Death by dark money: The Americanization of British democracy
LONDON — Scandals about money in British politics are like London buses: You wait an age expecting one to turn up, then a slew arrive all at once. The recent report into Kremlin interference into British politics — which caustically noted the cozy financial relationship between Russian elites in London and senior politicians, without naming the Conservative Party explicitly — came on the heels of a British summer dogged by series of questions over political donations. Among them, the admission by Housing Minister Robert Jenrick that he had shown “apparent bias” toward a Conservative donor’s £1-billion property development. The ensuing furor even prompted Nick Timothy — once the right-hand man to former Prime Minister Theresa May — to warn about sleaze and corruption in British politics. “We should not be surprised that members of this privileged class scratch one another's backs, but that does not mean we should meekly and passively accept it,” Timothy wrote in the stolidly-Tory Daily Telegraph last month.
British political parties — unlike their counterparts in many European countries — still rely on raising money to survive.
Timothy is right to be concerned: Britain’s politics looks increasingly like America’s, with private money buying ever more access and influence inside the corridors of power. Unchecked, this influx of cash will wreak even greater havoc on our political system. Small change Westminster is no stranger to “cash for favors” scandals, of course. Former Prime Minister David Lloyd George shamelessly sold peerages to wartime petty criminals and profiteers to fund his prime ministerial lifestyle.
A century on, British political parties — unlike their counterparts in many European countries — still rely on raising money to survive. And where donors on the other side of the Atlantic routinely spend millions on corporate lobbyists and bankrolling politicians, in Britain relatively small amounts of money can buy a lot of access. That makes the system that much easier to potentially manipulate. “A little bit of money goes a long way,” former Conservative Minister Guto Bebb told me. “We are not America. You don’t have to spend half a billion on a general election campaign. If you are willing to put a quarter of a million into a think tank, you can get a lot of bang for your buck.”
The numbers are stark. The 2018 U.S. midterm elections were estimated to have cost almost $6 billion. In Britain, almost anyone with £50,000 burning a hole in their back pocket can join the Conservative Leader’s Group. In return, Leader’s Group donors receive regular off-the-record dinners, lunches and drinks receptions with the prime minister and Cabinet ministers. “The donors are treated like an intelligent fan club. If there is a businessman who wants to have a chat with a future prime minister, then this is his opportunity,” said one regular. Information on who is a member of the Leader’s Group is not publicly available. In 2012, then Prime Minister David Cameron agreed to release details on donors after it emerged that he was hosting private parties for them at the Downing Street flat. But the Tories stopped publishing this information a few years ago, and when I checked recently all previous releases had been scrubbed from the party’s website.
What's in it for donors? For some, it’s status. Spending £90,000 on a game of tennis with Prime Minister Boris Johnson — as Lubov Chernukhin, wife of a former Russian finance minister, did earlier this year — has social cachet. Others seek influence and access. Over the last decade, almost one-fifth of leading Conservative donors have received honors, including knighthoods and peerages, after donating to the party. The number of government contracts given to businesses with long-standing ties to the Conservatives during the COVID-19 pandemic has been well-documented. Oversized-influence All told, money is playing an increasingly powerful role in British politics. In the run-up to last December’s general election, the Conservatives alone received more than £40 million from large donations. The trend is also, to a lesser extent, apparent among the opposition Labour Party. Although it is still largely dependent on trade unions and smaller donors and the super-rich donors that supported Tony Blair are long gone, some private money has returned since Keir Starmer replaced Jeremy Corbyn as leader earlier this year.
What is perhaps most concerning, however, is that the money fueling politics — and the Tories in particular — has changed. After the Brexit vote in June 2016, the Tories’ already narrow funding pool contracted sharply. The pro-European business elite fled the party. Around two-thirds of existing donors reduced their contributions, or stopped giving at all. Dislocated from their traditional support, the Conservatives are now largely dependent on funding from a small number of overwhelmingly pro-Brexit donors. When Johnson became prime minister in June 2019, promising a hard Brexit, donations increased sharply, particularly from corporates and wealthy individuals involved in hedge funds and other speculative finance. We don’t need to look far to see what happens when a small group of donors have an oversized influence on politics. “A federal election in the U.S. is supposed to be decided by 150 million voters, and yet the policy preferences are being determined by literally 20 people, 20 major donors,” says Adav Noti, a U.S. election lawyer with the Campaign Legal Center, in Washington DC. Something similar is happening in the U.K. “The Tory party is now wholly unrepresentative in any way of the U.K. population. Its source of funds is so restricted,” says economist Frances Coppola. “And because they are so dependent on this small group of donors, Tory party policy is going to be skewed.” There are already signs of this type of influence, as obscure projects — such as post-Brexit "free ports" — making their way onto the British political agenda.
“Political parties have a vested interest in the status quo. They would rather stay with the broken system we have currently because they know how to maximize their advantage within it” — Labour MP Stephen Kinnock
None of this is irreversible. The role of money in British politics could be reduced significantly. If the maximum individual donation was, say, £10,000 a year, parties would be forced to rely on a far wider, and more inclusive, donor base. However, there is little sign of any willingness for change. Although the parliament's committee on standards in public life in June announced a long-overdue review of British electoral regulation, for example, its remit doesn't include party funding. “Political parties have a vested interest in the status quo,” says Labour MP Stephen Kinnock, chair of a parliamentary working group on electoral reform. “They would rather stay with the broken system we have currently because they know how to maximize their advantage within it.” Britain, as Kinnock warns, is in the process of being "Americanized" — "Dark money and dodgy data are playing an increasing role in our politics. That is a very dangerous place to be. We have been complacent about our democracy. We thought it would just look after itself.” Unless the U.K. moves to protect its democracy from easily bought influence, its politics will become ever more in thrall to the kind of money that bought us Brexit
Britain pushes on with US trade talks despite presidential election
LONDON — Trade talks between Britain and the U.S. continue apace — just don't mention the looming election. The third round of negotiations entered its second week on Monday and the British government hopes to make headway across the board. But with former U.S. Vice President Joe Biden holding a commanding lead in the polls over President Donald Trump, U.K. negotiators face the prospect of a change in the lineup of the opposing team before a final deal is struck.
So why talk now? “The extreme unpredictability of American policy until after the election means what might or might not be available from the U.S. to the U.K. is just inherently unknowable,” said Ian Shapiro, Sterling professor of political science at the Yale School of Management. The way the November election turns out, he said, could reshape the future of the U.K.-U.S. trade deal in ways Britain cannot control and he cautioned the U.K. about its chances of striking a quick mini deal before the end of the year.
Whoever is in the White House next year must wrap up talks with Britain by April 1 to qualify for “fast-track” status and speed the deal through Congress.
However, U.K. officials and business leaders don't expect many American trading priorities to change significantly even if there's a switch in the White House. The fast start to talks is less about concluding an agreement and more "about the urgency [for the U.K.] to develop trade policy independently in the face of Brexit," said a member of Britain's business community, who spoke on condition of anonymity.
The sentiment was also echoed in a report by center-right think thank Policy Exchange, which argued "Brexit emphasizes the need for the U.K. to recalibrate its relationships with the world’s three major economic and geopolitical hubs — North America, Asia-Pacific, and Europe." For the U.K., that means the value of a U.S. deal is "as much geo-strategic as it is commercial." There are also some on the British side who hope talks with the U.S. will increase pressure on the European Union, aiding the U.K.'s parallel negotiations with the bloc.
Whereas both sides were bullish about a quick deal last September, telling the Sun newspaper one could be struck by July 2020, they now play down prospects of a deal by the end of the year. “It’s going to take time, to be honest,” U.S. Trade Representative Robert Lighthizer told an Economics Club of New York event in June. “We’ve been clear that there is no specific timeframe [for a deal],” said a U.K. Department for International Trade spokesperson. “Our focus is on getting a deal that works in the best interests of the U.K.”
What if Biden wins? If Trump does lose November's vote, Lighthizer might push to reach an agreement before Biden takes office on January 20. But even if that happens, U.K. officials could find themselves back at the negotiating table once Lighthizer’s replacement is in place. If Republicans maintain control of the Senate, it could also be months before all of Biden’s Cabinet nominees are approved. Other nominations, such as for secretary of state or defense, are likely to take precedence over Lighthizer’s USTR position, which will likely cause more delay. Whoever is in the White House next year must wrap up talks with Britain by April 1 to qualify for “fast-track” status and speed the deal through Congress. This is because the ability for Congress to “fast-track” a deal expires on June 30 and the White House must give Congress 90 days' notice of plans to give an agreement that status. Another complication could be if Biden was less enthusiastic about striking a large trade deal with Britain and instead picked up where the Obama administration left off in its pivot toward the East, Shapiro said, calling it “Obama's big unfinished piece of business.”
This could potentially see Biden rejoin the Trans-Pacific Partnership trade agreement that Trump abandoned by executive order in early 2017. After Trump pulled out of the pact negotiated by the Obama administration, the remaining 11 countries made some tweaks and renamed it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Last month, U.K. Trade Secretary Liz Truss put the importance of the government’s talks to join the Asia-Pacific bloc on par with the U.S. deal as Britain searches for more options for geopolitical alignment. “The assumption in Whitehall is that if Biden wins, we won’t need to do a bilateral trade deal because we might both end up in CPTPP. That is already committed to high standards of animal welfare. Some of the sting will be removed from those issues,” a Tory adviser told the Sunday Times. Biden's campaign officials have also played down his appetite for large-scale deals.
“The reality is in a negotiation like this, the U.S. is clearly also going to give up things for the U.K. and it’s going to be very helpful to their industry" — Clete Willems, former Trump White House official
“He's not gonna go [into office] in 2021 and start talking about re-entering or about entering new trade deals before he has done the work at home to make the investments in American job creation, American competitiveness, and American communities,” a senior official told reporters last month. Special relationship But the election is far from over yet, and former Trump administration officials argue both sides could gain from a U.S.-U.K. agreement. “I think there are very significant practical reasons why both countries are interested in an FTA,” said former USTR General Counsel Stephen Vaughn, a partner in the international trade team of law firm King & Spalding. “We’re both market-based economies that have a long history of trading with each other. We have close relationships in almost every area of international dealings, and from the U.S. perspective, it would be the biggest economy with which we have ever done an FTA.” Vaughn, who worked closely with Lighthizer for years, notes that both countries have strong services sectors and strong protections for intellectual property rights. It makes sense for the two sides to fashion an agreement that reflects that situation and becomes a model for other trade pacts, he said. Geopolitically, the agreement would underscore the deep relationship between the United States and the U.K. and give Washington a lift in dealing with an array of issues with both China and the EU, added Clete Willems, who worked in the Trump White House as deputy assistant to the president for international economics and deputy director of the National Economic Council. Willems, who now works at the Akin Gump law firm in Washington, took issue with the idea that the U.K. is involved in one-sided negotiations with the United States, where it will be forced to give up more than it can expect to get in return.
“The reality is in a negotiation like this, the U.S. is clearly also going to give up things for the U.K. and it’s going to be very helpful to their industry,” Willems said. “They are a major country with a major economy and they are an equal partner to the U.S.” He brushed off suggestions that the U.S. pursuit of strong intellectual property protections for its pharmaceutical companies would hurt the U.K. “The U.K. has one of the most advanced pharmaceutical sectors in the world. So having groundbreaking pharmaceutical provisions is going to benefit the U.K. as much as it benefits the U.S.,” Willems said. Sticking points That said, there are difficult issues for the countries to resolve that make a deal this year unlikely. In particular, on agriculture, where there is strong resistance in Britain to allow more imports of U.S. meat products because of concerns over animal welfare, including the veterinary drugs used by U.S. producers and methods used to decontaminate slaughtered poultry. A U.K. government spokesperson said Britain “has been clear it will not sign a trade deal that will compromise our high environmental protection, animal welfare, and food safety standards.” Chlorinated chicken and hormone-injected beef, they point out, “are not permitted for import into the U.K. This will be retained through the EU Withdrawal Act and enshrined in U.K. law at the end of the [Brexit] transition agreement.”
Many American companies are more interested in the outcome of the U.K.-EU negotiations than the trade talks between Washington and London.
Another tricky issue is the U.K.’s decision to move ahead with a digital services tax, which the United States sees as a discriminatory tariff imposed on its biggest tech companies, such as Google, Facebook, and Amazon. Key U.S. lawmakers have signaled they are unlikely to approve an FTA with the U.K. unless there is a favorable resolution. “Unilaterally imposing a discriminatory tax that unfairly targets U.S. businesses damages efforts to achieve a multilateral solution and unnecessarily complicates the path forward for a U.S.-U.K. trade deal,” said U.S. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and the panel’s ranking member, Senator Ron Wyden (D-Ore.), in a joint statement last week. However, many American companies, and especially those with operations in the U.K., are more interested in the outcome of the U.K.-EU negotiations than the trade talks between Washington and London. Still, even some who have been less enthusiastic about the U.S.-U.K. negotiations see potential gains. “This negotiation was inspired more by politics than economics,” said Michael Smart, a managing director at Rock Creek Global Advisors, an international economic policy advisory firm, and a former White House and Senate aide. “But it could deliver commercial benefits if it breaks new ground on trade liberalization and regulatory convergence. In order to do that, both sides need to be flexible and creative on issues like agriculture, investment, digital trade and financial services,” Smart said.