A Shifting Playing Field: The UK's Engagement in a Globalizing World

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During his week-long visit at Harvard University in October of 2012, Douglas Alexander agreed to talk with the Harvard International Review about the European fiscal crisis, the state of the British economy, the job of opposition party leader David Cameron, as well as the foreign policy and security risks posed by Syria and Iran. As the EU begins its slow path to recover and Britain itself continues to face meager growth, Alexander has voiced strong opinions and clear policy suggestions for how to promote Britain's shared interests with its global partners.

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Beginning with the domestic policy of the United Kingdom, the Labour Party has traditionally taken a more pro-European Union stance than the incumbent Conservative Party. Has its stance shifted since the latest European debt crisis?

The Labour Party is clear that Britain's interest and future lies in the European Union, but we recognize that Europe is changing and that there are very real challenges that continue to afflict the Eurozone. The urgent priority has to be for the Eurozone countries to address those issues, but there are additionally key issues of concern to British workers, companies, exports that we think the [British] government should be focusing on right now, such as the completion of the common energy market and digital services.

There are significant economic benefits still to be gained from a single [European] market with more than 500 million consumers. But, sadly, we've got a Conservative prime minister who seems to be negotiating more with his own backbenchers than with his European partners and I think you can only really explain his position in reference to the hostility felt towards the European Union by a number of concerned people of parliament.

Britain, along with many European countries, is waging a war against climbing debt on two fronts with a ratio of 47 to 35 Britons at home believing "we need to fundamentally change the way our country and economy work." How are you dancing between the two issues?

The Labour Party doesn't believe that the approach the government in Britain has taken is working. We had a year when the economy flatlined and we had three guarten of negative economic growth. We are one of only two countries, the other being Italy, in a double-dip recession. So the Conservatives' planning is not working. They believe you can cut quickly and steeply and still sustain levels of economic demand. But we think a new and different approach is needed. At the same time we recognize there are challenges in the European Union, so it's important that we build alliances [with our European partners].

Alas, Britain is being isolated in the European Union right now and I would argue that's a result of party interests in a way that is damaging to the national interests.

What new reforms and measures do you recommend the United Kingdom and European Union take, either jointly or separately, to restore their markets' credibility and competitiveness for the future?

Across the Eurozone we've argued that we feel there needs to be a grand bargain. There needs to be on the one hand recognition of the need for cash transfers within the Eurozone with the full weight of Eurozone economies and the European Central Bank backing those countries currently facing liquidity issues and a loss of confidence in the market at the present time. But at the same time those periphery countries need to be able to embrace the lands of labor product market and supply-side reforms that are needed to address continued productivity gaps within the euro economy.

In the United Kingdom, we've argued for a different approach to be taken to the economy--looking for example at long-term infrastructural investment, whether that kind of expenditure can be brought forward, and at temporary cuts to the value-added sales tax to help hard-pressed consumers at the moment. …