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Britain and Europe after the general election: An interview with John Palmer

John Palmer was a leading member of the International Socialists from 1959 until 1975. He later worked in Brussels as the European editor of the Guardian. With a referendum on the EU looming, we interviewed him on its history, institutions, and the truth behind the Tory bluster.

rs21: Could you say something about the terms on which the EU was established. Is it right, for example, that the EU was founded as a simple common market and only later acquired political ambitions?

The post-war years saw three important related currents, one was the “Never Again in Europe” preoccupation – meaning no return to war. There was genuinely popular support for an end to the cycle of ever more disastrous European wars. There was enough reality behind the perceived danger of the repetition of perennial European history to persuade both important sections of the ruling class (articulated by mainly Christian Democrat politicians such as Monnet, Schuman, Adenauer and De Gasperi) and important sections of the labour movement including the main Social Democrat parties (though not Labour) to support moves to create the European Community (later renamed the EU). The common demand on the revolutionary left was for an even more integrated “Socialist United States of Europe”. Indeed the International Socialists originally strongly supported EU membership.

The second current was a growing sense, more profound and pervasive today than it was then, that national states were confronting problems that they were never going to be equipped to deal with at a purely national level. Across Europe there was significant support for the goal of a united, democratic “federal” Europe.

Thirdly and most immediately, most west European governments (though not the British) recognised that the continued Balkanisation of the capitalist economy behind national trade and other economic barriers, was feeding a perceptible decline of European capital vis a vis in particular the United States and Japan. The drive to create a common market (later a “single” market) was fuelled by fear of eventual domination by other centres of global capital.

There is a widespread perception in this country that the EU was originally intended to be a solely a trading bloc and that later it clandestinely engineered moves to become a political union. To the contrary, the goal of political union was there from the beginning as can be seen by examining the founding Treaty of Rome in 1957 which set out the goal of an “ever closer union” among the peoples and states of the Europe. The objective was through initial, basic economic and commercial integration to move by stages into a political union of some kind. It was clear from the beginning that an emerging economic union would have to have some democratic dimension. The objective of European elections, a European Parliament, was there if not from the very beginning from very soon afterwards.

So where does this idea come from then that Europe was only ever meant to be a purely economic process?

Britain was driven to the negotiating table by the failure of its post-war economic recovery strategy which could no longer be ignored by the late 1950s. By then, it was clear that Britain was no longer Europe’s biggest manufacturer of steel, machine tools, cars, etc. and that in the new competitive pressures arising from the recovery of the West German and French economies, Britain had to “sue for terms” having initially turned down contemptuously the offer to participate in the negotiating process. That led to two abortive negotiations during which Britain was not willing to concede the principle of shared sovereignty in some important areas and the applications were vetoed by De Gaulle. Finally the Heath government of 1970-1974 negotiated the terms of accession, but it represented a radical retreat from the initial British negotiating positions.

So the British political class, as they struggled to sell the project domestically, stressed the purely economic advantages of “Common Market” membership and did their best to hide or downplay the undeniable political aspiration for closer political integration set out in the Treaty.

What has been the relationship between the EU and neo-liberalism?

The starting point I think for any serious discussion about the European option has to be the recognition that national states everywhere are in decline. Their capacity even to negotiate with more powerful economic forces  operating is steadily and, seemingly, irreversibly weakening. Small and medium sized states tend to be reduced to supplicant status in relation to major powers at the global level. Neo-liberal ideology acknowledges this reality. That is to say: unless you are ready to break with the global system entirely (whatever that means) you have to live at least to some extent on its terms.

The European social democratic settlement of the 1970s was based on a compromise between capital and organised labour. Initially in the EU this approach was shared by many Christian Democrats. That is why the EU from a very early stage was already negotiating EU wide “social market” regional development strategies, and later a wide range of social, labour market and environmental policies. This strategy reached its apogee under Jacques Delors when he was President of the European Commission in the 1970s. This was the last time that the EU felt really strong enough to say Yes, markets will open up, barriers to free movement of capital and of workers will be taken down, but only in a framework where some of the key social democratic policies of the trade unions and social welfare rights are enshrined.

So when Delors addressed the TUC at Brighton in 1988 he was cheered to the rafters and they all sang Frère Jacques. The prevailing ideology of the EU was that there should be an understanding between big capital and social democracy, the social democrats were in government throughout Europe and big capital felt it was not strong enough to simply ignore those pressures.

Since then the balance of forces has changed dramatically, and the gains achieved by social democracy have become ever more marginal. Social Europe was established in conditions of growth. Capital had an interest in securing all this liberalisation but there was still full employment and rising living standards even then. But since then in parallel with the weakening of this social compact, we’ve seen the social crisis and above all we have witnessed massive defeats for organised labour, a profound onslaught on social welfare and citizens’ rights and the consolidation of many of the worst features of the neo-liberal agenda.

Yet the crisis has not abolished all the gains made in earlier decades. It would be a profound mistake to imagine that that any new offensive by organised labour, the new social movements and the left more generally, against the neo-liberal hegemony, can ignore the centrality of the economic, political and social changes needed to be achieved at the European level.

Since 2008 the trend within almost every state in Europe has been for the removal of limits on the power of capital in the workplace; surely that has had an impact in terms of the policies being put forward by the EU?

It is undoubtedly the case that the lurch to right in so many member states has reinforced a sense of the inevitable stripping out of the social democratic consensus. However, I think it is an error to see in the neo-liberal project an unstoppable process which cannot be derailed. I do not mean that the organised working class is in a position to derail that consensus.

But I do think that the neo-liberal project cannot be sustained in its full ferocity without doing unacceptable collateral damage to the main political constituents of the ruling class. Politically and sociologically the ruling-class is not simply an aggregation of big finance and big capital. It is a far more complicated alliance of social forces compromising even large chunks of what we used to consider the middle class. The damage done to the economic and social environment by deskilling, deprofessionalisation and all that has gone with the neoliberal project is undermining the hegemony of the conservative right. Mainstream Conservatism, like Social Democracy, is subject to fracturing, and is vulnerable to the populist right. The different elements that constitute the mainstream bourgeois parties are increasingly incoherent.

The Greek situation has at least the potential to create a dynamic where people feel that they can stop neo-liberalism. It may well prove to be the same in Spain if Podemos were to come to power. The pendulum is swinging even if the direction is not always clear. There is now quite a widespread perception that the collateral damage done by neo-liberalism is outweighing its supposed economic advantage.

It is clear that any alternative to the neo-liberal project will have to be conceived (for us in Britain) and largely implemented on a European level. Even in the largest European states, any break with neo-liberalism which is confined to the national level confronts, is rendered utopian by the reality of economies so profoundly interconnected at European level.

Your 1988 book Europe without America analysed the tensions between the EU and the US, over political strategy and trade. To what extent does a desire not to be dominated by the US explain the moves that took place in the 1990s towards political integration and the creation of a single currency?

America’s over-weaning power, once it moved from areas like security into areas like the trade and the economy, was perceived increasingly by European capital to be distorting and dominating the terms on which global trade was (or should be) settled. So, part of that rallying at the European level, was about the pooling of collective strength in order to create a power that was closer to that of the US. I remember when the WTO negotiations were running, on the one hand, here was America and Europe, two close allies concerting together on foreign and defence policy but fighting like cats and dogs – on abusive terms – about trading and environmental conflicts.

It is not just in Europe and the United States that state formations are in decline. You are seeing something happen at a global level which is analogous to the late eighteenth and early nineteenth centuries when the capitalist market became national rather than local and forced a parallel evolution of the radical democratic and socialist oppositions.

I am frequently struck by the relevance to the left debate about Europe of the debates that Marx and Engels had with the German anti-authoritarian liberals about whether they should support German unification or not. Marx always argued for German unification even though he knew that Prussian militarism would initially dominate it. He said that the tariffs between states and Länder were going to be removed, political power was going to move and the workers’ movement needed to be present at the national level. There were fierce arguments in independent states such as Baden-Wurtemberg and Schleswig Holstein, where they were saying that their democratic rights and sovereignty would be threatened if they were forced into a United Germany. That argument was won inside the German Social Democratic Party eventually by the 1880s.

We have weakening sovereign states. The question is how are we today going to come to terms with this reality? And that’s why the Greek discussion is so important. What actually does Antarsya say should be done that’s different to Syriza? It largely comes to advocacy of devaluation after a break with the euro which is hardly a Marxian approach. As a political programme, it seems to me to demonstrate the bankruptcy of a lot of left thinking; they are trying to squeeze down onto the national level decisions which by definition the nation is no longer capable of taking. There is no going back to a Europe of individual national states except under circumstances which would be apocalyptic, where the nazi and neo-fascist ultra-right, like Golden Dawn, come to power in a number of key European countries.

Can you set out the roles of the main EU institutions: the Commission, the Council of Ministers and the Parliament. What powers do each have? How have the relationships between them changed over the past 40 years?

The EU institutions are a hybrid of two systems of governance. One, the Council of Ministers, is a system of sovereign national states taking decisions by inter-governmental co-operational. Alongside that is what is known as the “Community Method” that is legislation which is initiated by suggestions from member states or from the elected European Parliament which the Commission is then charged with working up into legislative proposals. The decision on turning these into laws can only happen when the two sides of the governance process agree. For most matters, legislative decisions require “a qualified majority” in the council of ministers where votes cast are weighted according to the size of each national’s population.

The story of the last 20 years has been the rise in the importance of the directly-elected European Parliament and a decline in the importance of the Commission.Parliament’s role has undoubtedly been further strengthened by its new role in the selection of the Presidency of the Commission. Previously that position was an appointee, governments had to haggle among themselves behind closed doors. Now the Council of Ministers has to give its approval, but the process for the identification of the Commission comes about in an election in the European Parliament between different candidates proposed by different European political parties.

The long-term growth in the importance of the elected European Parliament is compromised by the declining turnouts in the EU elections. However during the last election there was for the first time a sense that a battle was taking place reflecting some real choice between competing programmes of the different candidates for the Commission Presidency. However the reality, nowhere more than in the UK, is of national political parties incapable of conceiving political strategy at the European level, much like the princely states in 19^th century Germany.

There are other EU institutions including the Assembly of European Regions, and the so-called Dialogue of the Social Partners (now an increasingly marginal force), although the trade union bureaucracy is calling for its revival. One area where policy at the European level is definitely shaping national policies is the environmental movement, where the EU has become the primary negotiator on behalf of the member states on the talks concerning climate change, etc.

The Court of Justice, whose role is test the consistency of the decisions of the European Council with the European Treaties, is also of importance of course. It is not to be confused with the pan European Court of Human Rights. There is also the European Court of Auditors which is meant to check on the accounts of the EU institutions.

What will be the content of the next Treaty?

The next Treaty revision will probably be on the agenda before 2020, there are no fixed dates as yet. The terms of reference of the new treaty will almost certainly have to include some reckoning on what has been learned from the global and European crises since 2008. It is ludicrous for the EU to operate a monetary union without an economic union. There will probably be a further Treaty which will bring the economic and the monetary sides of the union closer together which will have far reaching implications for political responsibility for fiscal policy. This will also be an opportunity for a much wider debate what the nature of the economic strategy should be. Whether the left has a big and coherent enough voice to influence that outcome has yet to be determined.

One of the other obvious questions coming up is EU representation on the UN Security Council. Why is Britain holding on to Trident? Trident is the UK’s bargaining chip to retain membership of the global nuclear powers’ club. Without Trident, Britain’s Security Council place would be even less viable. It is another reason why we have to press to take it off them.

Is there any prospect at all of any further wave of protective workplace legislation? If so, what reforms might it involve?

The truth is that the impetus has diminished for further labour and social reforms. The last Commission under José Manuel Barroso was a right-wing Commission, and they kept their heads down. They were worried about divisions the increasingly important Heads of Government summits. The result was a drying up of social or labour market legislative proposals. But there are signs that the pendulum may be starting to swing back. The centre-right Swedish government has put forward proposals, as has the Italian government. Some of them are to limit or even reverse zero-hours contracts and the casualisation of labour. There is talk that any economic recovery must be marked by secure and permanent employment. This is something which not only involves and Greens and the Left but some Social Democratic parties and even some Christian Democrats. You have to remember for example that the German CDU bloc includes trade union delegates who are susceptible to pressure.

How about the relationship between the EU core and periphery: Costas Lapavitsas has argued that given Germany’s combination of low wages and high investment free trade with Germany can only result in the impoverishment of every country in the EU’s periphery. Do you agree?

Perhaps paradoxically, among the people who have lost most in the past few years has been the German working class. Under the Hartz IV agreement which held down wages; until very recently, German wages have been held down more than in many other countries. The loss of real purchasing power has been more extreme in Germany than elsewhere.

It is not so much that Germany attracts capital from Greece. The Euro exchange rate is weaker because of Southern Europe than it would be if Germany was on its own. The result has been a major boom for German export industries. So Southern Europe is in a sense subsidising the export-led growth of Germany through its participation in the single currency. That makes it all the more bizarre and unjustified that austerity is being imposed on Southern Europe. Why was Hartz introduced? Because German decision-makers anticipated that the Euro would rise to such a level that they wouldn’t be able to export, so they needed to drive down wages in order to drive down prices. That simply has not happened.

German hypocrisy is on a massive scale. But we are now at a fascinating point, can there be a sustainable recovery without a change of policy away from austerity? I find it difficult to see a recovery without that change. There are signs in Germany of increasing nervousness about the current line.

What will be the outcome of the negotiations with Greece?

My instinct is that around the Greek discussion there may still be at the end of the day a retreat by the EU and some – however marginal – tailoring of the loan terms. I think that is still more likely than not that Greece stays in, but an out-of-control exit from the Euro cannot be excluded. It might, however, involve a massive devaluation and a further sicking fall in living standards.  Apart from anything else, if Greece was to fall out, let alone if it was pushed out of the Euro area, everyone would assume that the next time questions are posed about another weak currency, the markets would say “Don’t believe a word from the authorities”, everyone would say, “the system cannot keep them in.”

It seems that there has been quite a shift in the Tories approach to Europe; with increasing numbers of Conservatives trying to bind the party to hostile negotiations with Europe which are deliberately doomed to fail

The Tories’ talk of leaving the EU is a palpable deceit. They will come back from so-called re-negotiations about the terms of the UK’s membership of the EU waving a piece of paper saying “It has all been changed”, without changing anything of substance. This what Harold Wilson did in 1965.

I understand that the Tories’ strategy on migration will be to seek a set of derogations from existing EU law on the free movement of people. And that way you would get an emergency brake on immigrant numbers. You would have a number of other conditions imposed on free movement. It is clear they will not get that. It is clear from what Merkel and everyone else, their allies, have said, that is impossible. To call into question the free movement of people would logically call into question the other of the “four freedoms”, to free movement of goods, services and capital. They won’t do that.

What the EU might do, because it would require an adjustment of British rather than European law, is toughen the conditions affecting initial social of security benefits for new immigrants from other EU countries. This might mean having to work for six months, say, and make some tax contribution before receiving so-called benefits. At the moment, that’s not something on which EU law has ruled one way or another.

That is something that other EU countries have said that it would be a matter for Britain if they wanted to require a three or six month gap. But on the big issues of migration caps etc simply they won’t get their way. The Tories are also looking for some guarantees that as the European monetary union moves to an economic union policies they will not be outvoted by what would be an increasingly strong Euro area bloc of states on matters that might adversely affect the City. In such an event Cameron will come back proclaiming: “I have won.” It won’t suit the hardline Eurosceptics, they will see through it straight away. It could deepen the split within the Tory party and accelerate a drift to UKIP.

 Could the Tories leave the EU?

The most hostile elements couldn’t carry the whole of the party with them. British capital, principally the big companies which thrive under the neo-liberal order and their financial services equivalents, will not tolerate a major party quitting the European consensus and potentially threatening to be outside the single market hence without access to decision making about how that single market is run. Their influence, combined with the still politically pro-European bits of the Conservative party, will be a huge magnetic force tugging the Conservatives, saying that if the Tories were to move to a UKIP-type position or merge with UKIP, this is writing off political power. If you want to be a responsible capitalist party doing the business of capitalism, we don’t want you to play with populists like this. Look at the CBI, they talk about reform but say Britain has to stay in.

Almost every day on the business channels, there is a discussion about how alarming it would be if there was another referendum which broke up the United Kingdom, and how even worse that would be if there was a referendum which took us outside the EU. They know that Cameron intends staying in the EU. He has no intention of pulling out.

There will be a consultation, and the appropriate mood music, that’s what they’ll do. Even Osborne is scared witless of the thought of being outside. The last thing they want is a Norwegian relationship where they still have to pay into the EU budget, they would be told what the laws are after they have been decided and they would have to implement all the policies that make up the single market.