Back in the early summer of 2017 the dominant classes of the European Union breathed a collective sigh of relief. The far-right challenger parties seemed to have peaked after their failure to break through in the elections in the Netherlands and France. Moreover, the election of Emmanuel Macron as French president seemed to offer the prospect of a new start for an EU battered by the eurozone crisis and shaken by the British vote to leave. And the eurozone economy, after a near-decade of contraction or stagnation, began to grow modestly. European Commission president Jean-Claude Juncker was quick to unveil plans for greater EU integration. European leaders sought to project the image of a dynamic and united Europe from which a self-deluded Britain was departing—a message parroted by the pro-Remain wing of the British media.
As we enter 2018, the picture doesn’t look so good for the neoliberal centre in Europe. Crucially, the German federal elections in September saw the governing parties—the conservative Christian Democratic and Christian Social (CDU-CSU) bloc and the Social Democratic Party (SPD)—make their worst performance since the Federal Republic was founded in 1949 and the far-right Alternative für Deutschland (AfD) enter the Bundestag for the first time as the third largest party.
The complicated parliamentary arithmetic involved in coalition-building alongside policy differences led to the collapse of negotiations between chancellor Angela Merkel’s CDU, the CSU, the Greens and the ultra-neoliberal Free Democrats (DDP). Merkel, proclaimed by numerous sycophants as the real leader of the West after Donald Trump’s election as US president, found herself struggling to stay in office, and under increasing fire from her own party’s right wing and from the more conservative Bavarian CSU for having governed too much from the centre and therefore having opened up a space to their right that the AfD has sought to fill. These criticisms correspond to the tendency of mainstream conservatives elsewhere in Europe to adapt to the far-right. The most obvious example is provided by the coalition the Austrian People’s Party has just formed with the far-right Freedom Party. But, for example, Les Républicains in France are following in the footsteps of their disgraced presidential candidate François Fillon and imitating the Front National’s reactionary identity politics.
Meanwhile, Macron’s popularity has plummeted as he drove through a pro-business budget and labour market “reforms”. Discussion of EU integration may well run aground, partly because of German resistance (reinforced by the success of the Eurosceptic AfD and FDP in the elections) to anything that smacks of a “transfer union” redistributing from rich to poor states and partly because the Commission is overplaying its hand by proposing a European Monetary Fund run from Brussels.
The EU’s only real success has been in the negotiations with Theresa May’s hapless Tory minority government in Britain. The bargaining asymmetry between the two sides, where Britain needs access to the EU market after Brexit but can only get it on Brussels’s terms, has led to the evaporation of the promises by May and her ministers to break free of the European Court of Justice and let the EU “go whistle” for the money it is demanding (on legally dubious grounds) from Britain. Successive Tory surrenders are no doubt psychologically satisfying to EU leaders (and diehard Remainers), but the ultimate reality they reflect—Britain’s embeddedness in European capitalism—cuts both ways. The City of London will still be Europe’s main financial centre after Brexit (despite the efforts of Frankfurt, Paris, Dublin and Luxembourg to grab its business), and British military capabilities can’t simply be sniffed at when Germany can keep none of its submarines at sea because of a shortage of spare parts. Some kind of modus vivendi is in both sides’ interests and may even be achieved.
The ugly face of Europe has been most visible in the Spanish state, where the EU has lined up behind the efforts of the right wing Partido Popular (PP) government to crush the Catalan independence movement. Catalonia’s striving for self-determination goes back to the drive by the Spanish monarchy—ultimately successful under the Bourbons in the early 18th century—to impose Castilian absolutism on the heterogeneous patchwork of domains accumulated by their Habsburg predecessors. By the end of the 19th century Catalonia and the Basque country had emerged as the most advanced economic regions of a decaying Spanish imperial state. Their struggles to break free became interwoven with the fate of the crisis-ridden Second Republic proclaimed in 1931. After the victory of the right in the Civil War (1936-9), the political and cultural rights of the non-Castilian nations were systematically suppressed by the dictatorship of Generalissimo Francisco Franco (1939-75).
Symmetrically, the rising tide of struggle against Francoism during the upturn of the late 1960s and early 1970s saw, alongside movements of workers and students, the revival of Basque and Catalan nationalism. The “negotiated break” with the old regime in 1976-8, agreed on by the military, the pragmatic wing of the Francoist movement and the Communist Party, involved the establishment of a liberal democracy that conceded rights of self-government to the non-Castilian nations while the workers’ movement accepted wage restraint and the continuation of capitalism as it had developed under the dictatorship. Despite a long armed struggle in the Basque country, this setup held together till the escalation of the eurozone crisis after 2010.
The experience of EU-mandated austerity enforced by a PP government in Madrid led to the radicalisation of Catalan nationalism. Independence for what is still the biggest economic region in the Spanish state became attractive to a section of the local bourgeoisie, but it also found proponents on the radical left, especially the Candidatura d’Unitat Popular (CUP). Meanwhile, the PP, founded by an ex-minister of Franco’s, Manuel Fraga, tarnished by austerity and by corruption scandals and hanging onto office thanks to the support of the Socialist Party (PSOE), fell back on a reassertion of Castilian centralism. Prime minister Mariano Rajoy refused to contemplate Catalan independence or to allow support for it to be tested in a referendum.
The decision of the pro-independence majority in the Catalan parliament to hold its own referendum on 1 October therefore led inevitably to a collision. Unfortunately Rajoy has proved much tougher than the centre-right Catalan leadership, deploying the Civil Guard brutally to disrupt the referendum, suspending Catalonia’s autonomy under article 155 of the Spanish Constitution, and putting the Catalan government on trial for sedition. He effectively called the bluff of the Catalan president, Carles Puigdemont, who ducked actually proclaiming independence despite the support this move won in the referendum, failed to organise a campaign of mass resistance to the takeover from Madrid and fled to Brussels to avoid arrest and appeal to the support of “Europe”. But “Europe”, in the shape of both the EU itself and leading nation states (including Britain), refused to countenance Catalan independence. This was justified by a highly conservative interpretation of the rule of law, identified with simple obedience and not with traditional liberal conceptions of due process.
Catalonia has thus confirmed the EU’s drift towards a thoroughly authoritarian version of neoliberalism.1 But it also underlined the fragility of existing socio-political structures and the way in which (as in the case of Scotland) the crisis had widened old fault-lines. The development of the Catalan crisis will depend significantly on the outcome of the regional elections ordered by Rajoy on 21 December, after we go to press. If a pro-independence majority is returned again, then the confrontation could escalate. The present situation has some alarming echoes of the Spanish Civil War (whose way was prepared by a bid for Catalan independence in 1934 that was suppressed by the right wing government in Madrid). Then both left and right were equally determined to win by crushing the other side. This time the will to power seems strongest among Franco’s heirs in the PP, but the polarisation that has already developed shows how rapidly a situation can escape ruling class control.
The stance on the reformist left to the Catalan crisis has been less than honourable—the PSOE lining up behind Rajoy and even the supposedly radical-populist Podemos condemning the 1 October referendum as illegal. One doesn’t have to endorse the liberal bourgeois nationalism of the mainstream independence movement to recognise that the Spanish state is denying the people of Catalonia their right to self-determination. This basic democratic issue should form the starting point of any socialist approach to the Catalan question. It is a caricature of internationalism to confuse working class unity with the structures of a specific state.
Elsewhere in Europe too the mainstream left persists in defending existing structures. This is typified by the hapless performance of Martin Schulz, ex-president of the European Parliament and current leader of the SPD. Typical of the mediocrities who dominate bourgeois politics in Europe today, Schulz completely failed to differentiate himself from Merkel. Then, after the SPD’s disastrous election result, he announced that the party would not participate in another grand coalition with the CDU-CSU bloc. This sensible choice to try and rebuild the SPD base in opposition was soon overturned by SPD deputies scared that the failure of Merkel’s coalition talks would mean another election. But Schulz pledged to hang tough in the negotiations for a new government. He demanded a new EU Constitutional Treaty that would create a United States of Europe and expel member states that didn’t want to become part of a federal state. This positively delusional proposal—contemptuously dismissed by the CDU—shows how much Europeanism has become a substitute for even the pretence of serious reformism in mainstream social democracy.
The main exception remains, of course, Labour under the leadership of Jeremy Corbyn and John McDonnell. May’s success in securing the EU’s agreement to move on from stage one of the Brexit negotiations (on Brussels’s terms of separation) to trade talks—despite the humiliation of a last minute veto by the Democratic Unionist Party and a successful Tory back-bench rebellion—has staved off the disintegration of her government, but there are plenty of pitfalls ahead, particularly if the Tory right jib at the drift towards a softer Brexit. The odds must be at least even on Corbyn becoming prime minister. The prospect is beginning to concentrate the minds of big business.
The Financial Times reported in early December:
Many investors took notice of Mr Corbyn only after June’s general election, when Labour gained 30 seats in the House of Commons and denied Mrs May’s Conservatives of their parliamentary majority.
Some have since moved hundreds of millions of pounds’ worth of investments outside the UK, while others have accelerated fundraising ahead of any drastic changes to the political landscape.
“The rise of Jeremy Corbyn has not made me feel that relaxed,” said Edi Truell, a private equity investor who has already taken his entire £250 million family fortune out of the UK and moved it to Switzerland. “I would be devastated if he got into power. It would be disastrous.
“I’ve heard from investors who say ‘we don’t want to invest in the UK, not because of Brexit but because of Corbyn’,” Mr Truell said. One manager of a UK private equity fund agreed, saying a Corbyn government would make Brexit seem like “a minor issue”, and make it difficult for funds to raise money from overseas investors.2
During the Labour Party conference last September McDonnell said his team were carrying out “war game-type scenario planning” for a Labour election victory: “What if there is a run on the pound? What happens if there is this concept of capital flight? I don’t think there will be, but you never know”.3 In practice Labour’s leaders have offered a combination of attacks on big business—for example, a speech by Corbyn in early December saying that bankers were right to see Labour as “a threat to a damaging and failed system that’s rigged for the few”—with efforts at reassurance led by McDonnell.4 According to the Financial Times:
Mr McDonnell has been at pains in recent months to suggest that the relationship between his party and the country’s business community has improved, while industry bodies say Labour has stepped up its engagement. Yet despite shared interest in a softer Brexit deal and higher infrastructure spending, business remains wary primarily over taxation and demands for greater state intervention.5
Brexit has made the City restive, and Corbyn entering 10 Downing Street could easily precipitate a tsunami of money leaving Britain, which would confirm the experience of past social democratic governments that capital flight is more than a concept. How would he confront this challenge, while he has simultaneously to grapple with sabotage by the civil service and by the Blairite fifth column in the cabinet and the Parliamentary Labour Party? No one knows, yet the fate of the left in Europe depends on the answer.
Alex Callinicos is Professor of European Studies at King’s College London and editor of International Socialism.
1 For two quite theoretical treatments of this topic, see Bruff, 2014, and Keucheyan and Durand, 2015.
2 Espinoza and Bounds, 2017.
3 Pickard, 2017.
5 Pickard and Gordon, 2017.