Britain - Posturing and politicking over Europe

July-August 2005

The rejection of the draft European constitution in the referendums held in France and Holland certainly came as a relief to Blair.

After having signed up to this draft, Blair and his ministers had repeatedly argued that since it changed nothing in the constitutional set up of members states - which was undoubtedly true - there was no reason to hold a referendum on the issue and Parliament could deal with it. Except, of course, that the real reason for this stance, was that Blair did not want to give the electorate the opportunity to register a vote of no-confidence against his policies - which is probably what would have happened.

In the run-up to this May's general election, however, Blair was faced with the threat of the Tories' anti-European demagogy taking centre stage in the election campaign, thereby threatening Labour with likely losses, which would have come on top of those already expected owing to the war in Iraq and Labour's domestic austerity. So, to take the sting out of the Tories' eurosceptic campaign, Blair came up with the surprise promise of a referendum to be held over the draft constitution in 2006.

However, this still meant the prospect of a resounding defeat for Blair, which he could do without, especially after Labour's very bad performance in the general election. The French and Dutch rejections, therefore, provided the government with an ideal pretext to cancel a referendum that it never wanted in the first place.

But, as it turned out, this was not to be the end of the saga over the EU.

Blair was about to take the rotating presidency of the European Commission for the six months starting on July 1st and he planned to make the best of this platform, both for the benefit of British business and to raise his own profile as a "European leader" and a deal broker.

After all, who knows what the future has in store? If former Labour party leader Neil Kinnock and former Labour minister Peter Mandelson were able to use their party connections as a springboard to land a cushy career on the European Commission, why shouldn't Blair prepare for a career move to the post of European "president", if such a job is ever created, as intended by the draft constitution?

At the same time, however, Blair had to face up to the Tories' jibes and he was determined to pre-empt, and if possible kill, once and for all, their attempts to undermine his credit in Middle England, by portraying him as a "euro-softie".

Of course, the various items on Blair's EU agenda can prove somewhat contradictory at times, thereby leading to a lot of double-talk if not outright lies. And this is exactly what has happened over the past few weeks.

Nationalist demagogy on the cheap

Blair's rumpus with French president Chirac over the European Union's budget, was a typical case of high-profile, media-driven posturing, designed to woo the kind of anti-European prejudices which are especially rife among Middle England's Tory waverers.

Blair's outspoken championing of Thatcher's so-called "British rebate" was obviously designed to be music to the ears of those suffering from nostalgia for the populist nationalism of the Thatcher era. The same is true of his highly-publicised demand that the EU's Common Agricultural Policy (CAP) should be scrapped, especially as this CAP is heavily portrayed as a milch-cow for the French.

Likewise, Chirac's demand for a cut in the "British rebate" and his vocal defence of the CAP, in the name of French "small farmers'" interests - although this is not at all what the CAP is really about - were undoubtedly part of an electoral stunt, designed to make up for the personal humiliation he had just experienced with his defeat in a referendum that he had initiated himself.

But what the newspapers' headlines shouted about, under the influence of Downing Street's spin doctors, was rather different from the reality.

In fact, as it turned out later, there had never been any question of Chirac demanding an end to the "British rebate", but just a mere reduction. And Blair's response had not been the fierce refusal portrayed by government officials, but a demand that some concession should be made to Britain in return, for instance, by initiating a review of the CAP.

Big deal! After all, the "British rebate" was conceded to Thatcher at a time when a far larger proportion of the European budget was devoted to supporting agriculture, and Britain's Gross National Income was far lower than it is today, comparatively to the rest of Europe. And yet, even Thatcher was willing to admit that this rebate might have to be phased out at some point, if and when conditions changed.

Nor is this "British rebate", which represents 2/3 of what would be Britain's net contribution to the EU, if it contributed to the same level as every other member state, such a big amount that it justifies the media hype generated by Downing Street. It represents an annual £3.8bn. This is the equivalent of 0.7% of the government's annual budget, one seventh of the interest it pays on its debt to commercial banks and bond holders, just under one third of HSBC's annual profits last year and about half the official annual cost of the British occupation of Iraq!

For a country as rich as Blair boasts Britain is, thanks to his government's economic policy, this is petty cash. Especially in view of the fact that this rebate will be partly financed by the EU's new members, which are all far poorer than Britain! And after all, isn't it only right that the richest countries should pay proportionally a lot more than the poorest, just as it is right that the richest taxpayers pay proportionally more than the poorest (although, Blair and Brown would probably change that too, if only they could get away with it!)?

But then, of course, such "clashes" are nothing new, and certainly nothing very dramatic, nor are they likely to cause a "melt-down" of the EU, as some tabloids have predicted.

Since its inception, Europe has always been an uneasy union between rival capitalist classes, whose weakness had left them no option but to form a common market, large enough to maintain their profits, against the competition of their American rivals in particular. Year after year, decade after decade, the institutions of what was eventually to become the European Union, have seen on-going horse-trading between governments, in order to secure the best deal - not for their populations, of course, but for their respective capitalists - including horse-trading over who is paying what and with which money.

The only difference this time was that both sides - Blair and Chirac - had an interest in dramatising their "differences" for their own domestic reasons and turning it into a major political issue. In fact far more so for Blair. Because, having blocked the adoption of the 2007-13 budget of the EU, he probably hopes to be in a position, as president of the European Commission, to broker a deal at some later point. And this would allow him to pander both to the eurosceptics, as a staunch champion of "Britain's interests", and to woo the europhiles, by appearing as the leader who can sort the EU out - in short that he, Blair, "rules the Channel's waves"!

The CAP - feeding the rich

In fact, it would have been rather difficult for Blair to demand the scrapping of the CAP, when, two years ago, following a long round of negotiations, he signed up to a revamped version of this policy, which included a number of concessions that he had demanded and which was meant to apply till 2013!

But then "B-liar" is not above reneging on his signature any more than he is above resorting to a sleight of hand. For instance, his favourite argument against the CAP, which he has repeated again and again in TV interviews - i.e. that "the CAP absorbs 40% of the EU budget, but benefits only 5% of its population."

That the CAP uses 40% of the EU budget is a fact - although, as we will see, a lot of this money does not actually go to agriculture. But to say that it benefits only 5% of the EU population is just plain stupid. If the CAP does, as it is meant to, help needy farmers to make a living out of producing food, thereby keeping agriculture and food production going, surely this means it benefits anyone who eats the food they produce - i.e. 100% of the EU population, except those who would feed exclusively on industrial food made from mineral hydro-carbons!

It should be recalled that farming subsidies go back to the period following World War II. They were designed to encourage farmers to carry on producing food despite the fact that they could not sell their production at a price which would have enabled them to make a living. So state subsidies were introduced primarily to stop farmers from dropping out of agriculture, which would have made the on-going food shortages even worse. All European countries used such subsidies and the system introduced in Britain was among the most comprehensive.

There was another reason for farming subsidies: by containing the rise of food prices they made the very low wages which were paid to the working class slightly more bearable. In other words, farming subsidies were also an indirect way of subsidising the bosses by allowing them to keep wages at a very low level. But then, these kind of hidden subsidies to the bosses were quite common. After all, the entire postwar welfare system was designed to achieve exactly the same objective.

Subsequently, even after the volume of food produced was no longer a problem, the subsidies system was kept in place, but with various changes. The problems faced by small farmers was not so much an issue in Britain, where, outside a few areas, industrial agriculture on very large farms was predominant and these farms could have easily managed without subsidies. However, the big landowners who owned them did not see it quite that way. They had got into the habit of being funded by the state and they liked it too much to do without it!

Moreover the operation of farming subsidies changed. Farmers were given incentives to borrow in order to buy new land and equipment. Far from protecting small farmers, this policy condemned them to almost certain bankruptcy. Being overburdened with debt, many had to sell their lands to big landowners, who were, thus, the main winners, once again.

When Britain joined Europe (the "Common Agricultural Market" at the time) in 1973, its system of farming subsidies was integrated into the system run jointly across Europe, which became known as the CAP. And it went on operating exactly along the same lines, with the biggest landowners making a killing out of it.

Up to recently, payments made under the CAP remained a well-guarded secret, in the name of "commercial confidentiality". However a new European directive has finally opened the Pandora box. Today, there is no shortage of examples of the scandalous parasitism of Britain's very rich on the CAP.

Last year, for instance, the royals managed to rake in £1.2m in CAP subsidies (on top of the £37m they get from the state and their own private revenue), the Duke of Westminster and Lord de Ramsey, around half-a-million, together with a host of very large landowners who netted between six or seven-digit amounts, just because they own huge stretches of land.

Is this the reason why Blair objects to the CAP? Not only has he never objected publicly to this scandal (despite the guaranteed success this would have earned him among working people) but in fact he has fought in the European institutions against any attempt at stopping it. So, in 2003, when the proposal was made by the European Commission to cap farming subsidies to a maximum of £180,000 per landowner, it was Britain who blocked this proposal, which had to be adopted unanimously, by opposing it.

Moreover, the changes in the CAP that Blair signed up to two years ago, provide for the progressive de-linking of the subsidies paid from the nature, volume or value of the actual production. Ultimately, the CAP will become a system of subsidies more or less proportional to the acreage of land, designed to encourage respect for the environment and such like. In other words, Blair signed up to a system of subsidies which is overtly designed to favour the biggest landowners, regardless of whether they produce anything useful, and should really be called the CBLP, the Common Big Landowners' Policy.

Subsidies to food companies

There is another scandalous aspect of the CAP on which Blair has never said a word about - the subsidies it awards to food companies.

Following a series of studies published by OXFAM, several newspapers have highlighted the scandal of the sugar industry. To summarize this story, the European sugar market is controlled by a handful of very large companies. Each of these companies has established a monopoly on certain sections of the market, which is guaranteed by member states, mainly on a geographical basis and partly alongside different lines of products. In Britain, 90% of the sugar market is monopolised by just two companies, Tate & Lyle (cane sugar) and British Sugar (beet-sugar, better-known for its Silver Spoon brand).

According to Oxfam, the 27 largest beet farms in Britain collected, in 2003, an average of £350,000 in CAP subsidies. These subsidies allow beet prices to remain low and given the monopoly position exercised by British Sugar on beet-sugar production, it has plenty of freedom to sell its sugar at a high price. It is no wonder, therefore, if this company achieves a regular 25% annual return on investment, a record for most industries - partly paid, indirectly, by CAP subsidies.

Likewise, Tate & Lyle benefits from the CAP but through export subsidies. Under the pretext that sugar prices are high in Europe, compared to the world market, it gets a subsidy for each exported tonne of sugar. In addition, it gets another subsidy under the pretext of creating a level-playing field between beet-sugar and cane-sugar producers. Last year, as a result, Tate & Lyle collected £227m in CAP subsidies! The company claims that this pays for buying sugar cane at a higher price from the poor countries where it is grown.

But there is worse to come. Because the sugar price in Europe is artificially high, any company exporting products containing sugar (supposedly bought in the EU) can claim a subsidy to make up for the competitive advantage of their competitors outside the EU. The total subsidies paid in 2003 under this provision amounted to £140m. And of course, since the biggest companies happen to be those which are really into exports, they get the most of these sweeteners!

The case of sugar is the most blatant case of using the farming budget to subsidise the capitalist class. But there are many other companies benefiting from the CAP's largesse under various pretexts. So, for instance, a recent issue of the Observer reported how Meadows Foods, a multinational dairy company, headquartered in Chester had pocketed around £50m in 2004, making it the second largest recipient of CAP subsidies in Britain, after Tate & Lyle. Next in the list, came none other than Nestlé UK - a very "needy" company! - with £30m!

Again, who has ever heard Blair criticising the fact that British food companies are parasitising the CAP budget? No, he prefers to blame the small farmers of Europe for being uncompetitive, unlike British farmers. If so, why does he keep awarding huge subsidies to Britain's big landowners and food companies, which do not need them. Surely, if Blair decided to cut subsidies to British profiteers, no EU member state would object!

Likewise, it would be interesting to hear what Blair has to say about the fact that, despite having 0% VAT on food in Britain and the "most efficient" agriculture in Europe, food prices here are far higher than across the Channel, where VAT applies to food and agriculture is so "uncompetitive"? The reason is simple, of course: the virtual monopoly of the supermarket chains on food distribution and the enormous profits they announce year after year. But whereas, for Blair, the CAP is an "uncompetitive practice" - not when it benefits the profiteers, of course, but when it benefits small farmers - the use made by the supermarket chains of their monopoly position is not an "uncompetitive practice". But then, of course, Blair would never upset his friend, benefactor and ex-minister "Lord" Sainsbury!

"British interests" versus working class interests

Of course, as Blair and Brown keep repeating ad nauseum, everything they do regarding the EU is for the sake of "British interests".

Well, the recent developments that took place around another British "exception", the British opt-out from the EU working-time, which allows employers to get workers to waive their right to work no more than the EU legal maximum working week of 48 hours, shows what they both mean by "British interests".

When the European Parliament voted by 378 to 262 to end the British government's right to this opt-out, in early May, British bosses were terrified, complaining, said the Financial Times, that it would be a "hammer blow". The same paper even quoted the spokesman of an employers' association complaining about the resulting cost as "businesses will need to rigorously monitor the hours staff work and put systems in place to show that they are conforming to the rules." What a candid admission that, as far as this boss' representative is concerned, there is no reason for working hours to have any limits as long as the opt-out applies!

The EU Parliament was, in fact, very timid, since it only proposed to end the British opt-out by 2012, which gave British bosses plenty of time to prepare for it! But, never mind, for good measure, the Institute of Directors warned that this "non-starter" would affect 40% of employers and that 4 million employees would be "forced" to work less.

As if many workers would do more than 48h a week, if it was not for lousy wages or due to being blackmailed under threat of the sack! In any case, the admission by the Institute of Directors that millions of workers are currently working more than 48h a week, proves unquestionably that it would be in their interest, and in fact in the interest of the entire working class, to end this opt-out straight away.

But this is not what Brown considers as "British interests". When he first spoke on the issue at a bosses' conference held shortly after the EU Parliament's vote, it was to reassert the government's commitment to fight tooth and nail in order to keep this opt-out. And Brown reiterated the same pledge a few days later at the conference of the Amicus trade-union, where, predictably, it was not so well received.

At the time of writing, it seems that the government has succeeded in securing enough support for a blocking minority in the European Commission to put the European Parliament's proposal on ice. If it is the case, the odds are that, it will take quite some time before the issue is raised again. Unless, of course, the large numbers of workers of this country, who are at the receiving end of the bosses' policy of long hours and low wages, raise it themselves, using their own fighting methods.

In fact, the issue of working hours is not the only one on which Blair and Brown claim the right to an opt-out, in the name of British interests. For instance, there have been protracted negotiations between EU governments aimed at harmonising taxation across the Union. One of the more advanced plans concerns company tax. It does not even aim at establishing a common rate of company tax across the EU (although, this would be the only rational thing to do), but, more modestly, at preventing the common practice used by companies to play on the 25 different methods of determining the base on which company tax is calculated across Europe, to pay as little tax as possible.

Any decent accountant would call such tricks, cooking the books! And any finance minister, determined to stop tax avoidance by companies, would welcome such harmonisation. But not so for Brown. According to the Financial Times, his position is that such a move would "interfere with national sovereignty and restrict flexibility in the tax field." Obviously, Brown is more concerned about leaving British companies all the flexibility they want to cook their books rather than to recover the tax they should really pay. And this, too, is "British interests" as conceived by this government, in other words the interests of British companies and shareholders.

This is what the working class should understand the phrase "British interests" to mean, whenever anyone, whether it be politicians, bosses, trade union leaders, or whoever else, uses it.

Working people have only one kind of interest, and this has nothing to do with birth place, language, colour, religion nor with any national flag - their class interest. They have nothing to gain from the posturing of the Blairs and Browns of this world, which, under the cover of promoting "British interests", is only designed to defend the interests of British capital. The only people with whom the working class of this country share a common interest are the working classes of Europe - and further afield, workers in every other part of the world - who all play the same decisive role in society and are all at the same receiving end of capitalist exploitation.

The EU as conceived by the likes of Blair is merely a vehicle designed to meet the needs of big business. But the EU can also provide the opportunity for the working classes of its member states to break free from the divisions created by national borders, assert their common interests and join ranks to use their enormous collective strength in order to change this decrepit world - on a scale and with a potential power which will not have been seen before in history.