Brown's former special adviser spoke on "muscular intergovernmentalism"—and its limitsby Stewart Wood / November 4, 2017 / Leave a comment
On 3rd November, Stewart Wood gave a talk at Hertford College, Oxford on Gordon Brown, for whom he used to work. You can read the full text of that talk below and watch it here. The lecture was part of a series on prime ministers and Europe since Thatcher. We will be posting more from the series in due course.
On 1st April 2010, five days before Gordon Brown called the 2010 election, he invited Angela Merkel for a private lunch at Chequers. It was ostensibly to discuss the next steps in Europe’s effort to recover from the Crash, the state of Europe’s banks & the Greek financial crisis. But it was actually a lunch to say goodbye. Everyone assumed we were about to lose power, and Gordon was about to leave No 10. It was never spoken of, but it didn’t need to be.
That day, Merkel had snubbed David Cameron, who would become prime minister six weeks later, by refusing to meet him during her visit to Britain. She was furious with Cameron for taking the Conservative Party out of the centre-right European Peoples Party grouping in the European parliament, in favour of a new group that would collect a ragbag of right-wing populist parties—and some more sinister right-wing authoritarian parties on the fringes of mainstream politics.
At lunch she told Gordon how angry with Cameron she was. How it would undermine British influence in Europe by removing the governing party from the main party grouping. Gordon nodded and said: “I’m afraid Angela that Cameron doesn’t understand how Europe works.”
I was at the lunch as Gordon’s special adviser covering European affairs. I’d worked with him in that role for a decade—first at the Treasury, then after 2007 in 10 Downing Street. When Gordon said those words, I remember asking ourselves if we passed that test, as we faced the prospect of the famous black door of No 10 opening to let us out for the last time. Did we understand how Europe worked? Did we understand Britain’s place in it?
I wasn’t sure that we did. And looking back a decade later, I’m still not sure. Maybe it’s because, as Madeleine Albright once said, “to understand Europe you have to be a genius, or French.” But it’s more than that. We shared many of the blind spots that plague Whitehall and the main parties’ leaderships’ approach to the European Union—on its institutions, its internal politics, the ties that bind its members beyond mere commerce.
“Everyone assumed we were about to lose power. It was never spoken of, but it didn’t need to be”
Yet Gordon Brown had strong convictions about the way the European Union had to change to adjust to an unprecedentedly interdependent world, and the kind of EU (and arguments for the EU) that would maintain the essential but fragile ties that connected the British people to the EU project. He was also convinced that his leadership during and after the extraordinary economic crisis from 2008 onwards could help navigate both Europe and the UK through choppy waters and to a better relationship.
There is a political tragedy at the heart of Gordon Brown’s time at the top of British politics. Having spent a decade working with Tony Blair to chart Labour’s return from the political wilderness, Gordon spent ten years at the Treasury waiting for a shot at the top job. He didn’t always wait patiently. But when his time came, his premiership only lasted three years, and took place during a time of momentous global economic crisis, with a domestic backdrop of political crisis around MPs expenses.
For a man who craved control so much, he ran a country at a time when control was more elusive than ever. It was a period of all hands to the pump. There was little time or political breathing space to enact a vision for reshaping Britain’s relationship with Europe. And compared to Margaret Thatcher or Tony Blair’s decades in power, there may be an understandable view that there is not that much to see in Gordon’s time as PM with regards to an evolving view of Europe.
But that would miss much that was important and distinctive. For one thing, Gordon is unusual in that during his time as Chancellor, he had a huge impact on our relationship with Europe—most notably through the 2003 decision not to join the euro. For another, the economic crash that engulfed us all, provided an opportunity for him to show economic and political leadership within the EU, and a taster of the kind of statecraft he thought was necessary to engineer a coordinated international response.
Gordon is a voracious and ferocious thinker, a reader and a debater like no other politician I have ever met. At 4am, we would receive the first quizzical emails of the day. At 2am into our inbox would drop the latest draft of a speech he would probably never give, that he miraculously produced himself during the course of an overpacked and stressful day, thinking through how to communicate an argument. Gordon wrote speeches to himself. Every day. To work out the argument, and to work out how to communicate it.
There was no respite with Gordon as your boss. It was exhausting. It took chunks out of us that are still missing. But, for all his faults, he was a prime minister that brought a brilliant intellect, immense energy and stamina, and a burning desire to understand change to Downing Street (both No 11 and No 10).
“Gordon is a voracious and ferocious thinker, a reader and a debater like no other politician I have ever met”
He brought that strategic mind to the question of Europe and Britain’s place within it. And what I want to do is assess his understanding of and approach towards the EU in three sections. First, I want to outline Gordon’s worldview and the place European affairs had within it. Second, I will look at the characteristics of how he engaged with Europe—intellectual, political and personal. Some successful, some less so. Third, I want to look at the strengths and limits of how Gordon saw the issue of Europe, in light of the unravelling of our country’s European affair in the past few years.
Let me start with Gordon’s worldview. He spent so much time thinking about how the world was changing. If you flew anywhere with Gordon, you kissed goodbye to small talk. Within minutes you would find yourself immersed in an interrogation about global trends, what you considered the great challenges of our time. He wanted to be a leader of consequence who faced up to the tectonic shifts in economic power and technology, and responded with a politics that shaped change in the direction of prosperity and social justice.
Gordon’s view of the UK’s relationship to the EU was seen through three lenses—economic, political and historical.
Firstly, the economic lens. The starting point for most of his views was the same: the unprecedented transformation of economic and social life caused by globalisation. For Gordon, the fundamental political fact of our age is interdependence between nations: brought about by a revolution in trade, capital mobility and technology; with repercussions not just in economic life, but in environmental, security, political and cultural spheres.
Interdependence is not a choice, but an inescapable fact. As Tony Blair put it in his 2005 Conference speech: “I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer. They’re not debating it in China and India. They are seizing its possibilities, in a way that will transform their lives and ours.”
Globalisation means that cooperation between nations has become as inescapable as the condition of interdependence. Partly because transnational problems require transnational solutions. Partly for risk-pooling reasons: as Gordon puts it in his book Britain: Leading Not Leaving, “building a shared future is our insurance policy against a risk-laden world.”
What is fascinating about Gordon’s case for the European Union is that it is not a case particularly based on values, history or affection. Nor is it a case for a particular kind of EU. At an economic level it is a case for a free trade zone. And at political level it is a case for international institutions that can produce a coordinated, cross-national response to globalisation. In this sense, Europe is simply the first bit of the rest of the world that you come to when you leave the UK. Its specialness is really its geographical position—its inescapability.
The case for the EU is that, flawed as it is, it is the only available structure for achieving continental cooperation. In Brown’s view, you don’t spend your time investing massive political capital in wholesale reform of international institutions or their founding treaties: you make do with what you have, and you make them work to deliver the goods.
The second lens through which Gordon viewed the EU was that of domestic politics. To understand New Labour, Blair and Brown, you have to understand the 18 years that came before Blair won the 1997 election. The emergence from the divisions of the 1980 Wembley Conference, the splintering of Labour into a new SDP, the disaster of the 1983 election—and the slow march back to credibility under Neil Kinnock. The loss of the 1992 election—in my view the most important and searing experience in the origins of New Labour—reinforced Blair & Brown’s determination to do what it took to restore Labour’s credibility.
The yardsticks for Labour credibility were shaped by the difficult years of the 1980s, and the ways in which Britain changed under Thatcher. Put simply, New Labour saw the challenge as reconciling Labour to a market economy at home, and to a global economy internationally. And central to that reconciliation of Labour with market liberalism was making Labour’s peace with a European Union that, by the mid-1990s, had become a single market project. For Brown, embracing the economic liberal case for the EU was not just fundamental to continued prosperity, but fundamental to reassuring Britain’s voters that Labour was safe for Britain again.
The third lens through which Gordon viewed Europe was a historical one. Gordon was determined to avoid the pitfalls of previous national choices about engagement with Europe that had done so much damage to Britain. The most fascinating section of Britain: Leading, Not Leaving is the section on Britain’s pre-history with the European Economic Community before joining in 1972. Brown is critical of Labour and Conservative imperial delusions in the postwar period. And he thinks there were many. The reluctance to move on from a Romantic but unrealistic attachment to the Commonwealth. The inability to see the economic necessity of engaging with Europe in the immediate aftermath of World War Two (Gordon accuses the Attlee Government, for example, of a “failure to distinguish between the temporary state of Europe—its debts, devastation and division—and its long-term prospects”). The Quixotic quest to make Britain into a third great power (whether through the Bevin’s Western Union idea, or the obsession with maintaining a role east of Suez at massive, unsustainable cost to Britain). And the wrong-headed view that there is a zero-sum relationship between the Special Relationship with the USA and closer relations with the EU—that Britain needed to choose between Brussels and Washington. That false choice, for Gordon, was one of the most damaging myths of all.
In contrast to these dead-ends, Brown speaks effusively about Harold MacMillan’s reassessment of Britain’s place in the world after Suez—in particular of the Cabinet Paper “The Position of the UK in World Affairs” commissioned in 1958. The paper includes a sentence that captures Gordon’s starting point on foreign policy perfectly: “In the 19th Century, we had the power to impose our will. Now we have to work largely through alliances & coalitions.”
Of course, Gordon is no dewy-eyed Europhile. At one point he quotes Churchill approvingly saying “We are with Europe, but not of it.” He also, somewhat amusingly, remarks: “We will always be distinctive, situated between mainland Europe and North America.” (I looked up the distances involved: it is 3,700 miles to the USA, and 23 miles to France.) But the dictates of facing up to interdependence, making his beloved Labour Party credible and electable again, and avoiding the catastrophic windmill-chasing of previous governments—all these considerations pointed him towards hard-headed practical engagement with Europe, combined with, rather than at the expense of, other international alliances.
So much for the strategic considerations shaping Gordon’s view of Europe. What were the hallmarks of how he dealt with EU affairs day to day?
Let’s start with a familiar refrain in Gordon’s thinking: the primacy of economics. Repeatedly during his time as Chancellor, Gordon converted huge national challenges into economic problems, and then provided an economic rationale to justify a course of action. He did it on renewing the NHS through the Wanless Report. He did it on climate change by setting up the Stern Report on the economic impact if the world took no action. He did it on immigration—ultimately less successfully—by justifying larger numbers of foreigners in Britain in terms of their economic impact. It is a version of what the political scientist Bill Riker calls “heresthetics”: the changing of a frame of debate to win a political argument with the public.
“For Gordon, the fundamental political fact of our age is interdependence between nations”
He did this for a combination of reasons: because he believed the way to the British public’s heart was hard-headed economic pragmatism. But also, let’s be honest, because as Chancellor it put him in the box-seat in political and policy terms.
Europe was no different for Gordon. He was convinced that the path to UK support for and engagement with Europe is built on economics. Again, MacMillan is the pioneer in Gordon’s lookback at 70 years of postwar engagement with Europe. His speech on 31st July 1961 recommending Britain applies for membership of the EEC set the pattern, in Brown’s view, for how to make a pro-European argument to Britain, focusing overwhelmingly as it does on the positive investment, trade and growth consequences of joining.
The economic benefit test also served to distinguish between European projects that should be supported and those that should be rejected. The famous Five Tests, assembled in the back of a taxi, was a clever way of marginalising the symbolic, political and diplomatic arguments for the Euro, in favour of the economic arguments. And the disastrous flirtation with a constitutional treaty for the EU during the Noughties conspicuously failed this test in Gordon’s view. He regarded it as a damaging, hubristic diversion, failing to learn the lesson from Maastricht, unable to appeal to the public on any economic added-value rationale. Gordon remained extremely detached from the constitutional treaty debacle—infuriatingly for Tony’s No 10 at the time—and was right to worry that it was a project that alienated people from its elites, with no public justification. And when Tony Blair decided that he would offer a referendum on the outcome of the treaty, Gordon thought it was a huge political mistake—and a deviation from the tried and trusted formula established by MacMillan back in 1961.
Alongside a relentless focus on the economic value-added sat Gordon’s belief in what I call “muscular intergovernmentalism.” His overwhelming focus in the EU was on the Council, and even more narrowly on bilateralism and summitry between the Big Six (the UK, Germany, France, Italy, Spain and the president of the commission). He had no time for the European parliament, nor for the commission beyond the president himself as an ersatz head of state. For Gordon, the EU working well meant the Big six agreeing something, and driving it forward. The institutional interstices of the parliament, the court or any other part of the EU landscape was for others to worry about.
In Britain: Leading not Leaving, Gordon refers to this vision of how the EU should work as “a United Europe of States, not a United States of Europe.”
This “muscular intergovernmentalism” was coupled with a heroic faith in shuttle diplomacy—his own shuttle diplomacy—between the heads of government of countries across Europe (and in the case of the Crash, across the world). His style was to work out the answer to a problem, and then present fellow leaders with the solution as a fait accompli, relying on the brute force of reason to get them to agree. It was a process he saw as the only way for internationalism to work: the accumulation of a coalition behind his grand plan, assembled by him talking personally to leaders.
It baffled some leaders, who started meetings with Gordon under the mistaken apprehension that they would be disccsions and exchanges of views, only to find that Gordon had in best Blue Peter style prepared the answer earlier, and wanted his interlocutor to agree it as a way forward. But it was a process that could produce results. Indeed I think one of the reasons that Gordon had such faith with is because early on in his days as Chancellor, he scored a spectacular success on the issue of resisting corporate tax harmonisation across Europe.
In 1999 the UK was facing the near-certainty of being totally isolated in opposition to the commission proposal for a harmonised corporate tax rate across Europe, partly to reduce avoidance problems. Gordon responded by arguing that harmonised taxes would lead to large outflows from the EU that would hurt everyone, and proposed instead a new policy to combat tax avoidance based on exchange of tax information between jurisdictions inside and adjacent to the EU. With Gordon’s muscular intergovernmental shuttle diplomacy in overdrive, a majority of 14 to 1 against the UK on harmonisation became a unanimous decision in favour of the tax transparency approach.
Gordon thought of this as his greatest EU-diplomatic triumph at the Treasury. He provides an extended discussion of it in Leading not Leaving, and cites it as a model for how to achieve the coordination needed to manage interdependence more generally. It raises an interesting issue about path-dependence in the way leaders see problems—the precedent set by early negotiating successes in shaping their view of subsequent challenges they face. Here is a more recent example. Theresa May’s public remarks on a sector-by-sector “cherry-picking” approach to Brexit negotiations clearly owe a lot to what she saw as her great triumph in EU negotiations when at the Home Office—over the cherry-picking of opt-ins on Justice and Home Affairs issues once the wholesale JHA opt-out came into effect in 2014. Her conception of how to negotiate Brexit was shaped by that success, just as Gordon’s muscular intergovernmentalism was shaped by his success on corporate tax rates.
Gordon’s shuttle diplomacy was extraordinarily vigorous. There was lots of shuttling. But it wasn’t that diplomatic. He was a politician who fundamentally believed the world is propelled by interests, not by relationships. He was totally uninterested in chemistry. Relationships were, to use a Marxist term, epiphenomenal. If interests collided or could be aligned, you could do a deal. It is a worldview that made him, shall we say, unpersuaded of the value added by the Foreign Office, which with some notable exceptions he saw as a department more concerned with relationship management than with delivering government policy.
His indifference to relationship cultivation led to some interesting moments. On day three of being prime minister we flew to Berlin for dinner with Merkel, to make a point that Gordon would be taking the EU, and the most powerful leader within it, seriously. But despite the fact the whole point of the dinner was symbolic and relationship-cultivating, Gordon got impatient at the lack of substance on the agenda for the dinner as we were coming in to land in Berlin. He asked a senior Foreign Office doyen on the plane, irritatedly, “What exactly is the point of this dinner?” The man from the FCO replied: “It’s what we call a getting-to-know-you dinner, prime minister.” Gordon replied with an expression full of consternation and anger. He just didn’t do getting to know you dinners. There wasn’t time.
On another occasion, Berlusconi had come to London for a private lunch. During which the Italian PM spent an animated ten minutes talking about Roman Abramovich’s new 75-foot yacht, aboard which he, Abramovich and Putin had just spent a lovely weekend. At the end of an effusive description of the vessel, Berlusconi paused and asked: “Have you been on Abramovich’s yacht yet, Gordon?.” “Er no, not yet,” Gordon replied. Yachts are something else Gordon doesn’t do. Bunga bunga had met the Son of the Manse.
Economics, intergovernmentalism, interests not relationships: these were the characteristics of his approach to all matters European. As a matter of political tactics, Gordon saw most EU affairs through the lens of domestic politics. The vast majority of Council business—first in ECOFIN when he was chancellor, then European Council business when he was prime minister—didn’t excite his interest. The point of a visit to the council was to show people back home that Britain was winning an argument, or a fight. And sometimes that might mean manufacturing a fight.
“Gordon just didn’t do getting to know you dinners. There wasn’t time”
Let me describe for you a not untypical sequence in the run-up to an ECOFIN meeting when Gordon was Chancellor. On the Friday before a Tuesday morning council, Gordon would call us in and ask what the main item of business for ECOFIN was. Not atypically it would be final agreement on a directive in some niche part of the financial services industry, discussed for months if not years, and now agreed between officials after tortuous discussion. Over the weekend, financial journalists would be told that Gordon was fighting for the future of the City of London. On Tuesday, we would awake to stories about Brown going into the lions den in Brussels. At the end of ECOFIN, Gordon would march straight into the press conference and proclaim victory, for a deal that had been sorted out between officials weeks earlier.
Clever and perhaps just a bit cynical politics, you might think. Yes, but it also reflected a serious part of Gordon’s view about sustaining a pro-European Britain: that the British electorate needed to feel that Britain was defending its corner, winning victories, fending off regulation that would undermine what was distinctive and successful about our economy. Maintaining Britain’s commitment to the EU could only be done with economics, with wins, by what he called a “pick and mix” approach to European engagement that said no to many integration projects (like Schengen or the euro) and sought specific carve-outs. And also by adopting an approach to negotiations that hugged the slightly Eurosceptic end of the pro-European consensus. Ultimately, of course, the positioning of both Labour and Tory governments at the sceptical end of pro-Europeanism came back to haunt the pro-European case in the referendum. When politicians of both parties who have been saying for years that they are fighting hard for Britain against the Brussels madness then turn around and say Brussels is a good thing, the public can be forgiven for being unconvinced.
This also raises a fascinating paradox about the kind of pro-European social democrat that Gordon was. Despite the fact that the great achievements of European social democracy, the most successful combination of prosperity, equality and social justice, were achieved in northern European countries, he had no particular cultural connection to or intellectual interest in the political history of post-war Europe. He felt much more affinity with the United States than with continental Europe. And he felt more affinity with the US Democrats—its key figures, its history, its language and politics—than with any centre-left party in the EU. So when Blair and Brown looked to develop progressive policies for transitioning people from welfare into work in the 1990s, it wasn’t Copenhagen or Stockholm that they visited, but Wisconsin.
Working as Gordon’s political Sherpa to the Party of European Socialists grouping, I have to admit I often found this frustrating—not least because centre-left leaders revered him as a political heavyweight. But looking back, I see the logic of looking across the Atlantic rather than across the Channel with more sympathy. Because Gordon was aware of the different political-cultural context of Anglo-American democracy and Anglo-Saxon capitalism. His love of the US Democrats was emotional, but it was also an affinity with a party who like Labour were trying to achieve progressive change in a liberal market economy that made it difficult to tack left.
So overall, how successful was his approach to EU affairs ? As chancellor, very successful. The Treasury used qualified majority voting to serve the interest of UK business and in particular the UK financial sector incredibly effectively. The absence of the veto over most economic matters (apart from tax and welfare) was neutralised as a political problem, in the short term, by the sharp-edged, aggressive muscular intergovernmentalism that he pursued.
It was also a success on two issues in particular for which Gordon will always be remembered: the decision not to join the euro in 2003, and his response to the Crash in 2008.
Gordon was not always opposed to the euro. Prior to 1997 he spoke in positive terms about the possibility of Britain joining. A story knocked around in Team Brown that in February 1997, before Blair became Prime Minister, Peter Mandelson called Gordon from a radio station in the USA, saying that he was about to go on radio, and wanted for pre-election tactical reasons to rule out joining the euro for at least the first term of a Labour government. Gordon said no, that it should not be ruled out—that we should retain flexibility.
“Gordon was not always opposed to the euro. Prior to 1997 he spoke in positive terms about the possibility of Britain joining”
So what changed? Partly it was politics. Gordon’s first act as Chancellor was to set up independence for the Bank of England over interest rate setting. Abandoning what was his greatest early achievement was not an attractive prospect. But working on the euro decision in the Treasury (one of my first big jobs there having joined in 2001), I was struck by three characteristics of how we approached it: the phenomenal secrecy that shrouded the work we did; the comprehensive, rigorous economics that formed the basis for the verdicts we gave; and the brilliance of Gordon’s dovetailing of economic arguments with political positioning. It was Gordon at his best.
And one main reason for why Gordon and the Treasury agreed that joining the euro would be economically inadvisable was that they thought it wouldn’t work well. Gordon genuinely thought it was not an optimal currency area. That countries would free ride on fiscal policy, and that its design militated against counter-cyclical policy when it would be most needed. And that the UK economy, with its dependence on financial services, and its unique and dominant housing market, could not be governed properly by the same interest rate decisions that would be needed in Madrid, Berlin, Rome or Athens. Gordon believed the euro would not work, and would not work for Britain economically. And if it hurt our economy, it would be a disaster for Britain’s relationship with the EU.
You’d be hard pushed to find anyone—economist, politician or voter—who honestly thinks now that judgement call was wrong. And yet right at the end of the process, in March 2003, we suddenly got nervous that Tony Blair would intervene and overrule the economic assessment. Looking back this nervousness was overstated. But it was a fraught time in the Blair-Brown relationship, with differences over Iraq, the euro and tuition fees policy combining to make life tricky between the two. One day on the eve of the start of the Iraq War, Donald Rumsfeld gave a press conference in which he hinted that Tony Blair may decide not to intervene alongside the US in military action in Iraq. The next morning, Ed Balls, Gordon’s chief adviser—and incidentally the most talented person I ever worked with in politics—came up to me in the corridor and said: “Imagine this scenario: Tony decides not to go into Iraq with the Americans. He becomes the darling of Europe for siding with France and Germany and not the US. On the back of this popularity, Blair rips up the Five Tests and steamrollers us into the Euro. What do you think?” I said I thought it was possible but unlikely. “So do I,” Ed said. “I think I do, anyway.”
If one great success was taking control of the euro assessment process, his other great moment came in the face of the economic Crash in 2008. The events of 2nd October to 9th October 2008 are etched in my mind. It was a period of turmoil. At one point I was in a meeting where someone said it was not out of the question that soldiers might have to be brought onto the streets to stop a mass run on the banks. Gordon knew that the only response that would avert a continuing, cataclysmic slide in the markets was a coordinated global response. But it looked impossible to achieve that agreement. Each government seemed to be have a different favoured response. The Bush administration opted for a TARP bill, buying up toxic assets; while over that weekend the Irish government announced they would guarantee bank deposits (and the Germans hinted they may do the same).
Gordon’s approach was to get international backing for an approach that combined recapitalisation with guarantees for interbank lending. An impromptu summit in Paris called by President Sarkozy on 4th October didn’t generate an agreement. On Tuesday, officials went into the Cabinet Room throughout the day, as Gordon prepared for…