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Weekly opinion articles interpreting current political and social developments in Europe and the wider world from a progressive perspective
On 17 February, the High Representative Josep Borrell and the European Commission released a Joint Communication on strengthening the EU’s contribution to rules-based multilateralism: on first sight a document in the continuity of previous ones, but also one that reveals important changes in how the EU sees itself on the international stage.
One might question the necessity of a new document to reiterate the EU’s commitment to multilateralism, since this has been enshrined as the guiding principle of its foreign and security policy in all major strategic documents of the last two decades. Yet, there are two good reasons why the Union should renew and qualify its multilateral approach to international affairs. The first, and more pressing one, is the need for coordinated action at global level to face the Covid-19 challenge and its consequences, be it sanitary, economic and social threats to the resilience of our societies. The second is the opportunity to re-join forces at the transatlantic level after the disruptive unilateral moment imposed by the Trump administration, and the return of the US to multilateral fora – from WHO to the Paris Agreement – initiated by President Biden.
Indeed, it is interesting to note that once again the EU’s assertiveness in promoting multilateralism comes as a reaction to a phase of its denial by its transatlantic ally. This had already been the case in 2003, when the then High Representative Javier Solana published the European Security Strategy, and the Commission its communication on the choice of multilateralism: two pivotal strategic documents that marked Europe’s distance from the unilateral US invasion of Iraq by the Bush administration.
Almost 20 years later, the EU chooses to do the same, with a similar aspiration to revitalise both multilateralism and its own role on the world stage. And in fact, the Joint Communication explicitly underlines the compatibility of the EU’s strategic priorities and objectives with a multilateral stance, “as the principles that underlie the EU are the same of those of the United Nations”. But how do the content and the spirit of this post-Covid and post-Trump communication on multilateralism differ from previous documents?
The first twist relates to the ‘why’ the EU should continue to embrace multilateralism. While the Communication reaffirms the EU’s engagement in promoting peace and security, together with fundamental rights, universal values and international law, it stresses that “these efforts go hand-in-hand with a more interests-based approach”. In line with, and taking to the extreme, the “principled pragmatism” in international affairs proposed by the 2016 EU Global Strategy, the Communication advocates for a more assertive EU that uses multilateralism as a means to achieve concrete policy priorities. With it, the EU seems to embrace a more realistic and less normative stance in its external action, thus acknowledging the inescapable emergence of a multipolar world, the transactional nature of the global system and the prevalence of power politics. This also adheres to the belief that the EU needs to become more geopolitical, as EC President von der Leyen has pledged in her vision of the mandate of the European Commission – even though this, for the moment, is still more an aspiration than a reality.
The next turn concerns the ‘how’ the EU should pursue its multilateral agenda. Crucial attention is placed on “extending international norms, standards and cooperation” on issues ranging from rule of law to international taxation, from digital cooperation to consumer protection to environmental degradation. It is intended as a way to cope with the proliferation of powerful norm-shapers that operate outside institutionalised channels, like digital platforms and multinationals, thus requiring an “active regulatory cooperation” at global level and “more ambitious standards and rules” to tackle disinformation, digital finance and internet governance.
It is also stated that the EU should work to “reform what needs to change”. Interestingly, a well-deserved attention is devoted to the strengthening of institutions such as the WHO and the WTO, but it is not accompanied by a similar focus on the UN Security Council, for which the Communication talks about a general commitment to a comprehensive reform. It seems that, after the repeated unsuccessful attempts of the past, the EU has given up on the need to equip the global order with a functioning, legitimising peace and security body. And yet, there are a number of reform proposals that could be promoted by the EU which do not require a hard-won amendment of the UN Charter and could become flagship initiatives to enhance its role within the UN, as suggested by a recent FEPS report drafted by the Istituto Affari Internazionali (IAI).
Finally, the Communication diverges on the past approach on the ‘what’ in two main respects. It insists much more than previous documents on the need to focus on the internal “coherence, unity and solidarity” of the EU as a condition for a more effective external action, thus recognising the unprecedented challenges impacting the European project and the increased urgency of an enhanced coordination among institutions and member states. Furthermore, it proposes a sort of ‘modular multilateralism’, centred on a stronger cooperation with like-minded partners – first and foremost the US – to defend universal principles and rules, and complemented by issue-based partnerships with interested actors on transnational issues such as climate change, education, and technology.
Overall, the Joint Communication presents in an honest way the gaps and opportunities in a world in transition, “more unpredictable and unequal”, and dominated by the competition of “visions and agendas”. It offers a candid assessment of the EU’s fragility and puts forward some solid proposals to implement its commitment to multilateralism but does not go deep enough into the analysis of its potentialities, in particular on the reform of the UN. The current circumstances impose a healthy dose of realism but navigating the future will require an additional injection of dynamism and ambition.
The year of 2020 brought us a pandemic and the most severe economic shock of our lives. Notwithstanding, while facing both challenges, member states were still able to come together and find joint ways to address the health crisis and to deliver on a recovery package, designed to relaunch our economy. The European Union showed, even to its fiercest deterrents, that it can act as a whole and provide results that work for the common good.
This should motivate us to consider other areas in which cooperation would be equally beneficial but in which, for the moment, it remains suboptimal. Here, the field of taxation emerges as a prime candidate.
No decisive action was taken to achieve tax justice
Even after being confronted with several tax scandals, such as the Panama Papers, LuxLeaks or the Paradise Papers, no decisive action was taken to achieve tax justice. Yet, it is clear that the European Union’s current ruleset is outdated and unable to deal with tax evasion and tax avoidance schemes. Tax planning consultants and wealth managers are able to make profit by exploiting loopholes and circumventing the law.
In the EU, for instance, even if value is being created in a particular country, currently there is no effective way to prevent profits from being shifted and booked in low tax jurisdictions. This regulatory environment allows multinational enterprises, particularly those operating in the digital economy, to shop around for the lowest tax rate, thus undermining national tax policies and leaving SMEs and workers to foot the bill.
Furthermore, countries are also pressured to engage in a race to the bottom to merely retain the tax revenue that already belongs to them. This is not just a matter of opinion, it is a fact. In the European Union, corporate tax rates decreased from 35 per cent in 1995 to an estimated 21.4 per cent in 2020. Unfortunately, not even the clearest evidence is enough to satisfy the market religion of liberals and conservatives, both of which have repeatedly opposed the S&D Group’s proposal to have a minimum effective corporate tax rate of 18 per cent at the EU level. Desperate tax competition is not a solution and it has been driving the welfare state into stress and fiscal austerity.
Desperate tax competition has been driving the welfare state into stress and fiscal austerity
Thankfully, there is a silver lining. Public opinion is more aware than ever about this issue and politicians are being pressured into fixing the loopholes that have been fueling this unbalanced system. The OECD launched the BEPS 2.0 project (Base Erosion and Profit Shifting), which seeks to reach a broad agreement on an international tax reform. The initiative is divided into two pillars, the first is tailored to address challenges arising from digitalisation and the modern economy; the second seeks to establish a global minimum effective level of taxation. This is an historic opportunity to make globalisation work for the many. The European Union should be committed to the OECD negotiations, even more so in the light of the recent leadership change at the head of our historic ally, the United States.
Nevertheless, we must be ready to pursue an alternative in case the global negotiations are unsuccessful or underwhelming. The European Commission has already shown ambition to pursue common solutions for all member states. That includes the current consultation on a digital levy, but also previous initiatives, particularly the Common Consolidated Corporate Tax Base (CCCTB), which seeks to establish a common set of rules for corporate taxation in the single market. Evidently, there is a key obstacle for moving forward at the EU level: it requires us to face unanimity, which has consistently reduced our ambition when it comes to promoting tax justice.
Until now, the discussion to move past unanimity and to deliberate on tax matters through qualified majority voting has been unfruitful. Many are quick to uphold the banner of sovereignty as a shield against using the community method, but equally quick to forget that there is no such thing as sovereignty when tax policies are being forced upon our countries by multinational corporations. It is not admissible that families, working people and the middle class are asked, once again, to make sacrifices, while the largest corporations enjoy even more profits, but remain undertaxed. As we look to finance the recovery, fixing the corporate tax landscape must become part of the equation.
As we look to finance the recovery, fixing the corporate tax landscape must become part of the equation
This is a window of opportunity – a small one – to make lasting positive changes to the tax systems in Europe, thus ensuring more equality, sustainability and redistribution of wealth: green taxes that include the polluter pays principle and favour a just transition towards a sustainable economy; a financial transactions tax to curb speculation and to make sure the financial sector pays its fair share; taxes on extreme wealth accumulation, which could restore the quality of our public services and contribute to debt sustainability. Such new taxes could dramatically boost the fiscal firepower of our countries, finance the recovery and ensure a relief for workers and SMEs.
We should not refrain from debating how to address the expectations of citizens when it comes to achieving tax justice. As the “Conference on the Future of Europe” is approaching, a profound reflexion on tax justice, and on the ways to attain it, should be on the table. This is how we achieve true tax justice. This is how we leave no one behind.
With more than 25,000 troops patrolling, downtown Washington today looks like the Green Zone in Baghdad, as Joe Biden is determined to have a normal inauguration. But the extraordinary security measures that have made the capital into an armed camp are a vivid reminder that America is far from normal.
As Biden takes office, all of the urgent questions boil down to these two: Will he be able to enact the important parts of his programme? And will the United States be able to contain and weaken a burgeoning popular fascist movement that finally got taken seriously after the attempted insurrection of 6 January?
The two questions are related. Biden can begin to reduce the support for Donald Trump’s brand of neo-fascism only if he can demonstrate to white working class voters that the Democratic programme serves their interests better than the Republican one. Yet the appeal of Trump is not just about economic issues; it’s also about racial resentments. And even as Biden tries to link the interests of the Black and white working classes with economic benefits, he will also be promoting racial justice that will be opposed by Trump’s base.
Let us begin with the first question. Can Biden successfully govern? Here there is some hope.
Thanks to the two surprising Democratic victories in the Georgia special Senate elections, the Democrats will have a bare majority in both Houses of Congress. That means, in principle at least, that they can legislate. But the Senate rules effectively require a supermajority of 60 votes (out of 100) on most legislation, thanks to the filibuster rule. The exception is the budget, which usually occurs very early in the session. So Biden will very likely be able to enact most of his proposed $1.9 trillion relief package as part of the budget.
That legislation includes many provisions that are easy to grasp and that will be popular even among Trump voters. The most vivid of these is a provision increasing the previously enacted emergency payment of $600 to every adult of moderate income to $2,000. The Republican opposition to this level of aid is widely cited as a key reason for their loss of the Georgia Senate seats.
Other popular provisions of Biden’s legislation include liberalisation of subsidies for good health insurance, at time when millions of American workers have lost their health coverage along with their jobs. The proposal also dramatically increases financing for production and distribution of Covid vaccines.
The hope is that these successes will increase Biden’s popularity, and give him the political leverage to win at least some Republican Senate support for other measures that will require 60 votes, such as his proposal to spend $3 trillion over ten years on green infrastructure investment. There are several Republican senators facing close election contests in 2022, and some may feel the need to support measures that provide practical help to their constituents.
Biden is also helped by the schism in the Republican Party. Trump supporters are planning primary election challenges against the 70 Republican members of the House who refused to join colleagues in the abortive effort to overturn the election results. Many of these House members are in swing seats, which they won in 2020 by only a few percentage points. If far-right challenges succeed in ousting these relatively moderate Republicans, those seats will be more vulnerable to Democratic wins in 2022.
These factors, taken together, increase the odds that Biden may be able to defy the usual pattern of the party of a newly elected president losing Congressional seats in the first mid-term election. Biden could benefit from two important tailwinds. The pandemic will be over by the fall of 2022, and the economy will be in recovery. He is well positioned in one other respect. The Democratic Party is famously fractious. But in 2021, it is more unified than it has been for a very long time.
During the campaign, Biden benefited from the urgent need to save American democracy from Trump. Many Democrats to Biden’s left supported him with enthusiasm, despite concerns that he was from the neoliberal Clinton-Obama wing of the party. But after Biden’s victory, progressives were pleasantly surprised by his cabinet, most of whose leading members turned out to be more progressive than expected. In part, Biden’s cabinet reflects the crisis, which will require him to be more like Roosevelt than like Clinton. In part it reflects Biden’s effort to repay and extend the progressive loyalty to him in the campaign.
Thus, the optimistic scenario: Democratic unity holds; Republicans continue to fragment; Biden governs successfully, and Democrats pick up House and Senate seats in 2022, and they even peel off some Trump voters based on the strength of the economy.
A less optimistic scenario would have Republicans divided over loyalty to Trump and the far right, but all too unified when it comes to blocking Biden’s programme. We will soon learn which obtains.
But the second question is far more vexing. It is one thing to topple an aspiring tyrant; it is another to deal with authoritarian and even fascist views that live on in perhaps one third of the electorate.
Thanks to legislation rushed through Congress after the attacks of 11 September 2001, the so-called USA Patriot Act, America’s government domestic intelligence and law enforcement agencies now have powers close to those of a police state. Liberals who detested that law when it was enacted are now grateful that it is there to be deployed against far-right private militias. The problem, however, is that it is easier to disarm and prosecute outright insurrectionists than to change attitudes. It is an outrage, but it is not a crime, for one third of Americans to view Trump as a truth-teller and a saviour.
In a recent essay for the American Prospect, I quoted a famous 1953 poem by Bertolt Brecht, who chose to live in the DDR but resented the regime’s clumsy bureaucratic conformism. After a party official warned that the party was disappointed with the people for their lack of enthusiasm for the official programme, Brecht wrote, perhaps the government should dissolve the people and elect a new one. In a doubly ironic twist on one of Germany’s most celebrated ironists, the problem in America today, as in East Germany under communism, is that you cannot fire the people. You have to win them over.
Every society has its thugs. What Trump had in common with Hitler was to valorise thuggery and validate Big Lies. For a time, the thugs governed.
In the German case, it took defeat in a war plus half a century of agonising self-reflection to tame fascism. The United States narrowly ousted Trump in an election, but faces no defeat in a war; and our self-reflection has barely begun. Indeed, the racist, slaveholding Confederacy was defeated militarily by the Union army in 1865 and was occupied for a time. But that did not defeat racism.
Even if Biden succeeds in governing, and even if he makes progress in repairing the damage to democracy, ridding the country of the hate in the hearts of too many Americans will be a longer-term project.
Europe must bring the power of the large, often American, online platforms under democratic control. That is the promise made by EU commissioners Margrethe Vestager and Thierry Breton in their Digital Services and Markets Acts published on 15 December. Those proposals do not go as far as the announcement by the US competition authority to reverse the takeover of WhatsApp and Instagram by Facebook. The liberal Commissioners may leave an imprint of their teeth, but they did not dare to bite through.
The last time Europe wrote rules for digital services was back in 2000 – 20 years ago. At that time, Zuckerberg was the captain of his fencing team in high school and the only digital service he used was the music sharing platform Napster. Teenagers nowadays are fully online, and they often fall into the hands of a few market players at an early age. 70 percent of the Dutch primary schools use hardware and software from Google. Nine out of 10 mobile phone owners worldwide use Google’s Android operating system and today’s average 30-year-old is a daily user of Facebook’s WhatsApp and Instagram and Google Search, Chrome and YouTube.
And the average person will not shed a tear for that: many services do not cost any money and work very well (together). Yet these services are not free of charge. Google, Apple, Facebook and Microsoft are masters in collecting individual data of website visits, search results, most visited places, mood and medical conditions. All these are personal data that is very precious to corporate interests.
Personal data gives big tech the power to influence our behaviour and to bind us to their services. They determine which search results or timeline we see and use this to keep our attention as long as possible. This opens the door for fake news, conspiracy theories, hate speech and the like, and gives them the opportunity to sell advertisements. Facebook and Google collect 99 and 86 percent respectively of all their turnover from advertising sales. These two companies are jointly responsible for half of all online advertisements. As a result, the free press is threatened.
By reading this article on the website of FEPS, about 50 advertising intermediaries registered you as a Social-Democrat and you’ll receive the corresponding advertisements, even if you’re shopping clothing online or visit football websites. 86 per cent of all websites have hidden trackers of Google, also applying to newspapers and other publishers, who are depending on the income of advertising. They see their incomes fall, since they no longer have the exclusive right to display advertising to their readers.
The power over personal data translates into the power of money: small emerging competitors are bought up or if necessary or squeezed out of the market. In recent years, Google has bought over 200 companies and made life difficult for Yelp, for example, the online platform for local businesses that did not want to be taken over.
There are several other reasons for the legislative proposals by Commissioners Vestager and Breton as well and the proposals contain many good points. For example, there will be greater transparency about personalised advertisements and algorithms, behavioural obligations for the largest platforms to share data with competitors and bans on self-preferencing in search results, for example, but also significantly higher fines. However, it is very doubtful whether the proposals are sufficient to deliver on Vestager´s and Breton’s promise to bring big tech under democratic control, for at least two reasons.
Firstly, the possibilities of removing or squeezing (still small) competitors out of the market remain. The US competition authority is choosing, not without reason, to reverse the takeover of WhatsApp and Instagram by Facebook. The fact that this will be a tough legal battle and that the outcome is still uncertain does not detract from the way of thinking and intervention. By early January at the latest, the European Commission, under Vestager’s responsibility, will have to decide on Google’s takeover of the fitness and activity tracker company Fitbit. This decision is perhaps even more decisive than the EC’s legislative proposals.
Secondly, the revenue model of data hoarding and personalised advertising remains untouched. Studies show that non-personalised advertising is much more effective and efficient. The Dutch national broadcaster Ster is a textbook example of innovation with non-personalised advertisements, who saw a rise in revenue and satisfaction after switching to this system. As long as personal data can continue to be used for advertisements, consumers, advertisers and publishers are doomed. By harming the revenue model and by restricting, if not banning, personalised advertisements, the balance on the digital advertising market and many other markets can be restored.
If we wait too long to act, an Orwellian society in which every movement is tracked is the only prospect we have. Behavioural and transparency requirements are very important but is not likely to bring Big Tech under democratic control. Let us not wait another 20 years to get to the heart of the problem but let us put an end to business models based on our personal data. The solutions are there, but it is a question of biting through!