Europe and United States
The European tag team of Starmer and Macron is off to Washington next week. The British Prime Minister and the French President will be trying to persuade Trump to save the Western Alliance by continuing to back Ukraine.
It will be a difficult if almost impossible task given the flood of anti-Zelensky, anti-European and pro-Russian rhetoric that has been pouring out of Washington. But they must but try.
Macron will be the first to arrive. He will sit down with President Trump on Monday.
The French president has taken the lead in trying to rally Europe-wide support for Ukraine with two Paris summits within a few days of each other. He has argued for years that the danger of American isolationism required Europe to increase its defences to fill the American vacuum.
At the summits he proposed that European countries despatch a peacekeeping force of up to 30,000 troops to guard key parts of Ukraine’s infrastructure. They would be supported by Western air and sea power.
Keir Starmer arrives at the White House on Thursday. The British took the lead in supporting Ukraine and continue to do so. The prime minister supports the idea of a peacekeeping force, but only as part of a ceasefire agreement and only with “an American backstop.”
Starmer has been vague about what the backstop would involve, but it is likely that he would want a guarantee of US air support.
However, the peacekeeping proposal could be dead in the water before it reaches the Oval Office. Germany is opposed to it. Chancellor Olof Scholz said such a proposal is premature and would be a serious escalation. Vladimir Putin has rejected any deal that involves European troops based in Ukraine.
Ukraine
What are the negotiating positions in Ukraine? There are four actors, only two of which have started talking: The US, Russia, Ukraine and Europe.
Donald Trump’s immediate objective is clear: Stop the fighting. And he appears ready to concede victory to Russia to achieve that aim. Longer-term, Trump clearly wants to withdraw American military support from Europe and move it into the Indo-Pacific region. The US president also appears to want rehabilitate Russia in order to gain access to that country’s natural resources.
Vladimir Putin wants Ukraine. In the short term he wants recognition for the Russian annexation of Crimea and the Donbas Region (including parts which it has not occupied). He also wants guarantees that Ukraine will be demilitarised; will not be allowed to join NATO and that no western (European or American) troops will be based in Ukraine. He also wants a pro-Russian government in Kyiv. Putin wants to win so that he can use victory in Ukraine as a springboard to exert Russian influence over Eastern Europe and beyond so that Russia is once again a Great Power.
Ukraine’s wants are simpler. It wants Russia out of its territory and guarantees that it will be protected in the future through membership of NATO. In the short-term Volodomyr Zelensky will agree to a ceasefire along the current front line if it is backed up by European/American peacekeepers.
Europe is riddled with differences. Despite what many Americans think, Europe is not one country. It is 27 members of the EU, Britain and a few small states. But with a few exceptions, Europe is united in wanting to contain a resurgent Russia and regards Ukraine as fighting a war on its behalf. Europeans regard NATO and American support as crucial in their aims. Europe—as a collection of countries—has given more aid to Ukraine than anyone else. After years of American pressure they are increasing defense spending and building up their militaries to replace American troops. But it takes time and they face an uphill task persuading Donald Trump to give them that time.
NATO
Here’s the good news: Donald Trump cannot unilaterally decide to withdraw from NATO. In December 2023 the NATO Enhancement Act was passed by Congress (co-sponsored by the current Secretary of State Marco Rubio). This bill required the president to seek a two-thirds majority of the Senate before withdrawing from the NATO Alliance.
Now for the terrible news: Trump doesn’t have to withdraw from the alliance to render it ineffective. Article Five of the 1949 NATO Treaty says that an attack on one is considered an attack on all, BUT, it leaves it to each country to decide how to respond.
Also, as commander-in-chief, the president has the right to cut or withdraw troops from any part of the world without congressional approval. In 2020 Trump ordered the removal of 12,000 US troops from Germany, seriously reducing America’s ability to rapidly reinforce the European theatre.
Ukraine and United States
Zelensky offered Trump access to Ukraine’s rich mineral resources to help pay for continued US support. Trump countered, according to a memo discovered by The Daily Telegraph, with a demand that Zelensky effectively handover half of his country’s economy. Furthermore, that the deal would be a payment for past American aid and would not guarantee future support.
Ukraine’s mineral resources—especially vital rare earths—are estimated to be worth $15 trillion. Control of them would alleviate Washington’s concern about China’s stranglehold on the mining of rare earth minerals.
Trump has proposed that Ukraine and the US set up a joint company which will allow the US to take half of all revenues received by the Ukraine for the extraction of any mineral resources. The US would also receive half of the financial value of all new licenses issued to third parties and reserves the right of first refusal for the purchase of all future mineral rights licenses.
The proposed arrangement says the US would also be given substantial control of ports, railways and other means of transporting the minerals as well as other infrastructure involved in mining operations.
The agreement would be subject to US law rather than Ukrainian law and the US “shall have the exclusive right to establish selection criteria, terms and conditions” of all future licenses and projects.”
US National Security Adviser Mike Waltz has warned Ukraine to take the deal immediately or face the consequences. The proposed contract has been described as leaving Ukraine with a choice between territorial violation by Russia or economic violation by the US. Zelensky has rejected it.
Germany
Germans troop to the polls in an easily predictable election. The centre-right Christian Democratic Union (CDU) led by Friedrich Merz and the CDU’s Bavarian sister party the Christian Social Union (CSU) have for months been predicted to win the biggest slice of the vote—30 percent.
That is not so interesting. What is interesting is that the centre-left Social Democrats (SPD) are being pushed into third place with an estimated 16 percent of the vote. The number two position will be occupied by the far-right neo-Nazi Alternativ fur Deutschland (Afd) with an estimated 20 percent of the vote.
Merz will have to form a coalition. Only once since World War Two, has a single party won an outright majority in the Bundestag. This was in 1957 when Konrad Adenauer’s CDU/CSU won 50.2 percent of the vote.
So coalitions are the German norm. But with whom will Merz offer to coalesce. He flirted with the AfD before the elections to try and force anti-immigration legislation through the legislature and was roundly condemned for it. There is an agreement – called the “Brandenmauer”—among the mainstream parties to refuse to work with the AfD.
Merz says he will maintain the Brandenmauer or firewall. This leaves the SPD or current Chancellor Olaf Scholz. But Scholz’s party may not secure enough seats to help Merz create a coalition. The liberal FDP and the far-left parties are unlikely to pass the five percent threshold which allows them representation, leaving only the Greens as an additional coalition partner.
One of the reasons the Scholz-led government collapsed because of the difficulties of balancing the competing interests in a three-party coalition. It looks like Germany is heading for another three-way, only with different parties. It also looks as if it is heading for months of political bargaining and possibly another election when Europe is embroiled in a major crisis.
* Tom Arms is foreign editor of Liberal Democrat Voice. He also contributes to “The New World” magazine and lectures on world affairs. He is the author of “America Made in Britain,” two editions of “The Encyclopaedia of the Cold War” and “The Falklands Crisis.”
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20 Comments
Might two of the basic problems we face be:as follows?
1) The U S A, alas, is now engaged in macro theft as demonstrated by is actions concerning Ukraine and Gaza and its words concerning Canada, Greenland etc.
2) The detachment between the ruling European leaders with their obsession with neoliberalism and the not wealthy majority of their citizens, and their children, who are avoidably deprived by this policy.
Might the L D Party talkie a lead by describing current U S A policy as it is and by adopting the equitable policy/practice of the mixed economy?
We find ourselves in a new world situation, it seems. According to Stephen Fry on the Kuennsberg show (BBC 1) this morning, it is a world of dominant fascist powers. We in our party are likely to accept the need for more defence spending, as the government proposes, to help shore up Europe for the defence of Ukraine, in view of the proposed American withdrawal of monetary support. But on the BBC show today the Conservative spokesperson spoke of finding the proposed 3.5% spending on the defence budget by cutting foreign aid and the Welfare budget. We have to provide the Lib Dem answer. Absolutely not the Tory way. The needed extra funding should surely come from taxation reform and increase; perhaps by taxing the wealthiest.first.
Katharine,
we definetly should not be cutting foreign aid and welfare. We need radical tax reform and will need to accept lower consumption spending in the economy as taxation and public spending as a share of GDP increases. Cutbacks in consumption of cigarettes, sugar, chocolate, nylons, lipstick and cappucinos until the Yanks arrive with these supplies, if they ever do.
“We need radical tax reform and will need to accept lower consumption spending in the economy as taxation and public spending as a share of GDP increases. ”
Radical tax reform – I think you’re right, but how to do it? This is at the top of the ‘too big to do’ pile.
How do you suggest we reform taxes?
I would suggest that a liberal Democrat radical tax reform would target the source of the very large wealth transfers that have occurred in recent years particularly since the 2008 banking crisis and pandemic.
There has been an enormous increase in public and private debt that is represented by an enormous increase in property and financial assets held by the wealthiest in society. It is the profits, rents and interest generated by these assets that should be targeted.
Key to this is increased taxes on income and gains from property i.e. commercial and residential rents and profits generated by ever higher mortgage lending on inflated property prices.
Home ownership and pension fund accumulation is dwindling for the current working generations and they are the least able to bear the burden of increased taxation.
My view is that we should combine income tax of 20% and employee NIC into a single basic rate of tax of 28%. That basic rate would be applied to all forms of income (including investment income, capital gains and corporation tax) not just wages. The higher rate would increase from 40% + 2% Ni to a standard 45% and the additional rate from 45% + 2% NI to 50%. Again these higher rates would apply to all forms of personal income.
The tax base would be widended by the inclusion of imputed rents on residential property less a homeowners tax allowance equivalent to the local authority housing allowance for your prinicipal private propery only. A commercial landowner Levy would replace business rates Taxing Land, Not Investment and a proportional property tax would replace council tax Fairer share
Joe, thank you for your ever-helpful suggestions for Liberal Democrat tax reforms, especially taxing the profits, rents and income generated by “the enormous increase in financial assets held by the wealthiest”, as you suggest. Our party already has some policies, as you note, but much more ought to be considered and voted on in view of the rising needs; now increased defence spending in addition to the already recognised requirements for the Health and social services, reducing the costs of living and meeting housing needs.
The EU has quite a hard nosed attitude to the UK.
It is time for the UK to be hard nosed in return. We can use our armed forces and nuclear deterrent as a bargaining chip with the EU.
Also this is a dark time for nuclear disarmament, any talk of unilateral disarmament is stone cold dead. I bet Ukraine wishes they kept their nuclear weapons.
@Joe Bourke
Are you still going to withdraw the Income Tax Personal Allowance at the rate of £1 per £2 income above £100k? That would increase the marginal rate on those earning between £100k and £125.4k to 67.5% from 62% (including the 2% NI) at present. Surely the top 1% should be paying a higher marginal rate than those on lower, but still high, incomes. There is a case for expanding the taper to £1 per £10 which would ensure that income tax was still, weakly, progressive. Or we could just raise the additional rate to 60% and expand the taper to, say, £1 per £4, before the additional rate is levied still maintaining the principle of progressive taxation.
Laurence,
i would advocate scrapping the allowance taper and replacing the personal allowance with a fixed tax credit of £3,520 (£12,570 @ 28%) i.e. the tax relief would remain the same for basic rate taxpayers but be restricted to basic rate for higher and additional rate taxpayers.
Higher and additional rate taxpayers would be paying higher tax rates on all sources of income including capital gains and imputed rents on their principal private residence.
I would commend to everyone Richard Murphy’s YouTube video from three days ago, not least because he cites Keynes’ 1941 pamphlet on how to pay for the Second World War. https://www.youtube.com/watch?v=D8vt7hXlqZM
Now it is urgent to oppose Keir Starmer’s proposal to find funds for the necessary new defence spending partly from the Overseas Aid fund. He proposes to reduce this to 3%; our policy is for returning to 7% of GDP. Please demand that Ed Davey speak out against this way of paying for the extra costs, and let him ask for extra taxation instead. There are plenty of suggestions, from Richard Murphy or the Patriotic Millionaires, and some policies of our own already for taxation reform.
@ Katharine Setting the Foreign Aid Budget to 0.7% of GDP was a rare Lib Dem achievement in the 2010-15 Lib Dem-Con Coalition, and it was achieved by my friend, and then M.P. for the Borders, Michael Moore.
Katharine, it’s only 0.3% of national income (Starmer’s proposal), 0.5% (now), and 0.7% (Lib Dem aspiration).
One point to make is that the Overseas Aid budget is simply too puny to raid. It can’t fund the level of defence spending we will need. Something else has to give. Taxing the US tech giants would be ideal – If it can be done quickly and practicably. If not, let’s borrow the money. That’s what the financial markets understand is necessary and reasonable in wartime.
Aid is of course the other area where the USA is abdicating from its international responsibility. It’s the worst time for another significant donor to let those in need down.
Thank you both, David and Peter. I have heard this afternoon reasoned argument from the Tory defender of international aid, Andrew Mitchell, pointing out that such aid to developing countries is as much a contributor to our national security as defence expenditure; and this evening have heard the Green party ex-Leader Caroline Lucas on Newsnight making all the arguments for its continuance which I would have wished to hear from our party. She, like our Leader, accepts the need for increased spending on defence but doesn’t want this way of paying for it. I would like to see a press release from our party deploring the planned cut as well as agreeing the defence increase, and explaining how the increase could be funded.
David (Raw) – our party’s commitment to Overseas Aid at 7% was reaffirmed at the last Bournemouth Conference, David, in which debate our own Michael BG made a moving speech which was very well received. But there has not been reaffirmation of this commitment of ours in the press release issued by our party supporting the defence commitment. We need to reassert it strongly, and then discuss further the raising of more funds for both commitments and all the necessary spending on health, social services and relief of the rising cost of living. Do we believe in the digital tax proposal, the seizure of Russian assets, AND will we discuss further taxation, especially of the wealthiest? It seems to me that that is going to be necessary.
Hello Katharine,
I fear you are mistaken. At our Autumn 2023 Conference in Bournemouth, F33 ‘Standing with Ukraine’ included the following
“Conference therefore … calls on the UK Government to:
7. Restore the 0.7% of GNI target for international development spending, to ensure that humanitarian aid which the UK supplies to Ukraine is not at the cost of cutting aid spending in other countries.”
I realise that being nice people, some of us believe that we need to give ever more to the poor people of the world, but even Michael BG with his best most moving speech ever would find that too big an ask. GNI is the income of every person in the UK, including income from overseas. I think suggesting we give away 7% of all that in a manifesto would be even too much for Ed’s publicity gaining stunts, paragliding from 40,000 feet onto the top of Everest and skiing down from there tossing a pancake he was cooking with a spirit burner strapped to the top of his head while juggling three sledgehammers with the other hand!!
” If not, let’s borrow the money. That’s what the financial markets understand is necessary and reasonable in wartime.”
If the government is doing the borrowing it is because someone is doing the lending.
Keynes did advocate a compulsory savings scheme during WW2. It might come to that again. The choice in wartime is either increased savings or increased taxes to restrain aggregate demand.
David (Evans) -Thanks, David, I much enjoyed your email! Yes, I expect Ed would indeed be up to attempting the exploit, were it proposed! But my lack of mathematical exactitude must account for the strange transition of 0.7% to 7%.
(I was just commenting on having attended an enjoyable Cumbria/Furness meeting on Monday when this email was swept away from me by unknown forces, so I must be serious now. It seems to me there may need to be an emergency motion at Harrogate calling for extra defence funds to be found from the sources Ed suggests, absolutely not from the Foreign Aid budget. )
While Ukraine’s mineral deal is between America and Ukraine, it depends on a peace between Russia and Ukraine for its successs. So until we know what Trump has agreed with Putin it is impossible for Zelenskyy to accept it. He might have to sign it under condition that America will protect Ukraine from further agresssion. The worst scenario for Ukraine would be for it to forfeit its minerals and the fighting continues.