Chances and Risks of “Protectionism” for the European Social Democracy

After years on the defensive, Europe’s Social Democracy is surprisingly feisty and rejuvenated in 2006. The public has developed an awareness that growing economic and social insecurities are primarily caused by neoliberal policies; and that the neoliberal agenda – performed by liberal, conservative and social democratic governments alike – has gloriously failed to deliver its promises. Stephen Haseler writes in ‘Social Europe’: “The signs and symbols of a growing resistance to ‘neo-liberalism’, and of a major reappraisal of its relevance, are all around us. (…) (There is) a growing sense that the dominance of neo-liberal ideas is now coming to an end.”

In the current political setting, the dominant theme in political discourse is insecurity. Political ideologies provide different explanations of what the sources of insecurity are, as well as how to provide protection against it. Insecurity may span from economic and job-related to social and even cultural fears. The concept of “protectionism” is primarily used in a limited economic sense, but can have a wider meaning. Social Democracy currently is in a strong position to shape the concept of “protectionism”.

“(Now) the centre-left has natural advantages, as citizens identify the state as the collective means of insurance against the perils of globalization and social turmoil.” writes former Blair-adviser Patrick Diamond. The emerging concept of a “Social Europe”, for example, is building on a reasonable economic regulation and secured social security, thus laying emphasis on stronger protection of the societies and its citizens.

In the following paragraphs I will examine some main elements of this “protectionist” concept , but will also point out its downside, focusing on immigration, trade and enlargement policies.

1. Economic Protectionism
In the past, neoliberals like President Barroso have frequently warned of “protectionism” to ward off policies aimed at softening the effect of the Union’s liberalization and privatization agenda. Although the latter has never been popular, Europe’s governments (and also socialist parties) have so far followed the Commission in this matter. But recently, protectionism has gained much appeal. For once, multiple governments are trying to prevent cross-boarder mergers in crucial industries: Enesa (against E.on) in Spain, Suez (against Enel) in Italy and BPH (against UniCredit) in Poland, to name the most prominent examples.

Meanwhile, this form of protectionism in itself is not a sufficient antithesis to neoliberalism, as the example of Suez shows. The merger with the publicly owned Gaz de France would mean reducing the share of public ownership significantly. Moreover, public ownership is an insufficient safeguard if the company is acting within a liberalized market. The aggressive business-strategy of EdF (Electricité de France) of recent years proves this point.

Protecting national companies from foreign take-overs is hugely popular. Regular news of multinational companies shutting down domestic production and firing thousands of employees make people fear that these companies threaten the stability of our society. Social Democracy is now in a strong position to provide a vision of a “protectionist” economic structure that 1) ensures stability, 2) provides a fair give-and-take between companies and society, 3) provides growth that benefits the people (and not only the corporate shareholders).

A concept like this addresses the whole spectrum of causes of economic insecurity, in contrast to the political postering performed by, most prominently, the conservative French government. “Economic patriotism”, as Nicolas Sarkozy calls it, is restricted to the question of the nationality of the firm’s owners.

In contrast, Social Democracy needs to emphasize that economic development can only be healthy if the needs of the community in which companies act are sufficiently considered, e.g. by public oversight and democratic regulation that is flexibly adjustable to the different needs of different regions or nations. In one of the most exciting developments of the past year, PES MEP’s have embraced this idea when they intervened in the legislative process of the Service Directive (Bolkestein Directive). This considerate form of protectionism takes the different needs of the European countries into account. It has been successful in mobilizing the public, NGOs and unions on a national an European level.

2. Risks of Protectionism: Immigration
As immigration is seen as a growing threat to economic stability and security, parties from both the right and the left have toughened immigration laws radically. This crackdown on immigrants is probably the most appalling and shameful of the European policies of recent years. Since 1993, more than 7000 people have reportedly died while attempting to enter the EU. Considering undocumented deaths, the number of fatalities may well be triple that of official statistics. Europe is haunted by the images of dead men, women and children on Spanish and Italian coasts and the murderous violence against immigrants in Ceuta and Melilla in 2005. NGOs report a frightening rise of violent acts against immigrants inside Europe, making the Union an ever more hostile and dangerous environment for immigrants. The continuing toughening of immigration rules and border policies grow more and more inhumane and lay the seeds for further exploitation of immigrants.

All advocates of sensible immigration policies acknowledge the need of the Union for regulating the immigration movement (e.g. HRW World Report 2006). But the planned common system for immigration and asylum focuses almost exclusively on ever tougher deterrence by violent means and deportation beyond judicial control.

It is illusionary to believe that the stream of immigrants trying to enter the EU can be halted by increasingly excessive means of violence. We must counter this dangerous claim vigorously. Policies relying on violent deterrence will only raise the death toll, but won’t stop immigration. We need to acknowledge the fears of people that immigration destabilizes security and the economy, but need to counter simplistic and polemic protectionist trends. We need to set straight cause and effect: It is police violence and disfranchisement of immigrants that create criminality and deteriorating job markets. Destabilization through immigration is not a sign that our rules are not tough enough, but rather that our immigration policies have failed.

In the United States, labor unions have taken up the cause of immigrants and fight for a sensible and omprehensive immigration reform. They understand that a humanely regulated immigration protects both immigrants and the domestic workforce alike from exploitative corporations and anti-labor laws. In Europe, Social Democracy still has to find the courage to stand up for immigrant rights.

3. Risks of Protectionism: Imperialist Trade Policy
Much emphasis has been laid on the argument that within a Europe of free markets, but of different social standards and rates of taxation, nations are down-competing each other in a race to the bottom. Countering this development is an important task of European Social Democracy and the labor movement in future years. The free market and common external trade policies have also made the Union into one of the most predatory economic forces in the world. The EU, not the US, was pursuing the most aggressive liberalization in the WTO’s Doha-round. Since the collapse of Doha earlier this year, the EU has been following the US example by establishing bilateral trade agreements with third countries ever more aggressively. It has been argued even by free trade advocates that those agreements between a huge trade block on the one side and a weak developing economy on the other is putting the latter in a tremendous disadvantage.

“That is why a neoprotectionist strategic approach will only work in a Europe-wide context.” writes Stephen Haseler (Social Europe, vol. 2, I. 1, 2006). But these protectionist economic policies, proposed by some socialist commentators, are putting the EU at risk of becoming an even stronger trade aggressor internationally than it already is. Growing dependence on gas and oil imports are adding to Europe’s explosive economic role. Without developing solutions to the negative impact of a both protectionist and imperialist trade policies we are not only exporting poverty, environmental problems and instability to other countries, but we are also aggravating our own problems, eg. concerning immigration.

4. Risks of Protectionism: Enlargement
A mayor victim of growing protectionism might well be the Union’s enlargement process. Since the enlargement of 2004, voices against further enlargement have dominated in politics and in the public discussion. Many on the Left argue that further enlargement will make reforms of the current status quo – seen as serving mainly business interests – even more difficult. Before further enlargement, they argue, we first need to advocate integration in social and institutional matters.

But both conservatives and Social Democrats follow yet another, mostly unsaid, argument: that neither the remaining Balkan and ex-Soviet countries nor Turkey are seen as desirable future Union members. The most common arguments are that the accession of even poorer countries will put huge pressure on the EU economies and labor markets, bring the Union even closer to the world’s crisis regions of the Middle East and the Caucasus and – in the case of Turkey – bring in a huge Muslim population. It seems that, given the current public mood, politicians have little to gain and much to lose from supporting further enlargement.

But populist rejection of enlargement jeopardizes the most precious achievement of the European Union: stabilizing, reforming and democratizing its current and future member countries, as it has successfully done throughout its history.

The case against further enlargement is fuelled by a variety of misconceptions. First, enlargement and institutional reform function cumulatively, not exclusively. Prior integration processes happened because enlargement made them necessary. Maintaining the status quo is the biggest threat to institutional and social reform. Without the necessity to reform, the Union’s institutions and governments will have no incentive to change the current power structure. The concept of a “Social Europe” will lose most from this stalemate. Second, it isn’t wrong to demand a long and thorough integration process for the accessory countries, as long as it is not impossible for them to finally get in. An accession of Turkey in 15 years will leave plenty of time for reforms, but keeps the incentives to actually do so intact.

Social democracy does not need to outcompete Conservatives in anti-integration polemics if we can explain that the biggest threats for our job markets are not the accessory countries but a Union that remains blocked in its current neoliberal setting.