Money talks. And events of the last month have shown that New Labour certainly listens to it. How else can we explain the fantastic developments round the question of Formula One tobacco sponsorship and the deep unhappiness these have created among Labour's supporters?
This is the most serious crisis of Blair's government so far. Labour has broken one of its election promises. However, this could probably be brushed aside by Labour, were it not for the overwhelming belief that Blair has acted in the interests of a small group of businessmen who are prepared to finance his party and not in the interests of those who elected him.
These people give money to Labour because they want and expect something in return. As Blair himself said, 'It would be bizarre if someone was in a worse position having donated to the Labour Party than a better one' tacitly admitting that such donations do produce results.
Even more than any real or imagined corruption is the sense that there is something wrong with the government and the people it takes advice from. There is a feeling of unease that Blair listens to businessmen and no one else. His priorities reflect their priorities and he bows to them over most issues. Following the tobacco scandal have come accusations that the food giant Sainsbury's is finding planning permission for out of town stores less stringent than it did in the last months of the Tory government. David Sainsbury has also made a £1 million donation to Labour.
The public statements of New Labour claim that such donations are necessary to distance the party from the unions. But Labour is happy to take the unions' money while denying the union leaders any of the access which the top businessmen are able to buy.
Perhaps the most disquieting aspect of the affair, however, is the sheer arrogance of the government the sense that it can do anything without being in the slightest bit accountable. Even the Financial Times was led to comment, 'Power, as Lord Acton observed a century ago, tends to corrupt; and Mr Blair has a very large majority.' Its editorial (15 November 1997) went on to ask, 'How many of these [government] policies might be suddenly changed after cosy chats at Number Ten?'
If these questions are being asked by the paper of big business then the turmoil among Labour's more natural supporters is far greater. There has been a constant tension between the expectations of most Labour voters for a fairer society, for an end to sleaze and the fat cats, for more public spending and the path which Blair's government has set itself. We have always argued in this Review that the contradictions involved here will increasingly come to the surface as Blair attacks students, pensioners and workers over the coming months.
This affair also shows Blair's weakness. His majority and popularity with the press so far have enabled him to get away with most things. But he has a very narrow base and few diehard supporters among his ministers as was seen when they backed away from defending him publicly on this issue. This means any crisis can hit him unexpectedly hard and that he has no safety valve to release the pressure on him.
Who could have predicted that the first real turning point against his government would have been on this issue? Yet its importance lies in the fact that it represents a government whose first priority is to follow the needs of British capital. This has so far meant keeping to the Tory limits for public spending, backing away from a decent minimum wage and ending free higher education. The government is also committed, like all previous Labour governments, to running the existing system and thereby refusing to challenge the power of unelected businessmen who try to force their agenda through.
The fact that a government with such a big majority has already got itself into such a mess tells us how powerless parliament is to stand up to such forces. If we are really to deliver a better life for working people who suffer from the effects of the market, then we will have to fight for a socialism based on workers' power to change the world.
In the two years leading up to the general election in May Labour spent £27 million on its campaign, almost half of which was spent in the final few weeks. Despite the claims that the bulk of this money came from sources outside the trade union movement, the balance of funding has not shifted anything like as much as the Labour leadership would have us believe. A look at which donors they have managed to attract is revealing.
Apart from the notorious Ecclestone million (and a now stymied request for more) there is the reputed million from David Sainsbury (now a lord) and another from the late Matthew Harding, chair of Chelsea football club. Key fundraiser was record producer Michael Levy, now also a lord, whose circuit of the rich and famous netted hundreds of thousands of pounds for the Labour electoral machine.
As a result the number of individuals listed as donating more than £5,000 and it is now clear that this can mean a lot more has risen from eight in 1995 to 40 last year. Businesses include Tate & Lyle, who may have something to say about Labour's plans to tighten up on food labels, and Sun Life, whose interest in Labour's private pensions plans can only be imagined. Other backers are Kingfisher, parent company of B and Q and Woolworth's. Individuals on the list include publisher Paul Hamlyn, Granada boss Gerry Robinson, hotel magnate Michael Montague, film director David Puttnam and writer Ruth Rendell. The latter are another two recent recipients of peerages from Blair.
But there is little sign of acknowledgement, let alone rewards, to the unions who donated a phenomenal £200 million to Labour between 1979 and 1997. Today Labour makes much of its claims that it has distanced itself from the unions, and that it is no longer dependent on them financially.
Yet according to Labour's own figures the amount the unions gave last year is up on ten years ago. In 1986 the unions donated 76.2 percent of £5.8 million. In 1996 they donated, it is true, less than half of the total raised at 45.2 percent. But this is 45.2 percent of £17.1 million, a considerably larger amount than the total raised in 1986.The planned sale of Labour's former headquarters at Walworth Road, currently owned by the unions, could raise more than £1 million. Labour's distancing of itself from the unions will not, however, lead it to refuse to accept the proceeds for its own coffers. Labour may have wooed the rich and famous, some of whom may well now be wary after the Ecclestone affair, but it is a long way from becoming independent from the organised working class movement as Blair would like.
When Tony Blair visited Silverstone last year, it was to set in motion a chain of events which has seen him tainted with accusations of sleaze only six months after his historic election victory. For, after meeting Blair, Bernie Ecclestone was said to be so impressed he decided to donate £1 million into Labour's election fund.
Only weeks after the election health secretary Frank Dobson told the Royal College of Medicine Congress that the election pledge to ban tobacco advertising would include sports sponsorship. Heavy lobbying from the Formula One industry began.
When October came and the government was about to fulfil this election promise, Ecclestone requested and received a meeting with Tony Blair in No 10 (now coined the Bernie Inn), along with Max Mosley (son of Oswald the fascist), head of the Formula One Association and a member of Labour's '1,000 Club' of big donors. Within 24 hours Blair sent a memo to Frank Dobson declaring that Formula One would have to be exempted from the ban. Two weeks later Tessa Jowell made the announcement of the U-turn. The big news at first was the discovery that Jowell's husband, David Mills, was until 20 May a director of the Benetton Formula One racing company and remained their legal adviser.
All the time there was a much more serious charge of sleaze that could be laid against Blair if word got out about Bernie's million. Blair claims that he had already alerted Sir Patrick Neill, chair of the committee on standards in public life, as to the question of the ethics of accepting a donation from Ecclestone, long before the press got involved. In fact, the letter to Neill was sent after the press got wind of the donation and not before. No one outside a select few at No 10, not even Sir Patrick Neill, knew at this stage the size of the donation.
As usual Blair appeared more concerned with the appearance of his government than with real events and so the grudging drip drip of information only fuelled the suspicions that he had something to hide. Blair claims the arguments that the Formula One chiefs put to him convinced him of the need to exclude racing from the ban, but he didn't feel the need to look for other opinions or take advice from his colleagues about the validity of Formula One's case.
The first claim was that if the ban went through Formula One would pull out of Britain and shift to the far east. This is the argument favoured by the Blairites: globalisation means that big business can in a flash move their investment overseas if the government challenges their profits at all. But of the 17 races this year only five took place outside Europe. Even the Economist pointed out the hollowness of this argument, talking of the expertise and skills rooted in this country which are even responsible for manufacturing of American Indy Car races which don't take place here. As for the claim that if Formula One did come 50,000 jobs in Britain would go, the Economist again retorted that 'this is an exaggeration even if sandwich suppliers and overall makers are counted in'. The government claims the figure comes from the Department of Trade and Industry, but it is cited in a report commissioned by the Institute for Public Policy Research previously funded with £50,000 from none other than a Mr Bernie Ecclestone.
A recent study in the Lancet shows that young men who watch motor racing on television are nearly twice as likely to take up smoking as those who don't. Not surprisingly then, according to a recent poll, 60 percent of the electorate support the banning of tobacco advertising. Yet nothing holds as much sway as the pleas of a multimillionaire desperate not to lose his profits. Not that Ecclestone has any reason to be worried. The planned flotation of his company looks like raising £4 billion. However, the proceeds will not go into his pocket but into the offshore family trusts of his wife into whose name the business was transferred last year.
Since the commission to decide the level of the minimum wage was set up, plans to undermine it are already afoot. Mandelson let slip at Labour Party conference that he thought all young people should be excluded. Since then leaks about other possible exemptions have become a flood. Mandelson has talked of exceptions on the basis of region, sector or size of firm, which covers most people in the country. John Prescott wants seafarers exempt, 'in the light of possible implications for the UK shipping industry', Jack Cunningham says agricultural workers should be a special case because they receive benefits in kind and Peter Hain wants the Welsh assembly to be consulted. All the queries that are being raised by ministers concern the anxieties for employers. Neglected is the reason why a national, legally enforceable minimum wage is necessary.
Labour's manifesto commitment was to a free vote on hunting. But the government has refused to make the necessary parliamentary time available to the private member's bill. However, pressure on parliamentary time did not stop parliament closing for an extra long summer recess. The government also says that the House of Lords would put up a hard battle against the bill which it wants to avoid. This is despite the fact that a Mori poll showed that 69 percent of the population supports a ban so a battle against the lords would be a popular one.
Under the Tories Labour made much of the government's refusal to take account of the 'wind chill' factor in calculating cold weather payments for the elderly. Now Labour claims that it must continue with this Tory policy because to do otherwise would discriminate against pensioners living in areas which aren't windy. Ministers have stooped to the charade of referring to the phenomenon as 'wind speed' factor as if in doing so we will forget that winds make the temperature colder.
Education was declared Labour's priority during the election campaign. Since 1 May the government has ignored the recommendations of the Dearing report and announced the end of the student grant and the introduction of tuition fees. The CBI itself has criticised the plans for tuition fees, calling on the government to be 'much more wary about the use of charges in education'. Even the employers are worried that significant numbers of potential students will be put off by the prospect of leaving college with massive debts. In order to ensure a skilled workforce they say there is a case for higher taxpayer funding of education and a higher threshold of parental income over which the fees are paid.
The NHS was central to Labour's campaign and ultimate victory. Money has been transferred to health spending despite Labour keeping to the Tory spending limits. But it is totally inadequate. Frank Dobson has admitted that waiting lists will actually increase this winter almost 1.2 million are currently waiting for hospital treatment.
A pledge not to order more private jails has been ripped up. Jack Straw now says it's an 'urgent operational requirement' to order two new private prisons and renew the contract on a third.
Tory plans to cut the premium to which lone parents had been entitled led to outcry from Labour. Now Harriet Harman says she will make cuts which could cost some families £11 a week. Labour has cynically appointed six women MPs onto the committee which is responsible for the decision to try and defuse criticism.
The manifesto proclaimed that 'smoking is the greatest single cause of premature death in the UK' and promised to ban tobacco advertising. The very public U-turn on tobacco sponsorship for Formula One motor racing has blown a hole in the promises as well as opening Blair up to charges of sleaze.
Harriet Harman has attacked academics calling for increased welfare benefits for the poor. She says, 'We want to make the mainstream economy with its opportunities and risks the main path out of social exclusion for all people of working age.' She went on to say that raising welfare benefits would show that 'we have failed to learn from the past'.
Labour plans to remove the right to legal aid for civil cases involving damages which include personal injury, medical negligence claims and actions against police assaults. It argues this will make the system more fair for those on 'middle incomes' when in fact it will deny justice to millions.
Despite Labour denunciations of Tory plans to privatise the tube network, John Prescott now appears to be moving towards at least a partial sell off of the lines.
From our correspondent
Egypt's rulers are the architects of the killings at Luxor. For years the regime's critics have argued that its own extreme violence would be matched by that of bitter and frustrated opponents. The massacre was almost inevitable.
Since 1992 the regime has been engaged in a campaign of terror against the Islamist opposition. Tens of thousands of suspects have been incarcerated, countless numbers have died under torture, and at least 100 have been executed following military trials. Meanwhile, death squads have been at work: summary killings have been commonplace, with victims left to die in the streets as an exemplary warning.
The apparatus of repression is vast. The regime polices schools, universities and every major workplace. During the week of the Luxor killings it rigged student union elections at the country's 12 universities by banning 20,000 opposition candidates. Many universities also cancelled classes in an attempt to discourage students from attending campuses and voting.
In a population similar in size to that of Britain, over 2 million men are in uniform with 500,000 alone in the riot police. Military courts are used against the most mild opposition politicians. Even elderly leaders of the Muslim Brotherhood a current that wants reform but also collaborates with the regime have been given long prison terms.
When this system 'fails', the state takes executive action. A week before the Luxor killings two Islamists who had (unusually) been found not guilty of killing a policeman were sentenced to death after a new hearing. President Mubarak had declared the original verdict 'lenient' and ordered a further court appearance before the country's most notorious hanging judge, Ahmed Salah Badour. 'This is what happens to those who are acquitted,' said the men's lawyer. In this climate victims' families and communities have developed a deep sense of bitterness and a focus upon revenge.
The regime is defending a system which is among the most unequal in the world. In the early 1970s President Sadat introduced a policy of infitah 'opening'. This pioneered privatisation in the Third World, at terrible cost to the Egyptian population. Commission merchants and speculators became immensely rich while the masses experienced immiseration. The present regime has continued this strategy, justifying it with the fantasy that Egypt is a 'Tiger on the Nile' an emerging economy on the brink of 'take off'.
A ministerial position is a licence to print money. The Luxor killers' attack on tourists was not only an attempt at economic sabotage but also a strike against ministers and top officials who profit from their speculative investments in hotels and tourist resorts.
Following the killings Mubarak was quick to sack his interior minister, Hassan al-Alfi. He thus turned a problem into an opportunity: the minister had been involved in a major business scandal which recently engulfed the whole Alfi family, worrying even the regime's most devoted supporters in business, finance and among the senior ranks of the military.
The Egyptian regime is supported wholeheartedly by its Western allies. The US provides military and financial support surpassed only by its backing for Israel. Egypt was Washington's key Arab ally in the Gulf War of 1991 and the US has endorsed Mubarak's domestic policy without reservation.
With this support the regime has gained confidence to accelerate its policy of privatisation, attacking workers' rights as a prelude to new sell offs. It has also dismantled the land reform laws of the 1950s and 1960s, which had given millions of peasant families a foothold in the rural economy. Vast numbers of small landholders are likely to lose their rights, creating a new rural crisis and intensifying migration to the cities. Cairo alone already receives 100,000 new rural migrants each month.
Egyptian workers have a history of effective mass struggle and of rapid radicalisation, seen recently when the industrial city of Mehalla al-Kubra mobilised in support of peasants threatened under the new land laws. With the Communists long since discredited, there is a new audience for ideas which can challenge the regime by mobilisation from below.
The Islamists' strategy of armed confrontation takes them away from this option. Elitist and isolationist, they can provide no answer to the misery of milions of Egyptians. The ambush of tourists in a Pharaonic temple is a metaphor for failure: this politics of the past is no challenge to Egyptian capitalism. A socialist route is necessary, one which passes through the factories. Here too there is anger but there is also power.
Once again the US has gone to the brink in the Middle East by threatening to launch cruise missiles against Iraq. At the time of going to press, this threat has receded but since the end of the Gulf War the US has launched three strikes against Iraq in 1991, 1993 and 1996. This, combined with the continued sanctions against Iraq (estimated to have cost the Iraqi economy about £60 billion in lost oil revenue), has meant ordinary Iraqis have had to endure cholera and typhoid epidemics, starvation and malnutrition. The bombing itself, both during the Gulf War and after, has left industry, hospitals, water, sewer and power supplies decimated.
Rather than leading to the strengthening of US imperialism, this latest episode has exposed the weakness of the world's largest superpower. Cracks have appeared in the western alliance and there has been dissent from its allies in the Gulf. The US has failed to gain the support of any of the Gulf states, including normally compliant countries such as Kuwait and Saudi Arabia.
The excuse for the latest call to arms was the decision by Saddam Hussein to kick out the UN inspection team Unscom. This followed a UN security council motion which slapped a travel ban on Iraqi officials who they claimed were responsible for obstructing Unscom's work. But right from the start there was growing dissent about the US strategy China, France and Russia, along with Egypt and Kenya, all abstained when the motion was first put forward at the end of October, and they only reluctantly supported the motion when it went forward again in November. They also let it be known that they would not support armed intervention if it went ahead.
This is a far cry from the days of the Gulf War when the US was able to win the full support of the UN. Then it was able to go to war safe in the knowledge that all the major western governments supported its actions, and those such as Germany and Russia, which had reservations, did not have the muscle to stand up to the George Bush administration. Today the Clinton administration is far weaker than at the beginning of the 1990s.
Countries such as France, China and Russia have signed lucrative oil deals with Iraq which will go ahead when the trade embargo ends possibly at the end of the year. France and Russia have also signed deals with Iraq worth over $2 billion which guarantee natural gas for many years to come hence their reluctance to be plunged into a full scale war.
The US administration has pursued a disastrous policy since the end of the Gulf War. Towards the end of the war the US first encouraged Iraqis to rise up against Saddam Hussein, but then cynically encouraged the suppression of the revolts when they did take place. They wanted a weak Iraqi regime, not its overthrow. More than anything the US feared a pro-Iranian regime.
In the seven years since the end of the Gulf War the US has pursued a policy of 'dual containment' with Iraq and Iran. Now, as US officials admit, this policy is in tatters. In Baghdad they face a government which is still hostile to US interests and which, despite numerous attacks, they are not able to remove. Now the US has as much to fear from the Iranian government which has spent the years since the end of the Gulf War building up its military capacity (with the help of Russia, China and North Korea) in the face of US sanctions. Once again Iran is now a major military player in the region.
With the Israeli-Palestinian 'peace process' in a mess, any offensive by Israel's closest allies will throw the whole region into turmoil which could also spill over into the other Gulf states. They know that any military action will lead to a big rise in anti-American sentiment in the region. Whereas in the past Israel was the country which helped the US maintain hegemony in the region, today it is one of the sources of the instability. The Gulf is now one of the most unstable regions in the world today. And the biggest imperialist power the US is in a much weaker position than seven years ago, unable to impose its will both economically and militarily.
This latest episode also reveals one other important fact that Labour's talk of a so called 'ethical foreign policy' comes to nothing when it is called on to support the Clinton administration. When Robin Cook, in his first days of taking office, talked about the need for human rights and a more caring side to the British government overseas, did he have in mind the launch of cruise missiles aimed at an already battered Iraqi people?