It is possible to forget that behind the chaos, backstabbing and rifts in the Tory party over Brexit exists the very real question of the future course of British imperialism. The parasitic character of British capitalism leaves it increasingly incapable of withstanding the economic and political challenge of US or European imperialism as an independent global imperialist power. In this context the Brexit conflict is essentially a dispute between sections of the ruling class over two necessarily, totally reactionary outcomes for British capitalism – staying as part of a European imperialist bloc or leaving and becoming an offshore centre for usury capital under the umbrella of US imperialism.1 The recent decision of US President Donald Trump to pull out of the 2015 Iran nuclear deal and impose further sanctions on Iran and any countries and companies trading with Iran has dramatically highlighted the serious consequences for British imperialism from the eventual outcome of the Brexit conflict. David Yaffe reports.
US threatens EU trade with Iran
On 8 May Trump pulled the US out of the Iran nuclear deal, a promise he had made during his 2016 presidential election campaign. The deal with Iran had been signed by the permanent members of the United Nations Security Council (China, France, Russia, the United Kingdom, the United States) plus Germany and the European Union. Visits to Washington by President Macron of France, the German Chancellor Angela Merkel and British Foreign Secretary Boris Johnson failed to get Trump to change his decision.
The threatened US sanctions on companies trading with Iran could jeopardise more than €20bn EU-Iran trade as well as undermining the economic benefits to Iran that the EU recognises are necessary to keep the 2015 nuclear deal in existence. The EU has to decide whether to hit back against the threat of sanctions and revive the EU ‘blocking regulation’, a response that enabled the EU to prevail over extraterritorial US sanctions to deter trade with Cuba, Iran and Libya in the 1990s. That regulation prohibited EU entities and courts from complying with and enforcing a list of foreign sanctions laws, raising the prospect of financial penalties for companies that do comply. It will be more difficult this time because of the deeper links between European companies and the US financial system and the threat of large fines, criminal charges and asset seizures against such companies in the US (Financial Times 15 May 2018). There is a lot at stake and the EU has to determine how it will respond to this growing challenge from a rival imperialist power.
At a dinner before a meeting of the 28 European leaders, including British Prime Minister Theresa May, in Sofia, Bulgaria on 16 May, the President of the European Council, Donald Tusk, began to address this issue when he said: ‘We are witnessing today a new phenomenon, the capricious assertiveness of the American administration.’ He condemned the US withdrawal from the Iran nuclear deal and its threat of a transatlantic trade war. Tusk drew lessons from this: ‘I have no doubt that in the new global game, Europe will either be one of the major players, or a pawn. This is the only real alternative. In order to be the subject and not the object of global politics, Europe must be united economically, politically and also militarily like never before. To put it simply: either we are together, or we will not be at all.’
Where will Britain stand in this ‘new global game’? The resolution of the impasse of the British ruling class over its relation to Europe becomes increasingly more urgent, confronted by this challenge from the US administration to the very viability of European imperialism as a sustainable global power. As we have argued in numerous articles on Brexit, the direction the British ruling class takes will have momentous consequences not only for the rivalry between European and US imperialism but also for the future role of the City of London, the financial arm of British imperialism.2
The end game approaches
As we said in FRFI 263, every move so far by the Tory government on Brexit is designed to contain the deep splits in the Tory party, hold together an irreconcilably divided cabinet and the deal with the pro-Brexit Democratic Unionist Party (DUP) to maintain a working majority in parliament. As Brexit day (29 March 2019) draws closer, difficult decisions have to be made and they threaten to tear the Tory party apart. The most difficult decision involves avoiding a ‘hard border’ between the north of Ireland and the Irish Republic.
The published draft withdrawal agreement contains a default ‘backstop’ solution, written into the December 2017 agreement at the request of the Irish Republic, under which the north of Ireland would maintain full alignment with the EU single market and customs union rules. In its present form this is totally unacceptable to the Eurosceptics in the cabinet and to the DUP, as it is seen as threatening the constitutional integrity of the UK. May has accepted the default ‘backstop’ solution, with the proviso that both sides work towards technological and legal alternatives that will avoid full regulatory alignment between the north of Ireland and the EU.3 Two possible alternatives were offered: a ‘customs partnership’ in which Britain would mirror EU requirements on imports on its borders and collect tariffs on behalf of Brussels and ‘a highly streamlined customs arrangement’ (the so-called ‘Maximum facilitation’ [Max fac] model), using technology to minimise friction on the border.4
May delayed the final decision on her preferred ‘customs partnership’ model to head off a rebellion in her Brexit inner cabinet and prevent key Eurosceptic ministers from resigning. An 11-strong subcommittee has been meeting for talks on this issue. With Sajid Javid replacing Amber Rudd as Home Secretary after she was forced to resign, the balance of the subcommittee has changed to 6-5 against May’s preferred option, but her team believes it can soften opposition by proving that the technology needed for the ‘customs partnership’ will work and allow Britain to have its own trade policy. May has warned that, unless they accept her position, parliament could inflict an even less palatable option on them – a full customs union with the EU. This hybrid ‘customs partnership’ scheme has been dismissed by Brussels as ‘magical’ thinking’.
In mid-May the Brexit sub-committee came up with a fresh proposal to avoid a hard border in the north of Ireland, after May and her chief negotiator, Olly Robbins, gained the backing of crucial cabinet ministers. If the ‘backstop’ were to be enacted, Britain would agree to maintain the common external tariff – the import tax levied on goods coming into the EU – and align its regulations with Europe for a strictly limited period of time. Britain would also seek to opt out of the common commercial policy, which prevents member countries from negotiating independent trade deals. The plans are expected to be put in a White Paper in the next few weeks with the hope of securing the backing of the EU 27 at June’s European Council. As the proposal directly contradicts some of the core principles of the EU’s Brexit strategy, it could bring the talks to a crisis point. The EU’s chief negotiator, Michel Barnier, has argued that, when it comes to the ‘backstop’, ‘only Northern Ireland specific solutions will work’. The UK-wide ‘backstop’ is unacceptable to EU negotiators because it would allow London to carve up the single market to its advantage. ‘This would be one huge cherry’, said an EU official. It is little surprise that Theresa May has already conceded that the UK will remain tied to a customs union with the EU after 2021, until an alternative to a hard border in Ireland can be found (Financial Times 18 May 2018).
Boris Johnson and the Environment Secretary, Michael Gove, are leading the cabinet opposition to the latest ‘backstop’ proposal. Having lost the argument in the inner cabinet in mid-May, Johnson, thousands of miles away in Argentina, gave a thinly-veiled warning to the Prime Minister: that he and his fellow Brexiters expect her to deliver a deal that avoids enacting the ‘backstop’ that would keep Britain aligned to the customs union beyond December 2020. Two weeks earlier Johnson described May’s ‘customs partnership’ scheme as ‘crazy’. That he still remains in the cabinet demonstrates the impotence of May in dealing with those Brexiters openly undermining her position in the cabinet and party.
The European Withdrawal Bill, which transfers EU law on to the UK statute book in preparation for Brexit, has completed its passage through the House of Lords.5 During that process the government suffered 15 defeats in amendments made to the Bill. Although the amendments can be overturned on the return of the Bill to the House of Commons, a few will have important consequences and represent a significant threat to the government’s Brexit strategy. The consequences of those amendments are listed below.
- The government has to outline the steps it has taken to negotiate the UK’s participation in a customs union with the EU. This was passed by 348 to 225 votes, a majority that exceeded expectations, and puts the government under pressure to reopen the issue of Britain’s membership of the customs union. It was backed by 24 Conservatives, including three former Tory government ministers.
- Ministerial powers to strip away protections from workers, consumers and the environment, and to cut supposed ‘red tape’ from manufacturers and producers without the approval of parliament, have been limited – passed by 314-217.
- Parliament’s right to force the government back to the negotiating table and thereby prevent the UK leaving the EU without an exit deal was passed 335-244. It was put forward by former Tory minister Douglas Hogg, now Viscount Hailsham, and is intended to give Parliament a ‘genuinely meaningful’ vote at the end of Brexit negotiations.
- MPs to have a vote on remaining in the European Economic Area – effectively a vote on remaining in the single market – after a shock defeat for the government by 245-218, with 83 Labour peers voting against their party whip. This is a blow for both Theresa May and Jeremy Corbyn.
- The fixed Brexit day of 29 March 2019 no longer needs to be specified, passed by 311-233.
Given the 15 defeats imposed on the government by the House of Lords, it is not surprising that a fixed timetable for consideration of the Lords’ amendments in the House of Commons has not yet been scheduled. May’s spokesperson promised the Bill will come back to the Commons within ‘weeks not months’. That remains to be seen.
The EU has however warned that unless ‘substantial progress’ is made on agreeing the Irish ‘backstop’ at next month’s European Council meeting, Brexit talks could stall. Ireland’s Prime Minister Leo Varadkar has driven this point home: ‘The deadline of course for the withdrawal agreement is October, but if we are not making real and substantial progress by June then we need to seriously question whether we are going to have a withdrawal agreement at all’. The Scottish Parliament has rejected the government’s EU Withdrawal Bill by 93 votes to 30, putting the UK on the path to a major constitutional crisis. Time is running out for Theresa May and her irreconcilably divided Tory party.
Fight Racism! Fight Imperialism! 264 June/July 2018
[1] ‘EU referendum: the position of communists’ in FRFI 251 June/July 2016, http://tinyurl.com/z7cpcz7
[2] See David Yaffe ‘Brexit, imperialist rivalry and the split in the working class’ FRFI 260 October/November 2017 at https://tinyurl.com/yckzdp9m for a discussion of these developments.
[3] See David Yaffe ‘Brexit hard facts deflate Tory illusions’ FRFI 263 April/May 2018 on our website at https://tinyurl.com/y8fzltcs
[4] The head of HM Revenue & Customs, Jon Thompson, recently told the Treasury Select Committee that businesses will face extra bureaucracy costing up to £20bn a year by adopting the ‘Max fac’ custom deal supported by the cabinet Eurosceptics.
[5] See David Yaffe ‘Brexit chaos and Tory rifts as the City prepares’ FRFI 262 February/March 2018 at https://tinyurl.com/y89y2dpt for a discussion of the function of the EU Withdrawal Bill and of the one important defeat the government suffered during its line by line scrutiny in the House of Commons.