Today the blog celebrates its second birthday.
Thank you all for your support and keep coming back for more content.
Today the blog celebrates its second birthday.
Thank you all for your support and keep coming back for more content.
Nick Clegg, the ex-Lib Dem leader and former deputy-PM published this briefing paper recently that explains very well why the Brexit dream of trade deals is and will remain a dream. The paper was drafted with help of independent experts and is co-authored by Peter Sutherland, the founding Director-General of the World Trade Organisation. I am reproducing the report here in full as it needs to have the widest possible dissemination.
After you read it, think this: If the one remaining supposed benefit of Brexit (trade with the world) is fantasy, what is the reason for still going ahead with it?
WHAT DOES BREXIT MEAN FOR THE UK’S TRADING RELATIONSHIPS?
Membership of the EU governs the trading relationships that we have with the rest of the world. Since long before the evolution of the Single Market in the 1990s, members of the EU have also been members of the European Union Customs Union. The Customs Union has two elements. First, it ensures there are no customs checks on goods crossing internal EU borders. Second, it means that all of its members adopt a ‘Common External Tariff’, charging the same rates of import duties on goods which are imported from countries outside the EU. This rule is designed to avoid third country goods entering the market and circulating freely having avoided the tariff rules set by the Union as a whole. The Customs Union also means that EU member states negotiate trade agreements collectively, through the EU institutions, rather than negotiating their own bilateral trade agreements with third countries. The advantage of this arrangement is that the EU negotiates as a bloc of 500 million consumers, and can use access to this vast market as leverage to secure better trading terms than could be delivered by any individual member state.
How is EU trade with the rest of the world organised?
The UK is currently party to more than 50 Free Trade Agreements (FTAs). While the EU itself remains our largest trading partner (accounting for 44% of UK exports in 2014), EU trade deals with third countries cover significant UK trading partners, including Switzerland, South Korea, and Canada (under ratification), as well as several Commonwealth countries and important emerging markets like Vietnam and Colombia. These agreements give British businesses preferential access to foreign markets while allowing reciprocal access to our market (i.e. waiving all or most of the duties normally required under the Common External Tariff and removing some non-tariff barriers). There are negotiations in progress with a further 67 countries, including the US, Japan and India. In addition to FTAs, which primarily aim to reduce tariff barriers, the EU has a large number of other trade-related agreements that address specific non-tariff barriers. For example, Mutual Recognition Agreements (MRAs) with third countries allow goods to be inspected and declared in conformity with Single Market rules by approved bodies before they are exported to the EU. This saves time and expense as shipments do not need to be impounded and checked at the EU border. MRAs are in place with many countries which do not have a full FTA with the EU, including China, the US and Australia. Other types of agreement include sector-specific deals (for example covering aviation and airlines’ rights to fly between the EU and third countries), and Economic Partnership Agreements (EPAs), which grant preferential access to a number of developing economies – mainly former colonies of EU member states. When the UK leaves the EU, it will cease to be a party to these agreements. Only 15% of UK total trade is currently with countries that are neither members of the EU nor covered by an EU trade agreement which is either in force or under negotiation.
How is the government likely to proceed?
Our membership of the Customs Union is part and parcel of our membership of the EU; when we leave the EU we will leave the Customs Union. Given the consistency with which the Leave campaign argued for the freedom to strike our own trade deals, it seems unlikely that the government would seek to strike a deal with the EU which preserved our membership of the Customs Union, even if this was politically possible. At the time of writing, however, the government would not confirm one way or the other. Assuming that we leave the Customs Union when we leave the EU, the government will then presumably seek to strike an FTA with the EU, and to open trade talks with third countries as quickly as possible. Brexit Ministers have presented this as a relatively straightforward process. David Davis has asserted that within 2 years the UK will be able to negotiate a free trade area “massively larger than the EU”, including deals with China and the US. This scenario is almost certainly impossible. A number of unavoidable steps will need to be taken before the UK is in a position to strike its own trade deals, and these steps will take several years to complete. The reasons for this are explored below.
What needs to happen before the UK can negotiate its own trade deals?
The UK has traded as part of the EU for more than 40 years. As a consequence our laws are completely intertwined with the EU’s, we have virtually no trade negotiators of our own, and any potential trading partners are going to approach talks with a good deal of caution, at least in the short term. Each of the following steps needs to be completed before any new non-EU trade deal can be struck:
1. Confirmation that the UK will not seek to remain in the Customs Union Remaining in the Customs Union would avoid the need for an FTA with the EU, but would also prevent the UK from negotiating FTAs with other countries. Future trading partners will want confirmation that we are indeed free to negotiate our own trade deals before they commit to negotiations. To date, the government has not confirmed its position, and so prospective trade partners remain in the dark. It should be noted that leaving the Customs Union will impose significant extra burdens on British exporters (see below).
2. Agreement with the EU on opening talks Members of the EU Customs Union are not able to enter into their own discussions with third countries about bilateral trade agreements. Technically, the other 27 members of the EU will need to agree to the UK opening informal talks. While this is unlikely to be a stumbling block to the opening of discussions, the UK will not be able to conclude any agreement with a third country while it remains part of the Customs Union.
3. Clarity about the UK relationship with the EU 2 Any third country considering whether to enter into a new trade deal with the UK will most likely want to wait until there is clarity about the UK’s trading relationship with the EU. If the UK decides to seek to retain its membership of the Single Market (either in total through membership of the European Economic Area (EEA), or through a bespoke agreement for specific sectors), then third countries would most likely want to see the terms of any deal, including arrangements for onward re-export of goods to the EU, before developing their own position. Similarly, if we leave the Single Market and negotiate an FTA with the EU, then the nature of this FTA will materially change the calculations that any third country makes about signing a bilateral deal with the UK. Potential trading partners are therefore likely to choose to wait and see what emerges from these talks before committing to negotiations. This question is also vital for foreign investors because onward access to the rest of the European market is one of the central attractions for any business looking to invest in the UK. If we are going to be outside the Single Market, the value of preferential access to the UK’s market to a prospective investor will be diminished.
4. UK ‘schedules of commitments’ to be agreed at the World Trade Organisation The last step which the UK will need to take before it can open meaningful negotiations with third countries is to establish ‘schedules of commitments’ at the World Trade Organisation (WTO). These set out the default duties that will apply to imports into the UK of goods and services. The UK is a WTO member, but as a member of the EU we have been part of the EU’s Common External Tariff for 40 years. In order to trade independently we will need to notify the rest of the world of our maximum import tariffs for merchandise, and other commitments for services, for every category of goods and services. These ‘most favoured nation’ (MFN) terms apply to any country with which we don’t have a bespoke trade agreement of a kind permitted under WTO rules. Until the point at which the UK leaves the EU Customs Union it will be bound by the Common External Tariff and cannot establish its own commitments at the WTO. Once we are free to do so at the end of the article 50 talks, the UK may attempt to expedite the WTO process by simply replicating the existing EU schedule of commitments, rather than starting with a blank sheet of paper. However, this is unlikely to be plain sailing. The UK’s schedule of commitments has to be adopted by consensus among the 164 members of the WTO. Some WTO members may try to secure better access to the UK market than they were able to secure when the UK was part of the much larger EU bloc. Or they may choose to block on wholly unrelated grounds as a means to exert political or economic pressure on the UK. Even if the UK can agree its terms with the other WTO members, there may be domestic roadblocks to overcome. Freed from the Common External Tariff, various UK interest groups may want to challenge the UK’s existing MFN rates. For example, there may be sectors where the EU currently charges a zero tariff on imports where protectionist interests in the UK may want to increase the tariff. Or there may be sectors where the EU currently applies relatively high tariffs, for example on food products, where businesses and consumer groups in the UK may want to make imports cheaper. For example, Tate and Lyle have made it clear that they want to see lower import duties on cane sugar. The whole question of tariffs on agricultural imports will be connected to decisions on the new agricultural policy which the UK government will have to take in partnership with the Scottish, Northern Irish and Welsh administrations. Tariffs on beef, for example, which are currently very high, will both be highly contentious domestically and of significant interest to many EU and third countries who will want to see them lowered.
Agreeing an FTA with the EU
If the UK leaves the Customs Union and does not attempt to re-join the EEA, then a UKEU FTA is the next logical step. An FTA would seek to abolish or minimise tariff barriers, ease non-tariff barriers, and provide whatever preferential access proved negotiable to some areas of the Single Market. It should be noted that it is not possible to pick off individual member states and sign FTAs (for example with Germany, our biggest trading partner). As members of the EU Customs Union they are prohibited from signing bilateral deals. Some MPs who favour a quick unilateral Brexit have suggested that we could avoid the need to sign an FTA by simply dropping our own tariffs on imports from the EU to zero, and challenge the EU to reciprocate. This would not work, for three reasons:
– First, in the absence of a comprehensive FTA the EU is legally obliged under WTO rules to apply the Common External Tariff to the UK, resulting in immediate tariffs on goods ranging from 10% in the case of cars, to 12% for clothes, 21% for beer and spirits, and 29% for chocolate and other confectionary.
– Secondly, WTO ‘most favoured nation’ rules dictate that if we drop tariffs on EU imports to zero we will be obliged to do the same for every other country in the world. That would at a stroke undermine any prospect of securing favourable FTAs with third countries, as we would already have unilaterally removed our tariffs and would find countries unwilling to offer reciprocal tariff reductions – we would have squandered our negotiating capital.
– Finally, such a move would do nothing to address the non-tariff barriers which are harmonised for countries inside the Single Market, or the right to provide services, which will become a far more significant concern for British businesses once we leave the EU.
Any agreement on the UK’s future relationship with the EU will take time to negotiate. Trade Commissioner Cecilia Malmström has said that trade negotiations will be treated as separate from the article 50 process. The logic of this is that we will have to wait for 2 years for the end of the article 50 process and actually leave the EU before there can be a formal FTA negotiation; though in practice, and with EU goodwill, these discussions may be able to run in parallel to some degree. Once talks do begin we can expect them to last for several years. It is sometimes suggested that the EU’s Comprehensive Economic and Trade Agreement with Canada (CETA) offers a model that the UK might follow. There are at least four reasons to question this:
– First, the sheer time it would take. The Canada-EU negotiation was launched in 2007. Nine years later, the agreement has still to take effect.
– Second, CETA grants only limited freedom of services, with hundreds of pages devoted to Canadian and EU ‘carve outs’ from general liberalisation commitments. Yet the UK is heavily dependent on service exports – and especially financial services.
– Third, it would introduce all sorts of new red tape on British businesses, from ‘rules of origin’ requirements to intrusive customs checks (see below).
– Fourth, the tariff reductions it achieves are limited. Under CETA, Canadian exporters will face tariffs and other restrictions on scores of food and farm products. It will still face EU quotas on beef, for example, the elimination of which had been Canada’s single biggest negotiating objective.
An FTA would have to be agreed by all 27 member states, and it is extremely unlikely that every single country will give the UK an easy ride in the negotiations. While Leave campaigners have claimed that the UK is in a commanding position due to its overall trade deficit with the EU (in other words “they need us more than we need them”), in reality much of this trade deficit is accounted for by Germany. Many other member states buy more from the UK than they sell to us. The balance of negotiating leverage would be dictated by the fact that we represent only some 17% of total EU trade, while they represent about 44% of ours. Another time-consuming aspect of an FTA is the negotiations that will have to take place with domestic UK stakeholders, who will have diverse and often conflicting views and needs.
Finally, it is important to note that an EU FTA has to be ratified by the Westminster parliament, and more significantly by the parliaments of all 27 EU member states and by the European Parliament. This introduces further significant scope for delay. For all of these reasons it is probable that an EU FTA will take several years to put in place post-Brexit, stretching the time horizon for a new deal well into the 2020s, and introducing a protracted period of uncertainty for business. In the meantime, unless there is some interim arrangement for tariff-free access, the UK will need to impose tariffs on imports from the EU, for the reasons set out above. To do otherwise would squander any chance of negotiating meaningful FTAs with other countries, and would hamstring our own talks with the EU. This will raise the cost of imports from the EU, which will be borne by British consumers. According to some studies, the impact on UK food prices alone could be as much as 8%. It may be tempting to imagine that there is a way around these problems by putting in place a simple, ‘quick and dirty’ FTA covering essential sectors and leaving others for future negotiations. But this is not possible: the WTO rules require any FTA to be ‘comprehensive’, covering “substantially all” the trade between the transacting parties. It the deal failed to meet this threshold it would be ruled illegal and both EU and UK would revert to their MFN tariffs.
What are the pros and cons of leaving the EU Customs Union and signing an FTA with the EU?
Once the various obstacles explored here are overcome, the UK would have the ability to negotiate new trade deals with third countries which would not otherwise have been available as a member of the EU, and without having to balance our negotiating asks with those of other EU countries. However, the freedom which this implies is less than it might seem:
– On leaving the Customs Union, we will immediately lose access to FTAs which give UK business preferential access to more than 50 markets. Open Europe estimate that these trade deals mean that an additional 14% of UK trade on top of our trade with the EU takes place on preferential terms.
– We will also lose MRAs with 3rd countries (including major trading partners like the US) which allow products to be imported having been certified as being in conformity with EU rules and regulations. Assuming we leave the Single Market and continue to maintain similar regulatory frameworks, these agreements will need to be renegotiated in order to avoid the creation of non-tariff barriers for importers.
– Outside the Customs Union, all goods exported to and imported from the EU will need to be declared to the customs authorities. This will introduce delays, extra paperwork and costs for British businesses, including customs checks, value declarations, inspection certification, and advance cargo declarations. It will also make continental businesses less willing to include UK-produced goods in their supply chains.
– If we sign an FTA with the EU, or seek to adopt a Norway-style relationship, then British exporters will also have to comply with complex ‘rules of origin’. These rules require UK exporters to obtain proof of origin certificates from their national customs authorities to guarantee that the product (or an agreed percentage of the product) originates in the UK. Under an FTA, goods have to be shown to come from the country in question in order to benefit from the preferential tariffs agreed under the FTA, and to prevent third country imports from being passed off as domestic products. These rules are not applied to countries inside the EU Customs Union. The economic impact of rules of origin has been estimated to increase trade costs by between 4% and 15%. The impact would be particularly pronounced on companies with highly integrated cross-border supply chains like the British aerospace and automobile industries.
– Leaving the EU Customs Union will require the introduction of new customs controls (a “hard border”) between Northern Ireland and the Republic, in order to prevent goods from crossing the border in contravention of customs checks.
– Perhaps most importantly, the FTAs that the UK manages to negotiate once outside the EU will lack an advantage that the UK had as a member of the EU. Negotiating as part of a market of 500 million consumers gave us far greater leverage than we will ever have as a market of 65 million consumers. This is simply matter of arithmetic: third countries will find our market relatively less appealing and so will make fewer concessions in negotiations than they would do if we offered a larger market for their products. It is highly unlikely that we would be able to negotiate equivalent access to that which we currently enjoy as a member of the EU, let alone to improve on it.
Sequencing issues and the ‘WTO Option’
The process of arriving at an FTA with the EU is, as we have set out above, not straightforward. The 2-year time window provide by the Article 50 process is completely inadequate for the scale of the task, and unless the deadline can be extended or an interim arrangement can be put in place it seems inevitable that there will be a hiatus between the point at which we formally leave the EU and the point at which an EU FTA comes into force. It may be that a temporary interim arrangement which prolongs our membership of the Single Market and/or Customs Union could be sought, pending the conclusion of a comprehensive FTA. It is not clear whether such a deal would be politically achievable or legally compatible with article 50. Even if it was, there is still the danger that talks would collapse, or that the terms of any agreement would fail to be agreed by the EU-27. Any of these scenarios would see the UK leave the EU without any form of agreement in place. In these circumstances the UK would have to rely solely on to its basic schedule of commitments as agreed in the WTO (see above). This is fraught with dangers: we would face immediate tariffs on our exports to the EU, bureaucratic customs checks, loss of passporting rights for services, and substantial non-tariff barriers on goods and services, including the prospect of trying to certify our exports as being in conformity with EU rules without any recognised approved UK certification authority. It is, for example, hard to see how any significant animal and animal product exports to the continent could continue given that imports to the EU have to pass through designated Border Inspection Posts, of which there are precisely none on the other side of the Channel. This is a £1.5bn export trade which would disappear overnight. And the wider £18bn food and drink export industry would be hit by significant tariffs which would inevitably damage sales on the continent. For these reasons, the Treasury estimated the cost to UK economy of the ‘WTO option’ as 7.5% of GDP after 15 years.
The conclusion is that there is no viable ‘WTO only’ solution. An interim trade deal therefore has to be in place at the point at which the 2-year Article 50 time limit expires.
For the reasons set out above and in Brexit Challenge #1, we believe that an interim deal based on the EEA / Norway approach, which would preserve our membership of the Single Market while allowing us to strike our own trade deals outside the EU Customs Union, would be the least bad option. Even the ‘Norway option’ carries serious downsides though: a major loss of sovereignty as we are cut out of the setting of Single Market rules, coupled with the introduction of new bureaucratic burdens for British exporters who will have to comply with complex ‘rules of origin’ to show where every element of their products was manufactured. However, there are no obviously better choices on offer.
The questions that need to be answered 1. Is it government policy that the UK will leave the EU Customs Union? 2. Is it the government’s intention to seek membership of the Single Market? 3. Will the government come clean about the increase in red tape which awaits exporters who want to continue selling their goods into the EU post-Brexit? 4. How will the UK negotiate new WTO schedules of commitments in a reasonable timescale, given that this will require consensus of all WTO members, some of whom are likely to object? 5. How long does the government expect it will take to negotiate a Free Trade Agreement with the EU? Does it believe it can be achieved in the 2-year time frame of the article 50 negotiations? 6. What is the government’s plan to prevent a highly damaging hiatus between the end of the article 50 process and the commencement of an EU FTA? 7. What will the government do to protect UK interests against the risk that ratification of the EU FTA is blocked by EU Member States? 8. Will the government confirm its determination to avoid the so-called ‘WTO option’, given its unworkability and the Treasury’s estimate that it would reduce GDP by some 7.5%? 9. How will the government address the fact that third countries cannot enter into meaningful negotiations with the UK until the UK’s future relationship with the EU is clear and its WTO schedule of concessions agreed? What will happen to UK export markets during the hiatus in between? 10.What is the government’s estimate of the increase in food prices that would result from applying EU tariff levels to imports from the EU and losing access to preferential food imports under EU agreements with third countries? 11. Does the government intend to pursue an interim agreement which preserves the UK’s access to the Single Market while a comprehensive FTA is negotiated? 12.How many external trade negotiators and consultants does the government intend to recruit over the next two years, and at what projected cost?
reproduced by @iGlinavos
Got sick of the uncertainty that has plagued the economy, society, our lives since the infamous Leave vote on the Brexit referendum on the 23rd of June?
Fear no more. I have looked into my crystal ball and here is a point for point explanation of what will happen from now on.
What will the Brexit plan consist of?
“The government will give effect to the democratically expressed will of the people to leave the European Union as expressed in the referendum on 23rd June 2016.
The government will negotiate a deal with the EU that protects British interests, the economy and the rights of citizens.
The government will make Brexit a success by opening up a new chapter in British history, expanding its relations with the world as an independent power”.
Applause all around. What this means is that the UK will no longer be an EU member state in January 2019. Also, this means that the ‘good of the nation’ and the ‘interests’ are left undefined. The government will seek a soft-Brexit and remain part of the internal market. It will not insist on an end to free-movement of people. It will say that the mandate of the referendum was to leave the EU, on which it has delivered. Everything else is determined in the national interest, and immigration does not trump economic considerations.
You doubt that this will happen? The City has boycotted a hard Brexit, and for all the talk of industrial plans, equality, state-directed-development, digging up Mitterand and making him Chancellor etc etc, Britain does not do what the City does not want. Also (and this is important) there is no factual basis to the immigration obsession. EU migration has been a net benefit to the UK economy and as regards stress on the ‘social fabric’, those areas most in favour of Remain were the places where most migrants live. May is clever to play the hard-as-nails defender of the natives, but can tell the difference between what is actually beneficial to the country and the ‘concerns’ of old ladies in the Midlands who once saw a brown person.
How will May pull off a soft-Brexit? How can she declare success in delivering what the right has been after for 30 years and slay the immigration dragon at the same time? For this see point 2.
May will win big time (see here for latest polls). She will use this win as a mandate for a soft-Brexit and in the new cabinet she will do away with the Brexit band of fools of Boris-Fox-Davis. She has nothing to fear from the far-right, as UKIP has in all effect disbanded and it will not emerge from its farcical leader elections as a living political force. I repeat: May will clean up.
You don’t think this is plausible? Come back and read this next summer and if things did not play out according to my text, I will smash my crystal ball on YouTube.
Is there anything the remaining Remainers amongst us should or could do about it?
Propping up the Labour corpse with Corbyn in charge is not an option, nor would it do anything to change the above anyway. Propping up the Labour corpse with anyone else in charge is equally pointless. Voting Green sounds nice and cuddly, but in the post-Brexit era the Greens seem to be going all Varoufakis; ditto pointless to support them.
We should do whatever we can to transform the LibDems into a single-issue party dedicated to being the European voice in the UK while we go through the divorce interlude. A party to protect the rights of migrants in the UK and to oppose the Thatcherite Armageddon planned by May.
A shitty menu of options I agree, but one has to play the hand one is dealt.
What motivates policy making? Is it the practical recognition that courses of action can have beneficial outcomes? Is it an ideological commitment to a cause of action? Is it, perhaps, the desire to stay in power for power’s sake, through the use of lies, diversion and distraction?
I have often wondered in this blog what is the point of the self-proclaimed ‘first time left government’ of Greece. This was a pertinent question ever since the compromise was made in the summer of 2015 to accept the new bailout and keep the country in the Euro. It became a pressing question in the September 2015 election (which returned said government). It is an urgent, some say desperate question in the spring of 2016.
After Syriza changed course away from memorandum bashing in favour of memorandum acceptance (in practice if not in rhetoric), it ditched its ideology and long practice of ‘resistance’ in favour of a new type of pragmatism. Why would anyone consider Mr Tsipras though different from Venizelos and Samaras who espoused the same type of pragmatism? This presented a critical problem for Syriza, as the recognition that there is no alternative to Euro membership and Troika cooperation would negate their political presence.
Syriza is a party with an activist base that grew from 4% of the vote to above 35% on the assumption that they were ideologically different and did not share the same ‘pragmatism’ as the hated ‘memorandum’ & Troika-controlled governments that came after Papandreou absconded the ‘throne’ in 2010. How does one traverse the thin line between ideological difference and pragmatic acceptance of a reality defined by ‘others’?
The answer, laughable as it may be, was to accept to implement a programme (pragmatic choice) that Syriza is ideologically opposed to and continuously promises to resist, but -wait for it- be sad about it. There it is therefore, the political capital of Tsipras rests on the government being sad about what it is doing to its people, regretting the necessity of implementing horrible measures, being unhappy when signing the laws that prolong the ‘austerity’ this government was created to fight against.
There is an endless series of examples of Ministers signing austerity measures with grief. The PM announces every opportunity he gets that he is sad to do this, that he has been blackmailed by the Europeans. When faced with the question: Don’t you think Samaras and Venizelos were also blackmailed, Tsipras answers: Yes, but they thought these measures were good, they were going to help the country. We (Syriza-Anel) do not think these measures are good, we don’t think they will help, yet we do them, in sadness.
The question that immediately comes to mind to anyone not brainwashed by ‘anti-austerity’ perpetual-protest nonsense is: How could a government that thinks it is doing the wrong thing govern? How can it implement the measures it decries as wrong? How can it successfully pass evaluations by external bodies (ie Troika)?
It cannot is the short answer. This explains why Syriza-Anel are unable to govern on any level. They are paralysed between an ideological commitment to resistance and serving their client-base whose very survival depends on the continued disbursement of bailout funds. The inescapable conclusion is that this study in contradictions (too many to recount here) has failed. In failing it is dragging the country further down the hole it is in.
Does Mr Tsipras and Mr Kammenos care? Many believe they do not. They are glued to their chairs and will do and say anything to stay in power. The result is lies, diversion and distraction to maintain support while the country sinks.
Tsipras being sad about implementing ‘necessary’ measures he thinks are wrong is like a rapist regretting raping a young girl. He has to do it, as he cannot satisfy his urges otherwise, he knows it is wrong but it has to be done. He is sad about it.
Mr Tsipras and Mr Kammenos need to offer an alternative plan for Greece with honesty. If they cannot, they need to leave. As they will not leave of their own accord the Greek people need to choose others to ‘save them’ next chance they get. Everything else is a dangerous waste of time.
The election of Kyriakos Mitsotakis as the leader of the opposition New Democracy has sparked a debate in Greece as to what neoliberalism is and what could be the consequence of being a neoliberal.
I do not think Mitsotakis counts as a neoliberal (see the first title below) and I do not think that attempts to deal with the size of the state in Greece correspond with attempts to marketize everything (see the second title).
Both my books dealing with neoliberalism and the European crisis are now available in paperback.
The Greek PM Tsipras made a speech today in which he claimed that the Syriza government aims to remove party politics from the civil service, but not to de-politicise public administration. This may sound like an odd thing to say, but it has a solid basis in a developed critique of technocracy and so-called apolitical administration.
The orthodox position: The work of the (now defunct) Harvard Institute for International Development which was heavily involved in the process of Russian transition to capitalism provides us with one of the best illustrations in the literature dealing with the need to distance politics from economics. It is interesting that their insistence on clear divides between economic policy and politics does not stop them from arguing for manipulation of the political sphere to achieve the goal of depoliticization. In The Grabbing Hand (1998), Shleifer developed a model of governance which aimed to create a market friendly state. In this model international aid found its role in supporting market-oriented political groups in an effort to directly influence the county’s internal political situation. This model showed total disregard for democratic choice and public consultation. Since social welfare was supposed to derive via market operations, government became redundant and politicians were always seen in a negative light as predators. There was little room for democracy in Shleifer’s book. When it did make an appearance it was only where the public, which was assumed to be enthusiastic about the market, could be used as a way of getting rid of old political elites through elections.
The heterodox position: The current obsession of European institutions with ‘structural reform’ requires de-politicisation and a non-partisan, non-political state machine. This creates however a great paradox in economic policy in a context of crisis: how is it possible to argue for significant law making activity (assumed by proposals to reform regulatory frameworks) without abandoning the idea of minimal state intervention which lies at the core of free-market thinking; how is it possible to empower the state in this way without risking a return to political control over the economy? The currently technically competent solution to this conundrum is to entrust the regulatory functions of government to independent institutions, free from political influence and control. This is consistent with an ideology that serves market interests under a technocratic, scientific cloak. In this way the theory of a free market safe from political interference is maintained while all the necessary detail is filled-in without upsetting a neoclassical theoretical structure that sees the separation of the economic from the political as central to the success of capitalism. However, willing something apolitical does not make it so.
The Tsiprian position: The problem with Mr Tsipras and his government is that he does not seek to resist de-politicisation as a tool of neoliberal subversion. He just seeks to recreate the client-state pioneered by his pre-predecessors under a different party banner. Any talk of de-partyfication in this context is a distraction from the business-as-usual practice of jobs-for-the-boys.