The consequences of the Ukraine conflict for Britain

HANNAH SELL assesses what impact the war in Ukraine will have for the already tenuous position of British capitalism internationally and domestically, faced with the prospect of economic recession and political representatives viewed with historic levels of distrust.

While the invasion of Ukraine by Putin’s regime has been watched in horror by working-class people in Britain as in other countries, the UK prime minister Boris Johnson has led the global charge by capitalist politicians to cynically use these events to try and consolidate his position. Before the invasion Johnson’s leadership of the Conservative Party was hanging by a thread as the Partygate revelations piled up. He has successfully used Ukraine to gain a little breathing space, but none of the problems facing Johnson, his party, or British capitalism have been solved. 

Nor, other than the short term distraction they have so far provided, will events in Ukraine assist Johnson. His crass comparison between the Ukrainian resistance and the vote for Brexit is just one more example of his populist approach, where he is often prepared to disregard the interests of British capitalism, prioritising instead shoring up his own short-term base. In an increasingly fractious world, with a war taking place less than two thousand miles from Britain, the majority of the UK’s capitalist class would clearly rather have a more reliable representative than Johnson.  Many would prefer the Labour leader Sir Keir Starmer, who has used the war to once again demonstrate what an eminently safe pair of hands he is for British capitalism.

There is currently a concerted attempt to present the NATO imperialist powers as a united block against Putin’s gangster-capitalist regime, but in reality significant tensions between them remain. While it is still the world’s single strongest power, there are limits to how far declining US imperialism is able to unite the other NATO powers behind it. During the current temporary, ‘papering over the cracks’ period of apparent NATO unity, Johnson’s government has, overall, managed to avoid any major blunders that cause short-term damage to the interests of British capitalism. Nonetheless, Johnson has consciously aligned himself with Estonia, Poland and the other countries who are pushing hardest for increased NATO forces in Eastern Europe.

Johnson’s unreliability as a representative of British capitalism could well come to the fore when it comes to negotiating terms for a cessation of all-out conflict in the Ukraine, where there are likely to be significant differences between the US on the one hand and Germany, as the major EU power, on the other. Strains will also increase within the EU. They are already present as shown by the spat between the French president Emmanuel Macron and the Polish prime minister Mateusz Morawiecki over Macron’s willingness to talk to Putin, with Macron attacking Morawiecki as “a far-right anti-Semite who bans LBGBT people”. The possibility of Trump, or a Trumpite candidate, winning the next US presidential election in 2024 would further destabilise the world situation.

The war has also increased the problems facing the UK economy. Globally capitalism is facing the prospect of stagflation – slowing growth combined with rising inflation – with 2022 likely to be, as the Financial Times put it, “a fraught period of geopolitical realignments, persistent supply disruptions and financial market volatility, all against the background of surging inflationary pressures and limited room for policy manoeuvre”. As they comment much of this was developing before the invasion of Ukraine, but has been enormously exacerbated by it.  For the British economy stagflation is already here. In March consumer prices increased by the highest rate since 1992. By contrast, GDP growth slowed to just 0.1 per cent in February, and real wages, adjusted for inflation, contracted by 1%.

As explained in the February edition of Socialism Today, in the article Where is Britain Heading? (No.255), the UK is in general among the most vulnerable of the major powers to the coming economic storms. A period of stagnation is likely to be followed not by a phase of growth but by a new recession, perhaps in short order. Thomas Pugh, economist at the consultancy RSM UK, is one of several capitalist economists to predict that “with growth forecast to average just 0.1% in each of the remaining three quarters of this year, it would not take much of a rise in oil prices or a disruption in supply chains to push the UK into recession”.

The ‘London Laundromat’

It is true that Britain has limited trade with Russia. Less than 4% of Britain’s gas supply is from Russia, with around 50% coming from the North Sea. This has not, of course, prevented domestic prices soaring as high here as in Germany, creating huge profits for the energy companies.  Russia also only accounts for only 1.3% of the UK’s goods trade. Nonetheless the global surge in commodity prices affects British capitalism hard. Britain’s goods trade deficit was £156 billion in 2021, higher than any other G7 economy.

In addition there are specific aspects to the Ukraine crisis which effect British capitalism more than other major powers. Over the last twenty years British capitalism has sucked in huge sums of Russian money. The ‘London Laundromat’ has been the favoured destination for ‘cleaning up’ the cash of oligarchs from Russian and other ex-Soviet countries (including Ukraine). Transparency International has identified £1.5bn worth of UK property — nearly 150 land titles — bought by Russians who have been accused of links to the Kremlin or corruption. Sanctions have hit only a small minority of these assets; two-thirds of them are held by companies based in tax havens, whose owners are disguised. Nor is it just a question of property. Since 2005 the City of London has presided over almost 90 equity and debt capital market deals involving Russian companies, raising around $34 billion.

In March 2018, in the wake of the Skripal poisoning, the then leader of the Labour Party Jeremy Corbyn called for Britain to “stop servicing Russian crony capitalism” which, he argued, “would have a far greater impact on Russia’s elite than tit-for-tat expulsions”. (The Guardian, 16 March 2018) He was denounced by 19 Blairite MPs, who demonstratively signed a parliamentary motion to give full backing to the approach of Theresa May’s government. But it was not only Corbyn who recognised the role of British capitalism’s relationship with Russian gangster capitalism. As the House of Commons Foreign Affairs select committee put it in 2018: “The ease with which the Russian government was able to raise funds in London… raises serious questions about the government’s commitment to combating Russian state aggression”. More than £1.9 million has been donated by Russian oligarchs to the Tory Party since Johnson became prime minister. New Labour, now revived by Starmer, was no different, however. The ‘golden visa’ scheme – where £2 million bought UK residency rights with no questions asked – was introduced by them in 2008. As European Trade Commissioner, the arch-New Labour politician Peter Mandelson recommended lifting trade restrictions which hindered the business of the Russian oligarch Oleg Deripaska – after spending a holiday on his £80 million yacht!

The sanctions and other measures now introduced, including the suspension from trading on the London stock markets of 36 companies with ties to Russia, are of a limited character. Nonetheless, they – combined with Putin’s pressure on Russian companies to withdraw from Britain – will further accelerate the long decline of the City of London, which has already seen its share of global equity values fall from 8.5% to 3.6% over fifteen years.

In the era of increased globalisation of the world economy, British capitalism positioned itself as a relatively-low waged, de-regulated, finance and service sector-dominated economy; more neo-liberal than average in a neo-liberal world, with a strong whiff of ‘rentier’ capitalism. Leading figures in the Tory Party hoped to take that process further creating what they dubbed ‘Singapore on Thames’. That dream is increasingly coming into conflict with reality. We are now in a different era, with growing tensions and barriers between the major world powers, leaving British capitalism with increasingly limited room to manoeuvre.

Tory divisions still there

The Johnson government is therefore emerging from Covid facing increasing political and economic difficulties. Some, like the Northern Irish protocol, which appear to have temporarily receded during the Ukraine crisis, can surge back with a vengeance. The biggest issue has already surged back. Fundamentally, the government’s unpopularity has risen because it is presiding over sharply falling living standards. While the pay of the FTSE 100 CEOs has resurged to pre-pandemic levels, no-one else is going to be ‘levelled-up’; instead they are being driven down. 2022 is predicted to see the steepest fall in living standards since 1956. The government’s attempts to blame the standard of living crisis on events in Ukraine have had a limited effect given that the cost of living was already rising markedly long before the Russian tanks rolled in. One in eight adults already report having gone without heating, water or electricity in the past three months. According to Price Waterhouse Cooper the average UK household will be £900 worse off this year, while the lowest earners could see their incomes fall by as much as £1,300.

All of this is leading the serious capitalist commentators to fear that Britain is going to see major social explosions in the coming months. ‘Is Britain heading for the summer of discontent?’, ‘Are we on the cusp of 1970s strike chaos?’, ‘Workers’ power on the rise’ are just a few of the recent headlines. Johnson, already badly wounded by Partygate, is very ill-equipped to withstand these coming storms. Attempts to whip up the Tories base via populist anti-asylum seeker policies like the ludicrous Rwandan scheme will not successfully shore up his support. According to a recent ComRes poll only 6% of voters consider him honest or trustworthy, while only 10% say he understands ordinary people.

Particularly if the Tories do very badly in the local elections, Johnson’s party could ditch him over the summer. However, they are deeply divided and no faction has an obvious leadership candidate. Sunak now seems out of the running. Firstly, as chancellor he is seen as even more responsible than Johnson for plunging living standards. Secondly the revelations about his wife’s ‘non-dom’ status (probably leaked by the Johnson camp) have done even more than Partygate to drive home that the Tories operate on the basis of ‘one rule for us and another for the rest of you’.

Another factor which may leave the Tories hesitating to wield the knife against Johnson for a while longer is the failure of Starmer to make a decisive breakthrough in opinion polls, leading some backbenchers to hope against hope that Johnson could scrape a victory in the next general election. The ComRes poll quoted above, for example, showed that despite the disdain Johnson is held in, when asked ‘who would make the better prime minister?’ Starmer came out only one point ahead of him.

There is currently a deeply ingrained, and accurate, mood among big sections of the working class that none of the establishment politicians represent their interests. Nonetheless, as we have previously pointed out, in the run up to the next general election millions of workers can still decide to vote Labour as the ‘lesser evil’, meaning a Labour election victory remains possible. While some workers would be consciously ‘holding their noses’ and voting to stop the Tories others will hope against hope that Starmer’s New Labour would defend their interests. Those hopes would, however, be shattered by Starmer’s trenchant defence of the interests of British capitalism were he to become prime minister.

Key role of the unions

It is absolutely clear, however, that there will be stormy struggles between now and the next general election, which will offer opportunities for steps towards a new mass party of the working class. Capitalist commenters discussing prospects for a ‘summer of discontent’ in the coming months tend to comfort themselves with statistics showing the weakening of the trade unions since the 1970s. Then around 80% of workers were covered by collective bargaining. Now the figure is closer to 20%.  Increasingly the commentators dimly realise, however, that social explosions are inevitable, whether or not they are organised and led by the trade union movement.

Right now the predominant mood appears to be one of sullen anger, with working class people feeling enraged but impotent. At some stage, however, that anger will find an expression in one form or another. If the national trade union leaders fail to act, ‘yellow vest’ type movements could be posed. New outbreaks of social struggles on other issues including BLM, combatting climate change, and opposition to violence against women are also likely.

However, the smaller size of the trade union movement compared to the post-war upswing does not mean it cannot play a central role in the struggles to come. With over six million members, the trade unions potentially have enormous power. At the time of the 1926 general strike – the most important moment in the history of the British working class so far – less than a third of workers were members of trade unions, a broadly similar level to today. The recent RMT strikes on London Underground, which brought the capital to a halt, give a glimpse of the huge potential power of the working class in this era. We have to fight for the workers’ movement to put itself at the head of the battles ahead. The national TUC demo on 18 June has the potential to act as a launch pad for a major struggle against inflation austerity; including national coordinated strike action. Energetically built for, around a fighting programme, this demonstration could draw in wider layers of the working-class that are not currently part of the trade union movement. The left-led trade unions should give a lead in building for the demonstration, and preparing the ground for national strike action on pay, including a discussion on refusing to allow the obstacles created by the anti-trade union laws from preventing effective action.

The potential for a mass trade union-led struggle around the cost of living crisis is already being indicated by the rash of local strikes are developing as workers fight to combat the decimation of their living standards. In 2022 the TUC has registered the highest number of industrial disputes (300) in the last five years. More significant than that are the protracted and determined character of many of them. A number of strikes have won significant concessions. Unite claims 35 wins in recent months, and the GMB has recorded six. Strikes that have won victories include hospital staff, bin workers, warehouse workers, and more.  The level of strike action is still at a relatively low level by historical standards. Nonetheless, the process we predicted – of a certain increase in class consciousness and confidence among some layers of the working class as a result of the pandemic and its consequences, combined with post-pandemic austerity making action a necessity – is beginning to develop.

This is not to suggest that every struggle has resulted in victory. The increasingly determined character of local strikes on the one side reflects the increasingly brutal and determined character of the employers’ attacks on the other. The P&O bosses were so vicious that even the Tory government was forced to pay lip service to opposing their actions, whilst in reality having being tipped off by them about what was coming. The RMT and Nautilus responded to the attack with a series of demonstrations, and are continuing to protest. However, mass blockades of the ports, preferably backing up occupations of the ships – demanding reinstatement of the workforce and nationalisation of P&O – would have been required to inflict a decisive defeat on the company.

The P&O experience is an indication of the kind of militant action which will often be required to inflict defeats on the employers in the next period. While individual victories will continue, it is going to require a major escalation of national struggle in order to successfully combat the brutal driving down of living standards which is already under way. As we have described previously, this comes on top of a sustained period of pay restraint since 2008. The Socialist Party can play an important role as a lever in fighting to cohere the workers currently becoming involved in action, often for the first time, into a force which can build broad left organisations which fight consistently to transform the unions into democratic and fighting organisations.

Starmer, and the alternative

Industrial issues cannot, however, be separated from the need for a political alternative. Like Johnson, Starmer has cynically used the war in Ukraine to further strengthen his position, and to push the left within the Labour Party into an even more abject retreat than previously. Prior to the war it was as clear as day that Corbyn would not be allowed to sit as a Labour MP again, and would have to stand outside of Labour if he wished to contest his seat in the general election. Now, however, an extra charge has been added to his list of crimes. According to Starmer, Corbyn would have to disavow the Stop the War Coalition and stop criticising NATO, “unshakeable” support for which he says is now a “very clear requisite” for being a Labour MP.

In reality, the Stop the War statement which Jeremy Corbyn signed, initially alongside eleven left Labour MPs, was extremely weak. It praised the French and German government’s role in the crisis, and called on ‘Russia and Ukraine’ to ‘reach a diplomatic settlement of the tensions between them’ without any indication that the interests of the Russian and Ukrainian working classes are diametrically opposed to those of the capitalist gangsters – the oligarchs – on all sides. Unfortunately, this fits with the mistaken approach of the leadership of the Stop the War Coalition, including Jeremy Corbyn, who tend to look not towards the mass mobilisation of the working-class against wars, and the need for socialism, but instead towards solutions based on capitalist ‘diplomacy’ and ‘international law’. Yet both are part of the framework of global capitalism, and cannot play an independent role from the major capitalist powers.

Nonetheless, it is to Corbyn’s credit that he has not taken his name from the Stop the War statement under Starmer’s pressue, unlike the eleven MP who, when threatened with having the Labour whip withdrawn, rapidly retreated and removed their names. John McDonnell then went further and withdrew from speaking at a Stop the War rally saying that “my response is that people are dying on the streets of Ukrainian cities. This is not the time to be distracted by political arguments here. Now is the time to unite”. This was a shameful capitulation. The worst possible thing that the workers’ movement could do – both for the working class of Ukraine and of Britain – is to ‘unite’ behind, which means uncritically support, the capitalist class, including the wing of it in the leadership of the Labour Party.

The 22% vote for Jean-Luc Mélenchon in the first round of the recent presidential elections in France (7.7 million votes), despite his weaknesses and those of his electoral formation – France Insoumise (France Unbowed) – is an indication of the potential mass electoral support for a force to the left of the major parties not just in France, but also here in Britain. While there are many differences between France and Britain, the rage against the elites and the big sections of the working class who look to the left are the same in both countries.

Here, however, at this stage that mood has found no expression. The Labour lefts like McDonnell, who have spent five years retreating under the assault of the pro-capitalist right, bear a large part of the responsibility for this. Even after years of retreating, if the eleven had refused to remove their names from the Stop the War petition and had had the Labour whip withdrawn, they could have then used their block in parliament to organise on a fighting programme on issues relating to the war – like the right to asylum for Ukrainians and others fleeing wars – but also on domestic issues, demanding nationalisation of P&O and the energy companies for starters.

Despite the vacuum left by the retreats of the Labour left, however, important – if small – steps have taken place on the question of political representation even since the start of the Ukraine conflict. As we predicted, they have been centred on the trade unions and, especially on Unite. In particular, the ongoing Coventry bin strike has posed the issue sharply. The vicious anti-union character of the Labour council, which has spent far more hiring scab labour than it would have cost to meet the workers’ demands, has led Unite general secretary Sharon Graham to declare that Coventry Unite-member Labour councillors were suspended from the union, and that the Labour group would receive no money to fund their election campaigns in May.

Starmer’s response has been not only to back up Coventry council but to raise the stakes, declaring that Labour is under “new management”. Building solidarity with the strike continues to therefore be particularly important. Starmer would undoubtedly like to give the new left general secretary of Unite a bloody nose – the workers’ movement needs to do all it can to ensure that it is the council that receives one.

Broader political lessons are also being learnt from strike. For many of the Coventry bin workers, the need for the trade union movement to found its own party is now extremely clear. They are not going to be the last group of workers in this period to take part in bitter struggles which make this conclusion extremely clear. The Socialist Party, acting together with others in the Trade Unionist and Socialist Coalition, can play a vital role acting as a lever to speed up this process.

The pandemic shook up every part of society, including the outlook of the working class and young people, accelerating the developing anti-capitalist consciousness among many. The war in Ukraine may appear to have given the capitalist establishment some momentary ground to stand on, but its lasting impact will be to increase the mood that capitalism means instability, war, environmental crisis and the impoverishment of the working class. Mass struggle, and growing opportunities to increase support for a socialist programme, will be the most important features of the coming period.