Monday, February 20, 2017

An Unreasonable Brexit could be fatal for the UK

The weeks pass and the position of the Conservative Brexit government grows ever more unreasonable. Many people who voted to leave the EU would still have been perfectly happy with an "economic association", indeed it was the default option for probably the majority of those who voted to leave: "we should have an economic not political union". Leaving aside the practicalities of how much economic issues require political engagement, the idea of limited economic cooperation is not unreasonable.

However the current position of the Conservative government is that Brexit means the end of British membership of any European cooperation groups, whether political or economic. Brexit means not merely withdrawal from the EU, but the outer group of European Free Trade Area (EFTA) nations that are members of the EEA. It even means the withdrawal from the EU customs union. This total withdrawal is not the majority position of the British people: 48% voted to remain full members of the EU and it is quite clear that many, possibly most of those who voted to leave still expected some kind of ongoing relationship short of membership with the EU.

Then there is the growing evidence that the Conservative position of complete exit is going to cause considerable damage to the the UK- both economic and political. The disruption in Northern Ireland could even trigger the renewal of violence in the province. The rage in Scotland at being forced into a complete severance of EU ties is bringing separatism back on the political agenda, even despite the horrendous economic mess that that particular Leave vote would bring.  Then there is the limbo into which we have placed 3 million EU citizens living in the UK, as well as a large number of our own citizens living in the continuing EU. Already UK farmers report significant issues with seasonal labour. Universities have seen a significant drop in EU applicants. The reputation of the UK as an open and tolerant society is daily being undermined by the moronic racism that the vote has ignited in its wake. It is quite likely that all of the GM plants in the UK will close after the mooted PSA acquisition, with the cost of many jobs. The City is losing thousands of jobs to Dublin, New York and Frankfurt. All of this before we even understand what kind of relationship will follow the enactment of article 50.

Yet EU governments are thinking carefully. The timeline for article 50 negotiations is too short and it is clear that without creating transitional arrangements, the Brexit on offer will be extremely disruptive. In a sense the aggressive statements by Michel Barnier on outstanding payments owed by the UK are a good thing, since there is at least something that the EU would want from the UK. Otherwise Britain begins to look like a total loser in any negotiation. There is sympathy in many quarters at the position that the UK finds itself in, but also frustration at how little the HMG is prepared to commit to. The 12 points that Mrs May has offered are simply too general to be a basis for any substantive agreement, while the threats of simple reversion to WTO rules are too weak a negotiating position to have credibility- the UK cannot negotiate separate WTO rules for itself in time, even if there was no opposition from such members as Russia. Neither are there well functioning back channels into Brussels. The UK is deeply isolated and in a very weak position.

All of this could have been avoided if a reasonable position had been adopted by Mrs. May's government, but "Brexit means Brexit" actually means an extreme and damaging Brexit. Total withdrawal will come at huge cost. 

The result is increasing rage against the Conservatives. Even if one could accept that leaving the EU would lower barriers, rather than raise them- a highly debatable point- the disruption of moving away from the largest trade block and the largest economy in the world is unlikely to create any benefit in the short or long term. Even if one believed the "Singapore without the sunshine" hype of the Tory Libertarians, the fact is that the timing is very unfortunate to say the least. The rise of Trump could bring to an end of a century of Anglo-American alliance at a time when Russian mischief making creates a huge threat to our freedom. Even if one accepts that the Tory best case scenarios are even possible, the questions of basic competence in the Cabinet room are more than enough to raise as many fears as hopes. 

The population and economic power of all the other 15 Queen's Realms: Australia, Canada, New Zealand, Jamaica (which has given notice it intends to become a Republic) plus 11 very small countries in the Caribbean and Pacific, all combined, is less than that of Germany. Furthermore the idea that Australia is going to switch away from trading with Asia to the UK is obvious nonsense. The world trades with its neighbours, which is why we trade massively more with Ireland than we do with India, and that will be true whether we have a free trade agreement with India or not. The Imperial nostalgia of such figures as Jacob Rees-Mogg is not credible as a policy either politically or economically. So the EU states continue to regard the debate in London with a growing sense of disbelief and unease.

Of course, the European Union is itself going through significant challenges: the Dutch, French and German elections not least. The wildest hopes of the UK anti Europeans rests on victories for their allies in these countries. Yet the meddling of Mr. Putin- so successful in the UK and the US- may find limits in the rest of the EU. It would make a great deal of sense for the UK to delay Article 50 until new governments are in place in these three founder states, yet Mrs. may does not seem to have a keen awareness of her own interests, and her Brexit bulldozer has no reverse gear. We can make no predictions, but the chances are high that Marine Le Pen will not be the French President, that Geert Wilders will not be the Dutch Prime Minister and that there will be no breakthrough for anti-Europeans in Germany. The British will not be waiting to see anyway. So we have to find a way to start the discussions without causing meltdown from the very beginning.

Several EU governments have reached out to the UK, but have been frustrated by the continuing internal dialogue in London: it is not that there is no running commentary, there is still no credible sense of direction, except further retreat from any position that could be considered a compromise. The UK expects nothing, but is not prepared to ask for anything anyway. 

In the face of one of the most damaging acts of policy since the 1930s, the British government has not been able to create a credible negotiating platform. It is a serious failing and one that unless remedied this year will cause a decade long crisis. The UK is on a knife edge, and one that carries huge risks not merely of damage but humiliation. It may even be a final -existential- risk. 

British pragmatism was always reasonable. Now this lack of reason may in fact finally destroy the United Kingdom. It would be a pity, but "whom the Gods would destroy, they first make mad".

It is time for the UK to find a reasonable position and a reasonable tone of voice. 

Can Theresa May deliver?

Friday, January 27, 2017

The misjudgment of Theresa May

It has been a long hiatus from blogging.

Partly it was that I have had little time and less inclination to comment of a series of utterly catastrophic events for Western values. I began to feel that the fear of the implosion of the West that this blog was founded to warn against had actually happened. The withdrawal of the UK from Europe and the advent- one can hardly say that losing by three million votes was an election- of Donald Trump in the United States are two malign sides of the same discredited coin. A spectacular failure of confidence and a betrayal of what open societies are supposed to stand for.

In ancient Rome, a victorious general could be granted a Triumph- a truly extravagant ceremony where the Triumphator was promoted for one day above all mortal Romans. In the midst of this adulation a slave would travel with the hero saying: "Respice post te. Hominem te momento" (Look [to the time] after you [are gone]. Remember you are only a man. This "momento mori" has been much on my mind as I have watched the Conservative Brexiteers, who won only by the narrowest of margins and the new Trump administration, which lost the popular vote by over three million votes, attempt to reshape the politics of their respective countries as though they had an overwhelming mandate to do so.

Trump and the Tories are seeking massive and potentially hugely destructive changes in the social, political and economic order, but they are failing so utterly to conciliate with any other forces in society that it now seems a foregone conclusion that things cannot turn out as they predict. Donald Trump is already the most unpopular incoming President since records of these things began.

The Tories by seeking a complete break with Europe are flying in the face of the majority of what even the Leave voters expected. It will be extraordinary disruptive and is undermining the power of the UK on a daily basis. We are insulting our friends and gratifying our enemies, such as Vladimir Putin. It is a monstrous act of economic self harm and political vandalism. In the midst of these catastrophic decisions, Theresa May has gone to Washington to court the crass and vulgar Mr. Trump.

Mr. Trump is held in contempt by the vast majority of the British people: if he is the least popular incoming President among Americans, he is positively despised by the Brits. As ever more resistance gathers in the States to the erratic and odious Mr. Trump, Theresa May has decided to put all our eggs in an American trade basket.

It will not work and it will make the Conservatives astonishingly unpopular. At the moment it is only the inept and useless Labour party that is sustaining the poll ratings of the Tories. As soon as a viable alternative is put forward, I predict that support for the Tories will all but collapse. Increasingly I am reminded that in Canada both the Conservatives and the Liberals were virtually wiped out at different times, only to recover power- in the case of the Liberals at the last election from a pretty deep third place. If Brexit ends as the disaster that it seems inevitable that it will, then I could see deep changes emerging- including not merely the rehabilitation of the Liberal Democrats, but quite possibly their return to power, even as the largest party. 

If the choice is humiliating subservience to America or partnership with Europe, we will recoil from Trump. So to the Brexiteers I say: remember you too will die.

Wednesday, October 26, 2016

Future Tense

I think the major shock about the UK vote to leave the EU was the transformation in British culture that the vote seems to represent. From having been in the vanguard of the global economy and the globalized society, the UK seems to have rejected much of what it seemed to stand for. The aftermath of the vote- racist statements, racist attacks and all seemed to have turned the conventional wisdom about Britain on its head. The country was not as open or tolerant or globalized as it purported to be. This is despite the fact that a significant faction of the Leave campaign believed that the the problem with the EU is that it is not globalized enough. The reality is that whatever the Libertarians amongst the Leave camp thought they were getting, it is now all too clear that the isolationists, not the globalizers, are the big winners from the vote... at least so far.

If Brexit is a process, not a destination, as we are now being told, then it is still totally unclear what the destination might be. One nasty shock for the incoming May government has been that the option that would probably be accepted by the majority of the the UK- a kind of associate membership of the EU, via either the EEA or some kind of bespoke agreement- now looks by far the most difficult solution to bring off. The confrontational attitude adopted by the UK government has met its match in the Juncker Comission, which has wasted little time in inflicting as many petty humiliations on the new PM as possible. The appointment of Michel Barnier as the Commission's negotiator was the first, followed by the repeated cold shoulder to the UK at every meeting, including forcing Theresa May to wait until 1 am to address the meeting of the European Council. I suppose we can hardly blame the Commission for taking the hump against the UK, particularly since it reflects the deep anger that many governments feel about what the UK is trying to do. As Xavier Bettel, the Luxembourg Prime Minister Minister puts it  "Before they were in and they had many opt-outs; now they want to be out with many opt-ins.

Meanwhile Conservative blow-hards, such as Bernard Jenkin, insist - with precisely no evidence- that a total withdrawal from all form of EU collaboration was what was voted for on June 23rd. 

The choice is becoming stark: national humiliation as we create mayhem in much of our economy and face a serious and prolonged economic crisis through breaking all ties to the EU, or national humiliation as we seek to reverse the decision taken on June 23rd. As the storm clouds gather, there are more than a few people in London and in Brussels who believe that the UK may indeed change course. The Conservatives have sought to own Brexit, but now it is clear that whatever Brexit does in fact mean, it is bad and the Tories will get the blame. The big swing in Witney and the likely gain of Richmond Park is putting the Lib Dems back on the map, and despite the current high poll ratings for the Conservatives, the reality is that these leads could be very shallow indeed. 

Yet despite the growing economic and political storm in London, we can not ignore the abject failure of the Juncker Commission. The hapless former Premier of Luxembourg has now presided over the debacle of Brexit and the seeming collapse of CETA with Canada. This second failure is possible of even more moment than the first. The fact is that the crisis in CETA speaks to the very worst paralysis of the EU, and a failure to ratify would demoralize even the most fervent defenders of the Commission. Whereas the Commission has little choice but to be reactive to the UK, they have proven unable to be proactive to address the problems with CETA ratification. Clearly this bodes very badly for the far more complicated discussions to come with the UK. The fact is that the Commission may not be able to deliver any kind of soft Brexit- regardless that this is the majority will in both the UK and the rest of the EU.

Faced with the choice, it may become literally impossible for the UK to withdraw. Certainly there are voices on both sides of the channel that are beginning to think that, as the political pendulum swings in the UK strongly away from Brexit, that the British may opt for the economically less painful version of national humiliation rather than another. The paralysis that the Juncker commission has engendered does not seem to have been shaken by the prospect of the British departure, but just possibly it might be shaken up by a British lack of departure. 

Maybe the Brits will return to the global future after all.

Wednesday, October 12, 2016

The Markets verdict on Brexit is coming & it will be ugly

80% of the British press is under the control of off-shore domiciled billionaires. These shadowy figures: the pornographer Richard Desmond, the sinister Barclay Brothers, the oafish Harmsworth, and the borderline criminal Rupert Murdoch have established a hard right-wing agenda. The press, especially titles owned by the creepy and boorish Mr. Murdoch, have a well merited reputation for powerful lobbying in support of an extreme right-wing agenda. Since the referendum, their shrill support for the ending of all ties to the European Union- the so-called hard Brexit- has pushed the Conservative government to ever more hardline positions.

However, despite the propaganda and the contempt that these newspapers have directed towards the near majority that preferred to stay in the EU, reality is- finally- beginning to bite.  The extreme position adopted by the May government has a price, and it is one that very few people on any side of the referendum debate would have been prepared to pay. The fact is that there are many fundamental reasons why a "hard Brexit" would cause significant economic damage, and the problem is that even the large-scale devaluation of Sterling that has taken place since the referendum debacle will not much ease the crisis to come.

The conventional wisdom is that the fall in Sterling will reduce costs and make exports competitive, but this is to misunderstand the huge changes in the global supply chain over the past few years. British exports in manufacturing are largely made from components that are imported, therefore the conventional wisdom that a devaluation makes the UK a more competitive exporter no longer truly holds. All that is going to happen is that the country will reignite a level of inflation that will erode the currency still further, without any improvement in the UK current account. In the quest for greater productivity there will be a need to shed jobs, while the government sector now faces a double whammy of a lower tax take, a higher social security bill, and rising gilt yields, and confidence in the UK continues to fall. 

Hard Brexit is a vicious circle. The expulsion from the single market that  Mrs May now says could happen in January 2019 is going to cause a rout in several critical sectors of the UK economy. Confidence is being eroded to the point that Credit ratings are coming under critical review and the negative outlook is being priced in. As long as Hard Brexit is the policy, there is no technical support for Sterling in the medium term above about 95 Euro cents, and if the Market continues to take a dim view of the competence of the May government, we could even see Dollar Parity in the short/medium term. The currency rout now taking place is already beginning to see the beginning of a rout in gilts- a 5% yield may be surprisingly close, and as we know this could in turn lead to the overstretched mortgage market also being pushed to breaking point, with a breakdown in property prices quick to follow and a major banking crisis the inevitable coda. Meanwhile the lackeys of the right wing press, like Ambrose Evans-Pritchard, suggest that the prospect of this major discontinuity is a good thing. According to their world view- backed up by whatever bat-squeek of hope they try to find in the gathering gloom- the UK was over indebted and living high on the hog, so that a collapse was inevitable. Yet the fact is that the market is delivering a verdict on the politics. Any sign that Brexit may be soft rather than hard and Sterling recovers a smidgeon. 

Yet Mrs. May made her case: "If you are a citizen of the World, you are a citizen of nowhere" is a phrase that will haunt the rest of her premiership. Business hates it. Universities loath it. It is a contemptible manifesto of Little Englander provincialism, and it will ultimately fail. The price, however, will be the prosperity and the stability of the the UK.  On June 23rd the British people did not vote to make themselves £66 billion poorer- and the absurd lies published by the verminous Mail, Express et al does not change the fact that the consequences of the vote will be deeply unpopular.

Mrs May currently has a Parliamentary majority of 12. Over twenty seats are currently the subject of Police investigations as to the legality of the Conservative expenses claims. That is not something the right wing press wishes to discuss.

As the chill winds of the Brexit Autumn turn into the bitter frost of Winter, one wonders how far the Tories can push the Bond Market before it bites back. Then the posturing fools of the billionaires' supporters club can face the wrath of the rest of us.

Wednesday, September 28, 2016

Eternal vigilance

The United States Presidential debates seem to have confirmed two things.

The first is that Donald Trump is totally unsuitable to be the President of the United States. 

I mean, not just inappropriate for the job, but most likely utterly catastrophic. His contempt for the niceties of the US constitution was just the cherry on a particular odorous cup cake of crap. His demeanor- petulant, childish, and his opinions- ignorant and boorish, suggest that as President he would respond to the slightest provocation with over reactions that could lead to breakdown domestically and war internationally.

The second thing the debate confirmed is that he could still step into the oval office next January. Despite the fact that literally no business leaders back him, despite his failure to release his tax returns, and despite his insulting and patronizing comments about more or less anyone who is not Donald J Trump, this man could become the President of the United States.

Even though the chances still favour Mrs. Clinton, the fact that it is even remotely close changes everything. The fact is that even if Mr. Trump is defeated this time (Please Lord!), there remains a huge block of voters that is prepared to consider possibilities that should be unacceptable in any sensibly governed democratic state. This challenges the whole basis of the global international order. The United States has been a force for democratic will and the free society since at least the second world war. If the US can not be relied upon to defend freedom, no matter what the cost, then we genuinely risk a collapse of the Pax Americana and a descent into a nuclear armed instability that risks the entire planet.

In the event the Alt-Right and the other post truth politicians may not get their man this time, but the shock of what is happening underlines the urgent need to develop a new kind of politics that can balance the political interests of society without the emergence of irrational and dangerous demagoguery.  

The price of freedom was, and remains, eternal vigilance. In a world where Vladimir Putin is attempting to subvert Western democracy, we must now drastically increase our guard.

Electing Trump would be a disaster as great  as May 1940 for Western Democracy.   

Friday, September 23, 2016

Punishing the Conservatives

A Conservative government has caused the greatest political and economic disaster in 50 years. The Prime Minister responsible, David Cameron, has resigned. Theresa May's ministers are consistently suggesting that the vote to leave the European Union means the withdrawal from all EU mechanisms- the "Hard Brexit". The result will be the exit of the car industry from the UK and severe damage to the City of London.

It is totally irresponsible.

It will cost the country millions of jobs and billions of pounds. The Tories now own the Brexit fiasco.

Voters are noticing: some major shifts in local elections suggest that the Liberal Democrats may be recovering fast.

Just maybe the new Tory programme of back to fifties- imperial measures, grammar schools et al- may end up destroying the party that is proposing this drivel. Backward looking provincialism deserves nothing more than contempt.

I bloody hope so.

In other news.

Last night hundreds of children went to sleep alone and hungry in the Jungle at Calais- a humanitarian mess that the UK is responsible for. Last night the food banks were doing good business. Last night the NHS faced just another day of strain and pain. Last night millions of workers in the UK were facing renewed threats to their livelihood because of the Brexit fiasco. 

This morning the British right wing press: 80% supporting the Conservatives and funded by five off-shore billionaires, decided that the marriage split of two actors was the chief story their readers needed to know about.

Contemptible. Disgraceful. Outrageous.

Tuesday, September 20, 2016

Burns and the charms o' nature

I was interviewed yesterday on the subject of the poetry of Robert Burns by the Scottish Cultural Society in Tallinn. This is a good organisation that promotes a wide variety of things Scottish with a fervour that should embarrass even the most intransigent nationalist. Whether ceilidh dancing or singing the songs of Burns, or even kilt wearing, this small group constantly delight with their enthusiasm and passion for the subject of Scottish culture, broadly defined.

Since I was a teenager I have read the works of Burns and felt that he deserves a wider audience than the annual festival of the unco' guid that marks his birthday each year on January 25th. Like the Slovene poet, France Preseren, Burns speaks not just for some exclusive national feeling, but the universal themes of love, nature and politics. Yet whether the lovely pastoral of Westlin Winds or the epic song of brotherhood a Man's a Man it has seemed until recently that Burns was condemned to the shortbread tartanry that makes him seem more of a museum piece than of any modern relevance. In the end though, Burns is really a bit of a rock star and though Holy Willies Prayer and Tam O'Shanter were radically subversive at the time, it really is the songs that make Burns so accessible. Possibly my favourite (and certainly my Grandmother's favourite) is Ae Fond Kiss

The links will take you to some modern performances of these great songs. Enjoy!