In These New Times

Cailean Bochanan

5th October, 2008

Mandelson is back, declaring Britain to be in “something approaching a national emergency”. That’s very diplomatic: in fact, it is bankrupt. Ever since the collapse of Northern Rock the government have been discreetly channeling public funds to the banks. That this process was nearing its limits was shown when Mervyn King, head of the Bank of England, threatened to resign. Brown in his desperation went to Washington to talk up the US bailout from which it appears British banks would benefit substantially. Paulson  tried to bounce the Europeans into a similar bailout of which, once again, Britain would be the beneficiary. This was scotched by Germany and has been dropped. Where else can Britain go, cap in hand?

We noted an intriguing statement by none other than Mandelson himself last week before his dramatic recall. He said:

“China, India and Middle Eastern countries should start to assume roles of leadership in talks on global economic issues and participate in finding solutions to the US crisis.”

Iran’s president Ahmadinejad had already hinted of something to similar effect in his speech at the UN. Now Mandelson it seems was picking up on this cue, a move which caused some expectation here at inthesenewtimes where we have already been arguing for  full integration into Europe as part of a multipolar resolution to the crisis.

A brief view of Mandelson’s CV shows why he may be uniquely disposed to shifting the direction of British politics. Long before becoming European Commisioner he had repeatedly stood up for membership of the Euro. Indeed, it was this which led to his falling out with the Murdoch press. An article in 2000 pointed out that:”Mr Mandelson’s increasingly pro-euro statements have irritated the passionately Eurosceptic Sun, as they have the Mail and the Telegraph.” It went on to claim prophetically that “we can be doubly sure that should he ever step out of line again, they will be eager to destroy him.” New Labour’s formal commitment to Europe was increasingly rendered irrelevant by its growing Atlanticism but Mandelson continue to be “off-message” writing in 2003 that we must be in the euro by 2007 and that the price of staying out is too great. Already out of cabinet  he was now exiled to Brussels, our Siberia, as Britain was already getting bogged down in its final, doomed imperial project.

And so, as the awful fate of Iceland , another off-shore financial centre, looms before us, what kind of solution could Mandelson be envisaging? In exchange for a complete turn around in British foreign policy, commitments to assist us to get out of this mess. No bailout of our banking system is conceivable: that would be to try to fill a bottomless pit. The banking system would have to be sanitised as part of a deal to bring us into the Euro on reasonable terms. This would in turn facilitate inward investment from China, Russia,India and the Middle East. Britain, after suffering a substantial drop in living standards would be recapitalised. Europe would no longer have to deal with our wrecking on the fringe and the way would be open for the rapprochement with Russia which Sarkozy has called for. China and Russia would see the de facto end of NATO.  The worst, the complete implosion of Britain, will have been avoided and a major step towards a multipolar world order taken.

In our view there is no other solution, but that doesn’t mean we can be confident of this scenario becoming reality. In fact, it looks like a long shot: the British oligarchy, intent merely on defending there ill-gotten gains and keeping out of the courts are set to wreck any such initiative. It is for this reason that the Euro option isn’t even discussed even by those who you might expect to champion it. Both the SNP and Liberal Democrats have spurned the opportunity to put this at the top of their agenda. How Mandelson would broach the issue is hard to see: it would almost certainly involve presenting a fait accompli after negotiations with our international partners. The coming months may bring some remarkable and unexpected developments.