with just six weeks’ notice. Popular Unity was still-born. Syriza was re-elected on a wave of popular abstention. It was a grim denouement to a tumultuous nine months of ‘radical left’ government.

There are not many similarities between this and the British case: Greece wanted to remain a eurozone member but renegotiate some of its prior bailout commitments. The British government, on the other hand, wants to negotiate exit from the EU on relatively favourable terms. The structural position of the UK is very different to that of Greece, not least in terms of its currency arrangements. The Brexit negotiations now pivot on a matter of geopolitics – the Irish border question – that was entirely absent in the Greek case. Nevertheless, the story of Syriza’s capitulation in 2015 is a good example of how rotten deals are done.

Reports have recently surfaced that Theresa May is hoping to rely on opposition votes to pass her own deal. The bait here is naturally different to that of the Greek deal: some leave-supporting Labour MPs will see May’s deal as the only way to secure Brexit, while some Remainers way even see it as preferable to a hard Brexit. Her gambit is likely to be similar to Tsipras’s: that she can secure an outline of a deal at such a late date, and with a no deal exit looming so close, that many unsympathetic MPs feel obliged to vote with her. If she can rush the vote, she can avoid a protracted build up of opposition on her own benches and avert some defections. The government will be hoping to once again make speed the enemy of dissent. This may sound ironic-bordering-on-the-absurd, given the length of the fruitless negotiations to date, but the key decisions are all yet to happen. The news now is that leaders of the EU27 have decided to shelve the November Brexit summit that was supposed mark a turning point in the negotiations. This may, perversely, work to May’s advantage. The incompetence and failure of the government may not be ‘deliberate’ in any obvious sense, but in the final weeks of the negotiations the lack of progress – of concrete shape to the deal – will be the one card they hold.

If a deal emerges at the last minute, what will it look like? You can expect a ‘fudge’, but that doesn’t tell anyone anything. A fudge will conceal a certain balance of interests. My feeling is that the EU and UK government will reach some kind of ugly last minute compromise on the question of the backstop for Northern Ireland (a way of avoiding trade disruption between Irish Republic and Northern Ireland in the event of stalling transition or a no deal Brexit ). Extensive recourse to legal and technical contortions (‘a backstop to the backstop’) aside, what will it all mean? Right now the DUP doesn’t want any form of backstop or backstop-to-the-backstop that will only apply to Northern Ireland (thus imposing some kind of customs border between NI and the UK). Theresa May doesn’t want that either and needs the DUP’s support. It’s unlikely that the Irish Republic would support the kind of exit that would see a hard border imposed between it and Northern Ireland because of the way it would jeopardise the Good Friday Agreement (which is one of the things that makes a backstop so important). Because of May’s abhorrence of a customs border in the Irish Sea (basically partitioning the UK), she is now seeking temporary customs union membership for the entire UK as an alternative to a NI-only backstop. Michel Barnier, the EU’s Chief Negotiator, has said he wants to ‘de-dramatise’ the Irish border question by avoiding actual border checks while ensuring that the backstop only applies to Ireland. Tory Brexiters who will be crucial in getting the plan through the Commons don’t want an indefinite commitment to remain in the UK after the transition because Customs Union membership means no new trade deals with states outside the EU. It may be the case that the EU can be persuaded to accept some formal commitment to the temporary UK customs membership ending at an unspecified definite point. It may also be the case that some Brexiters can be bought off by May’s assurances that the UK will definitely leave the Customs Union even if she ultimately gets no formal date. Of particular significance will be May’s few key Leaver allies – people like Michael Gove, who has argued that any deal will be up for some sort of later revision – in encouraging pro-Brexit Tory MPs that this is the only way they can get Brexit done and is only for the short term. It won’t convince everyone, but it may work for some.

If all this sounds confusing, that also works in May’s favour. The very complexity of it means that different interests can take what they want from it. The alternative needs to look just bad enough – and the time to seek an alternative just slim enough – to get a majority to vote for it. Nevertheless, this might not save May. Tsipras got his deal and won his snap election, but at the cost of his party. May would probably not survive even a small Tory defection. She might get the deal through parliament with some opposition support only to be turfed out of office in the ensuing months. That would see either a Tory leadership election or a general election or both. May’s legacy could ultimately be securing a deal to which her successor – whoever that may be – is committed.

For those on the Labour side there is little solace in May’s impending downfall. Most MPs want the softest of all Brexits – Brexit in Name Only – followed, presumably, by re-entry at some later date. The Labour leadership wants a permanent Customs Union. Were it in power, a Labour government would very much be at risk of two outcomes: either being bounced into membership of the EEA (or the Single Market for both goods and services) or being bounced into exactly the kind of backstop for Northern Ireland that the EU would like. In the former case, the few left-wing benefits of Brexit become impossible. EEA membership means accepting neoliberal EU policy on state aid, competition rules and procurement policy. It is better to remain in the EU than wind up in the EEA but without full EU membership. Exit minus the EEA but with a new Customs Union (Labour’s current position) would no doubt require an Irish backstop of the kind proposed by Michel Barnier. There is nothing in principle wrong with that – but imagine the political opposition to a Corbyn government that imposes a border between the UK and Northern Ireland. Corbyn, who has historically supported a united Ireland, would be accused of creating a de facto united Ireland. It is not necessary to be a full-throated Remainer to see that some thought needs to be given to how a workable Brexit agreement can be secured. It is still not entirely clear how Labour would make that work in practice and avoid its own defections. Principled socialist opposition to the EU has rarely coalesced into a meaningful path to exit. This is not to say that Labour should have all the answers by now, but it should at least have grappled with the political realities of it.

In the real world, the Labour leadership is likely to whip its MPs to vote against May’s deal. If it wants to win that vote – essentially by ensuring its MPs actually vote with the whip – it has to make its alternative clear. The more confusing and complex May’s deal looks, the clearer Corbyn’s alternative should be. This means ditching the ambiguity about a People’s Vote and making clear what its deal would look like. Above all, somebody needs to explain what the solution to the Irish border question is.

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