Issue 275 of SOCIALIST REVIEW Published June 2003 Copyright © Socialist Review





Enter at your peril

Protests in France show another Europe is possible
Protests in France show another Europe is possible

Tony Blair's government was due to announce the result of the Treasury's 'five economic tests on the euro' on 9 June, after bitter rows within New Labour. We have come a long way since the Tories seemed to have a monopoly on being torn apart by arguments over the euro and Europe. Labour's official policy is that it will call a referendum and then argue for entry if it is 'in Britain's economic interest to do so'. The problem is that this supposedly 'economic' judgement on the five tests is in fact also about politics. And there are three deep splits behind the reluctance either to decisively reject the euro or to leap into the unknown of a referendum.

The first split--and perhaps the most fundamental--is within the British ruling class. Should the British economy look across the Atlantic to the US or across the Channel to the 12 countries that have adopted the euro? In practice Britain has opted for a mixture of the two during the postwar period. The City of London consolidated its position as a financial centre by becoming a sort of offshore tax haven for capital markets, and Britain followed the US in making it easy for bosses to fire workers, and cut spending on public services. In this sense the last Tory government's non-policy of 'wait and see' was a compromise based on a real division, just as the circus performer who rides two horses is fine unless they veer apart.

The second split runs down the middle of Britain's political class, and can be seen in the Labour Party and trade unions as well as among the Tories. The leaders of unions representing manufacturing workers tend to be more keen on the euro, while public sector union leaders see a threat to their members from European limits on government spending.

The third split is among the people of Britain. The commonsense view is that any referendum would be lost because a substantial majority is against the euro. Though this seems likely, it is not as clear-cut as it first appears. Many people have not yet made their minds up and some of those who say they are decided may change their minds in the course of a concerted pro-euro campaign (which we have not yet seen).

So what would the euro mean for the British economy? Firstly it would take away the Bank of England's power to set interest rates and give it over to the European Central Bank's (ECB) governing council--composed of one central banker from each country. The ECB's president repeats each month his mantra about the need for wage moderation--and he is not talking about the GlaxoSmithKline chief executive's 22 million 'golden parachute'.

New Labour is not worried about unelected bankers setting our interest rates. Within a week of coming to power in 1997 Gordon Brown handed control of monetary policy over to a newly independent Bank of England, while merely setting its target for inflation. In practice all the world's major central banks informally coordinate their monetary policy, with the US Federal Reserve leading the way. In the wake of the financial panic after 11 September, this coordination even became formal as the Federal Bank, the Bank of England and the ECB all cut rates within hours of each other to pump money into the markets and avert a financial collapse.

As for governments being able to run budget deficits of more than 3 percent, Britain is ahead of France and Germany in its orthodoxy. Because Labour stuck to the Tories' harsh spending targets when it first came to power, and because of Gordon Brown's attachment to 'prudence', Britain is on the right side of the ECB's rules on deficits even though it is outside the euro.

Here too there are clashes taking place on the continent, because the two countries central to the European project, France and Germany, are among the countries breaking the budget deficit rules. France has not only ignored the rules, but is making little pretence of caring. In the short term, the French government is unlikely to change its stance, since its economy expanded in the first three months of this year while many other European economies stagnated. Germany has gone into a second recession in the last six months.

Right wing papers froth at the mouth at 'Blair's betrayal of Britain'. It is tempting to say if the Sun is against it socialists should be in favour of it. But there is an alternative on offer, which has recently been glimpsed on the streets of France, Austria and Germany as thousands have demanded decent pensions rights and a halt to deregulation. The slogan of 'A social Europe, not a bosses' Europe' can connect with many of those workers who are fed up with years of cuts and privatisation.

This month's G8 meeting in Evian may attempt to bridge some of the deep divisions in the European ruling class that were exposed by the Iraq war. But they will face mass protests raising the possibilities for another kind of continent.
Nicolai Gentchev


  • Beware supermarket labelling, warns the Consumer Association. Tesco's finest range prawn, squat lobster, lemon and parsley terrine slices contains just 6 percent prawn and 2 percent lobster. And guess how much maple syrup there is in Asda's maple syrup creams? There is none.

  • Saddam's Banjo?
  • The US army can't find Saddam Hussein--but it has liberated his banjo, which was sold on eBay recently for $15,000. According to the seller in Knoxville, Tennessee: 'This was Saddam Hussein's own banjo--signed by the man himself. Dug from the rubble in Baghdad, the signature has been verified as authentic by several friends of mine.' What more proof do you need?

  • The bosses' CBI doesn't like the phrase 'fat cat pay' according to a recent press release. Instead it has set up a committee to examine 'enhancing transparency and performance-based remuneration'.

  • Bargains galore on the Tory Party website. Winston Churchill's funeral papers are only 2,500 or, if the recession's biting, Enoch Powell's leadership nomination papers are a snip at 1,500.


    Who said crime doesn't pay

    Trading with our lives
    Trading with our lives

    The last time there was a crisis in the international stockmarket they made a film about it. It was called Wall Street. Michael Douglas played Gekko, the intended villain of the piece, a greedy gambler who had made a fortune on the stockmarket chiefly by buying and bribing inside information, and then betting on it, knowing it to be true. The film was such a realistic indictment of the market and its values that it quickly became a cult movie for thousands of yuppies swarming like bees round the honey of the stockexchange. When Gekko is finally captured by the regulators of the Securities Exchange Commission, most of his admirers felt sorry for him. The film was a close portrayal of the rise and fall of the stock market gangsters and insider dealers of the time. Those critics who saw it as a fair rendering of what really went on in Wall Street were told that the scandal it revealed was exceptional, the old story of the rotten apple in the otherwise unblemished barrel of Wall Street and the City of London.

    It took a decade for the market to start falling again, and for the same sort of scum to rise to the surface of the barrel. In 2001 came the Enron scandal, in which a massively hyped international trading company duped the wealthy world by the time-honoured process of fiddling its accounts. Huge profits recorded in the accounts simply did not exist. The company went bust and the accountants who fiddled the accounts and shredded the evidence--New Labour's close friends Arthur Andersen--were disgraced, bankrupted and quickly absorbed by other big accountants such as KPMG, which has a similarly questionnable record. Apologists for capitalism argued that Enron was a 'one-off'--an unfortunate slip of the regulators that was unlikely to happen again.

    Now, less than two years after Enron, comes a scandal every bit as shocking. For years the US regulators have been investigating the role of the country's top investment banks, the very core of the capitalist system. Of special concern was the method used by the banks to prise investment out of the US bourgeoisie. Their technique was to hire 'analysts' who circulated 'research studies' on the value of various stocks, recommending whether or not they were worth buying. The regulators soon discovered that the 'analysts' were not at all interested in the value of the stocks they were 'researching'. All they were interested in was getting more money for the banks who hired them. So thousands of gullible investors were conned out of many billions of pounds by bogus research that the analysts knew to be bogus, solely in order to drum up more business for the banks who paid them. In one of the hundreds of incriminating e-mails unearthed by the regulators, an analyst from the big US bank Lehman summed up the whole scam: 'Yes. The little guy who is not smart about the nuances, may get misled. Such is the nature of my business.' Like Gekko, like the millionaires who played the market in derivatives, hedge funds, split capital investment trusts, it was the 'nature of his business' to lie and cheat in the interests of his paymasters.

    The names of the liars and cheats in this area are the household names of modern finance capital: Citigroup, Credit Suisse First Boston, Merrill Lynch, Goldman Sachs, Salomon, Piper Jaffray, UBS Warburg (a special favourite of the New Labour government in Britain), Lehman, Bear Stearns, etc, etc. The total fines against these banks comes just short of a billion pounds, but the banks coughed up in huge relief. They will not be prosecuted and even when disgruntled investors sue for compensation, the banks can unleash their unimaginably expensive lawyers to defend every suit. Gekko went to prison, but none of these professional liars and cheats need lose a night's sleep.

    Socialists who study this story (and that in itself is difficult--the newspapers and commentators of the ruling class are reluctant to expose the fraud of those who feed them) are inclined to pass by on the other side, their noses in the air. The whole sty stinks, they argue, so why worry about the smell of any particular pig? Who cares about the swindling of the petit bourgeoisie by the big bourgeois? That approach is easy to understand, but it misses the point. The point attacks the root of the argument that capitalism is the best available system to sort out the problems of supply and demand, to ensure that the right things are made to fit people's needs and aspirations, and that the proceeds are fairly distributed. The fantastic scandal of the investment banks (like all the other similar scandals of modern capitalism) proves exactly the opposite. It proves that the people who run the system couldn't care less about the real value of anything, but will take any course, twist any figures, tell any lies and engage in any amount of cheating so long as their already comfortable nests are further feathered. Gekko rides again, and this time he rides free.
    Paul Foot


    Criminalising the persecuted

    A Rwandan refugee camp: the model for the government's 'regional protection areas'
    A Rwandan refugee camp: the model for the government's 'regional protection areas'

    Although Britain hosts just 2 percent of the world's refugees--0.3 percent of its population--the asylum debate is imbued with a dangerous hysteria. The Sun describes asylum seekers as 'a sea of humanity polluted with disease' and the Mail writes that Britain is 'a haven for Albanian gangsters, Kosovan people smugglers and Algerian terrorists'. The tabloid articles, however, represent the poison stirred up by the deeper currents of government policy. In a recent interview cabinet minister Peter Hain wove terrorism, drugs smuggling and asylum into a single soundbite, paving the way for remarks by one of Britain's most senior police officers. Chris Fox mirrored Hain with talk of 'a tidal wave' of refugees acting as 'a vehicle for drugs, prostitution and coerced labour' and 'a camouflage' for criminal gangs and terrorists who inhabit 'the murky underworld of asylum seekers'.

    The rhetoric may be increasingly demented, but it fits with US neoconservative ideas of 'rogue states' and the threat of Islamic fundamentalism. The British government is redefining the issue of asylum as a threat to international stability and national security, justifying a relentless battle against those seeking sanctuary. Lip-service to protection of 'genuine' asylum seekers through 'firm but fair' asylum laws is fading fast, with the government explicitly linking moves against 'illegal' migration to the fight against transnational organised crime.

    The government itself has played a crucial role in creating the 'people-smuggling industry'. It has blocked any opportunity to seek asylum through legal channels. Those forced to take the smuggled route are then condemned as 'economic migrants', despite a wealth of research that invalidates this claim, including a recent Institute for Public Policy Research report showing that the vast majority flee not poverty but violence, oppression and conflict. The UNHCR estimates that up to two thirds of those smuggled are refugees. The largest group to make the perilous journey to Britain last year, for example, came from Iraq. But refugees are categorised as 'illegal' because they are smuggled in with false documents, and because they are 'illegal' they are criminalised, and can be detained and deported.

    The 1951 Refugee Convention rules that refugees cannot be returned to the countries they have fled until they have had a full review of their asylum claim. But this last shred of protection is already unravelling. In the Balkan states they pass through, the fate of those seeking asylum further west is routinely decided with scant respect for international law. The region has been singled out by the EU for deployment of a vast array of intelligence, surveillance and policing measures, transforming it into Fortress Europe's buffer zone.

    The government claims that national security justifies the use of extraordinary measures without democratic scrutiny. In Britain this includes the detention without trial of foreign nationals 'suspected of terrorism'--15 are now in British jails and some have been held for more than 18 months. In Europe, Interpol, its offshoot Europol, and the fingerprint-sharing system Eurodac are now at the forefront of tracking down 'illegal' migrants.

    But in the Balkans the refugee is bereft of legal identity and liable to be detained for long periods and/or deported through a series of readmission agreements with neighbouring states. The government now defines these 'transit' states as 'safe third countries' to which those denied the opportunity to claim asylum in the west can be returned, yet most of these countries have no guaranteed access to asylum procedures. In Bosnia, for example, the UNHCR believes most asylum seekers are immediately deported.

    ASYLUM APPLICATIONS TO UK: TOP TEN COUNTRIES (2002) --(Home Office statistics) TOP TEN COUNTRIES (last quarter 2002: October to December)

























    Sri Lanka






    Democratic Republic of Congo






    Federal Republic of Yugoslavia




    The government is now preparing the ground for a further offensive, designed to shift the 'problem' beyond the borders of western Europe. In a plan it is presenting to the European summit this month, the majority of refugees will lose the right to claim asylum from within western Europe, and will, in the short term, be deported to 'transit processing centres' just outside the EU. In the longer term, the government proposes they should be corralled into 'regional protection areas' close to their countries of origin, where their claims will be processed and some may be accepted into Europe on a quota basis. If the refugee camps set up in the Great Lakes region of Africa after the Rwandan genocide are anything to go by, these 'protection areas' will be little more than ghettos of violence and squalor in some of the world's poorest regions.

    Ever-tightening security controls are increasing the costs of smuggling and heightening the risk of death en route. The often traumatic journeys refugees are forced to make are themselves an abuse of human rights, compounding the effect of the horrors many have suffered. Not only is the government complicit in this abuse, it is guilty of returning refugees to persecution and violence. But, as one minister has said 'off the record', the government is determined to see 'the death of the notion of the asylum seeker in the UK'.
    Fran Cetti



    Time to teach Clarke a lesson

    Charles Clarke rabbits on
    Charles Clarke rabbits on

    Education minister Charles Clarke's idea of school life as a 'magical experience' is not one that many school students--or their teachers or parents--would recognise. His vision of education as a narrow instruction in the needs of big business lies behind both his attack on 'irrelevant' medieval history and his obdurate defence of Standard Attainment Tests (Sats).

    Today's students are forced to endure up to 87 public examinations in their school careers. This includes Sats at the ages of seven, 11 and 14. But a wealth of evidence shows that the tests provoke damaging stress for large numbers of them, and that the league tables they are designed to suit force teachers to focus on exam cramming to the detriment of music, sport, drama and art.

    They also place an added burden on already under-resourced schools, many of which are threatening teacher redundancies and the prospect of four-day weeks.

    'Play' is an essential component of children discovering the world around them. But for Charles 'Gradgrind' Clarke it is a distraction from the task of business-orientated categorisation. It is no coincidence that fee-paying schools are not compelled to sit Sats as state schools are.

    Although Sats are dressed in the language of 'raising aspirations' of the poor, in practice they marginalise a layer of deprived children deemed failures from their first unsuccessful test. Of the quarter of students who fail to meet government targets at 11, only 10 percent go on to attain 5 A-Cs at GCSE.

    In response to the tests and the workload they create, delegates to the National Union of Teachers (NUT) conference voted to boycott Sats in an effort to get them scrapped. Although they have voted to do so before, and had the decision ignored by general secretary Doug MacAvoy, this year teachers look determined to carry the campaign forward. In the face of this Charles Clarke has conceded that Sats results for seven year olds will be considered alongside teachers' assessments. But more pressure will be needed to scrap these damaging tests entirely.
    Andrew Stone


    Dreams on screens

    'It's been said that dreams are our road maps to the future. If so, where are we headed?' So starts the 'About Us' section of the Common Dreams website.

    Since 1997 the people behind the website have been 'working to bring progressive Americans together to promote progressive visions for America's future'. They believe in 'using the internet as a political organising tool--and creating new models for internet activism'.

    With this in mind, Common Dreams has created a daily news service that brings together a wide range of articles (mainly from mainstream US media, but with a smattering of other papers from across the world) of interest to the activist community.

    Also worthy of note is the Common Dreams progressive newswire--a regularly updated set of press releases and statements from progressive organisations--and not just the usual suspects either, but a wide variety of groups, campaigns, trade unions and NGOs. As I write this, the latest press releases include ones from the AFL-CIO, the World Wildlife Fund and the Centre for Science in the Public Interest.

    The site has a huge archive--its search facility is a useful starting point for anyone researching a particular topic, though non-US readers might find it slightly limited by its predominantly American content. Perhaps a second criticism is that it is difficult to find more radical voices than those of the mainstream left and NGO types, but there are other sites that more than make up for this.

    One of these sites is dedicated to the work of 'one of America's most prominent political dissidents'--Noam Chomsky. The Chomsky Internet Archive at chomsky, hosted by Znet, contains many downloadable versions of his books and articles.

    ZNet itself-- weluser.htm --is another resource of radical and alternative articles. Contributors come from many traditions--John Pilger, Robert Fisk, George Monbiot and Naomi Klein to name a few of the more well known authors. It's difficult to classify any particular editorial line, but a general libertarian socialism probably fits the bill.

    Activists could do a lot worse than while away a few hours reading either Znet or CommonDreams.
    Martin Empson
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