Insiders and outsiders: Politicians must learn to satisfy our search for belonging, says Vincent Cable

POLITICS used to be about left and right; class and inequality; public against private ownership; unions against employers; state planning versus markets. The vernacular may have varied from one country to another but the language was the same.

After the Cold War, a new politics is emerging. Eastern Europe has seen a flowering of nationalism while this year's European Parliament elections could harvest a bumper crop of German neo-Nazi Republicans, Italian fascists and French racialists. Tribalism holds sway in the Balkans, Belgium, Burundi and Belfast. In Britain we still talk in the language of left and right but the big issues - Europe, Ireland, personal morality - do not derive from that tradition.

The surface may be different - language, colour, tribe, caste, clan or region - but the subterranean source is the same: an assertion of cultural identity, or difference, or what Isaiah Berlin called 'the politics of the soil'. Many people in Britain treat identity as personal, uncontroversial, and non-political. We are all the same under the skin, we say.

But new political movements are springing up everywhere which argue the opposite: that difference matters, that societies should be clearly partitioned into those who belong, and outsiders. This new politics requires some re-labelling. Some right-wing libertarians genuinely believe in individual choice - in the market place, the church pew and the bedroom. But there are also, on the right, cultural conservatives who combine capitalist economics with attachment to exclusive identity. Pat Buchanan is building a Republican presidential launching pad in the United States around religion and nationalism. Gaullists, such as Jacques Chirac, have mobilised the French right against Arab immigrants and American 'cultural imperialism'.

Cultural identity is also a fundamental dividing line for the left: between the open pluralistic approach of Bill Clinton, Francois Mitterrand, John Smith and Nelson Mandela, on the one hand, and, on the other, the socialist/

nationalist coalitions in Russia and Serbia, the revolutionary movements of Kurdistan, Iran and Peru and Arab Baath.

One reason why so many ancient grievances have surfaced in many countries is a reaction against the globalisation of business and tastes, against freer capital flows and trade, and against faster communications. For the educated and entrepreneurial there are unprecedented opportunities. But many feel threatened by the loss of identity which used to give their lives meaning.

Economic liberalisation in Britain and the US under Margaret Thatcher and Ronald Reagan in the 1980s is now being replicated in Eastern Europe, in Latin America, throughout Asia and in France and Italy - under governments of both right and left. This economic revolution reflects a consensus that overcentralised, interventionist systems do not work. But even where more dynamic, richer societies are emerging from the transformation - as in China, India, Turkey and Mexico - there is moral confusion and alienation from the inequalities being generated. So people turn to new political movements. Those appealing to cultural identity have been the most successful while broadly based human rights and 'clean politics' movements - Solidarity, Havel's Civic Forum, Aquino's People's Power, Kenya's democracy coalition - have fragmented.

The politics of cultural identity has a distinctive agenda. It defines insiders and outsiders, belongers and non-belongers, believers and non-believers. 'Ethnic cleansing' is its extreme manifestation. Almost every national state now has a minority 'problem' of some kind. Pan-ethnicity is spreading - Greater Russia, Greater China, Greater Hungary, pan-Turkism. Powerful religious movements blur the distinction between divine and secular concerns - Sunni and Shia Islam, Opus Dei, evangelical Protestantism - and help to refocus attention on the 'traditional values' of cultural identity. This triggers a 'back to basics' reaction against liberated, Western or cosmopolitan lifestyles. The corresponding economics of identity is expressed through protectionism: Ross Perot's anti-Nafta campaign, the French stand against Gatt's attempts to liberalise trade in food and films; the Indian 'swadeshi' movement for homespun capitalism.

So how can politicians learn to manage identity politics? First, they must show respect for multiple identity. Individuals should feel secure with all aspects of their heritage and not be forced to choose between them. A London Sikh, for example, should be able to feel both British (and European) and Indian at the same time. This requires vigorous anti-discrimination legislation. But the state should resist minority 'opt- outs' such as separate Hungarian communes in Slovakia and Romania, English-free zones in Quebec, and Islamic law for Muslim minorities in secular states. The road to disaster for many societies, including our own, is casual endorsement of 'self-determination' leading to secession, which tends to create new, aggrieved minorities in turn.

Second, national leaders should recognise the value of political as well as economic decentralisation. The politics of identity feeds off the alienation generated by a loss of control over events. Third, politicians must strengthen global institutions. Inter-governmental institutions and rules - for trade, human rights or cross-border pollution - lag miserably behind technology and business.

These are abstract principles, but we can find role models. The Netherlands, for example, has a prosperous, stable, outward-looking economy with strong safety nets. Cultural identity is strong, but non-Europeans have been well integrated. There are strong religious traditions but they co-exist with libertarian social legislation - for abortion and prostitution. The Dutch have pride in national history and language but also a widespread facility with foreign languages and generosity with aid.

The Western mind often equates Islam with fanatical intolerance. But Malaysia has rectified the economic grievances of its Malay majority without driving away its minorities; and it marries strong cultural identities with national modernisation and openness.

Britain cannot remain isolated from global economic and political forces. Politicians must learn how to satisfy people's search for a sense of belonging and identity without allowing that to become a force for division and destruction.

This is an edited extract from 'The World's New Fissures', Demos, 9 Bridewell Place, London EC4V 6AP, pounds 5.95.