Thursday, November 29, 2007

Barbaric Sudan

For those who might be interested, the address of the Embassy of Sudan in London is:

Embassy of the Republic of the Sudan
3 Cleveland Row
St. James’s
London
SW1A 1DD

Should you feel that the violent and unpleasant regime might need reminding that civilised states do not jail teachers on trumped up charges under a kangeroo court for allowing their class to name a teddy bear, my suggestion is that you let them know that the people of the United Kingdom hold them in the most abject contempt.

After all it is merely the latest crime from a regime that is racist, fanatical, despotic and evil.

I think that the man who represents this disgusting regime in London, Omer Siddig, can leave as soon as he likes, and I do not think that our woman in Khartoum, Dr Rosalind Marsden, need detain herself further in attendance to these vermin.

The Liberal Democrat Leader

The role of the Leader of the Liberal Democrats is one of the most difficult in British politics.

Unlike the Leader of HM Opposition, there is no specific financial support for the leader of the party, neither, except at election time, does the Liberal Democrat Leader have Police security protection.

Yet despite the reduced official support, the role of the leader is, if anything, even more difficult than that of the Leader of the official Opposition. In a system explicitly designed to divide only two ways, the Leader of the party must overcome the structure of the constitution as well as the efforts of the other parties. Defining the position of the party in the face of the indifference or hostility of most of the media is equally difficult. The position of most journalists is that whatever the Liberal Democrats say or do, they are irrelevant: and as a result the party rarely receives the coverage that its ideas and support deserve. Although gaining the support of around one in five voters, the party gains less than one in ten of the seats in the House of Commons.

Truly the job is difficult and dispiriting.

Yet the reason why Liberal Democrats continue to put so much effort into politics is because we believe that Liberal ideas are vital to preserve our freedoms and to enhance the way of life of our country in the future. Liberalism is a disciplined and coherent ideology based on maximising the freedom of the individual. We are economically Liberal because that is the best way to generate prosperity, we are socially Liberal because the role of the state should not define how individuals should live their lives.

The two candidates for the Leadership of the Party have both put Liberal visions. We are therefore told by commentators that the differences are more of emphasis and presentation. Certainly Nick Clegg, one-on-one is attractive and charismatic. He has certainly put forward intelligent and interesting ideas during his tenure as Liberal Democrat Shadow Home Secretary.
His weakness has been to lack crispness in dealing with unexpected situations- and on one or two occasions he has clearly been thrown by questions.

Chris Huhne, by contrast, has not been considered to have presented his more challenging environmental agenda so well. However, throughout this election I have been struck by the way that he has consistently been able to refer to key liberal principles when he has been asked questions. He has a deep understanding of the way that Liberal ideology knits together.

One other point has been made about this election: that impressive as Nick Clegg is, he is not the finished article, whereas Chris Huhne has less room for growth. Personally I find this a slightly strange idea: we are looking for a leader now. I can only judge the contest on what is being offered today. Indeed Chris Huhne does have more life experience; he has been a highly successful journalist and made a great deal of money when he set up what became the Fitch IBCA rating agency. His business and entrepreneurial experience is impressive. I have also no doubt that success did not make him universally popular. Several people have said to me that "of course Chris can be a bit of a bast*rd sometimes". This is not, however a popularity contest, it is a test of leadership, and an element of ruthlessness is clearly part of the job description.

Finally, I think that many people- both inside and outside the Liberal Democrats- have been impressed by the way that Vince Cable has performed as leader. For me it has been a tonic to see his disciplined and consistent approach, based on considerable knowledge and experience outside of politics.

This has been a difficult decision. I think both could do the job exceptionally well. I have been impressed by the way that the party has responded to both candidates. Certainly I did not expect to be hesitating this late in the contest. I was leaning strongly to Nick Clegg at the start.

Nevertheless, for his experience, his principles and his disciplined focus:

I will be voting Chris Huhne.

Cultural Relativism

I know that in today's world we can not generally sit in judgement over the matter of cultural differences. However there is currently a very clear example of where we are entitled to make a comment. The arrest of a British school teacher who allowed her class to name a teddy bear after the name of one of the kids in her class- Mohammad- is extremely simple.

Those who accuse her of a crime are evil.

Were they to succeed in inflicting punishment upon her, particularly the whipping that is suggested, then they would be barbarians.

I see that the Sudanese Ambassador has been summoned for the dubious pleasure of a dressing down by our boyish Foreign Secretary. I sincerely hope that this wrist slapping is backed up with a concrete message: No free citizen should endure arrest and charges for such an absurd offence, and that if the Government of Sudan proceeds with this case it will be labeled "evil" "barbaric" and will be severely punished.

Wednesday, November 28, 2007

Browning on Brown

One task more declined, one more foot-path untrod,
One more devils'-triumph and sorrow for angels,
One wrong more to man, one more insult to God!
Life's night begins: let him never come back to us!
There would be doubt, hesitation and pain,
Forced praise on our part--the glimmer of twilight,
Never glad confident morning again!


The last lines of Robert Browning's poem, The Lost Leader have been widely quoted against politicians, especially since they were used so effectively against the declining Harold Macmillan during the Profumo scandal.

It does not look good- the government seems accident prone and whereas Tony Blair was a lucky leader, Brown, with his volcanic intensity seems too brooding and driven to be likable. He clearly is a bright and thoughtful man, but his angry motivation is alienating and difficult. His secretive and mistrustful nature has isolated him in his party and in Parliament; and all of this has become apparent in only six weeks.

In hindsight, the decision to delay the general election seems likely to lead to a completely different political environment over the course of the next two years. Instead of moving forward, the government has made a series of catastrophic decisions: the abolition of taper relief on capital gains tax will cause significant problems in the private equity business, while the changing of the 90 day a year non-dom rule to include the days travelling will cause a significant number of hedge funds to leave London. The run on Northern Rock has left tax payers with an open ended commitment of billions of Pounds and brutally exposed the weaknesses in the British regime of financial regulation. The fiasco of the missing data discs simply shows up the fatal flaws in a flagship policy of the Labour government: the multi billion Pound ID cards project.

The global economic background grows bleak indeed- the political environment for Labour grows colder. So cold that the dreaded word "sleaze" has returned to haunt a sitting government. Sleaze is usually a symptom of a failure, rather than its ultimate cause. The question now is can Labour recover?

In my view the answer is: No.

The next question is altogether more complicated: so, what next?

In my view, this could be a dramatic opportunity for the Liberal Democrats- thus the choice of new leader will be a significant factor in how the party takes advantage of this opportunity.

I will address that issue tomorrow.

Checking In (again)

Just back from a couple of days in rather foggy Ljubljana.

The car crash of the Brown government seems now to be spininng down the cliff with the flames about to burst from the petrol tank... what fun!

Thursday, November 22, 2007

The challenges that the next Liberal Democrat leader must address


I believe that there are several key challenges that Britain now faces and which the Liberal Democrats must address.

The role and power of the State has grown substantially over the course of the past two decades at a time when those who control the state apparatus are coming from an ever smaller pool of career politicians who lack the management skills required to administer the increasingly complex mechanisms that are supposed to deliver the promises that they make.

The result has been increasing disillusionment from an electorate that has learned that politicians can not deliver what they say. Furthermore, despite their manifest failures, the political class has largely escaped from personal responsibility for the mistakes that they make. A cosy consensus between the civil servants and successive governments has created a powerful, secretive and unaccountable State. Local government, dependent on Whitehall for its finances, has been eviscerated, and yet the legal responsibilities of Councillors are so arduous that ever fewer are prepared to take on the role except on a professional basis. Forty years ago we had MPS who were quite badly paid, since most had outside interests, and unpaid Lords and Councillors. Now the costs of our democracy have increased almost exponentially.

The scale of government has grown to a level that is beyond the capacity of the archaic systems of our constitution, and quite probably beyond the capacities of any constitution to control.

Britain faces a constitutional crisis.

In the wider world, the mismanagement of the Bush administration has created two challenges. The first is the result of the failure of the United States to deal with its lax credit market until it was too late. Essentially the United States has created an approximately $47 trillion debt that it can not repay. In effect, the fall of the Dollar is leading to a gigantic default on this debt. The overall result is that the economic role and prestige of the US- hitherto our closest ally- is being weakened at a time when it faces the new challenge of a resurgent China. Far from being a hyper-power the United States is becoming merely a first amongst several powers of roughly equal weight. Associated with this economic decline is the spectacular failure to meet the challenge of Islamic terror. The costs of the wars in Iraq and Afghanistan are beyond what the US can realistically sustain. In short, the US, leader of NATO, and of the democratic world has reached the position that Paul Kennedy warned of in the Rise and Fall of the Great Powers: Imperial Overstretch.

The challenge for Britain in the face of the decline of our leading ally is to define a new set of relationships that can maintain British security and influence. Furthermore, this must perforce be done in a manner that maintains liberal freedom. The challenge of the rise of the so-called BRIC powers- Brazil, Russia, India and China- is that neither Russia nor China are democratic and that Brazil and India have relatively unfree economies. The new economic and political world is both more politically unstable, but also more economically unstable. At some point, we may see the return of production from China to the United States as the costs of business tend to equalise. The risk is that China might become protectionist in order to weaken this process.

The consensus amongst the other European powers to meet this challenge has been to pool a degree of sovereignty and to forge closer political co-operation. However the process of reform in the European Union has been very slow and very piecemeal. There is a significant group that argue that the costs- economic and political and well as financial- of the EU, outweigh its benefits. However, in the face of the dramatic challenges emerging globally, it seems clear that a considerable effort must be made to ensure that the liberal, open economies of Europe continue to work together and to provide an example and a force that can promote liberal economics and liberal democratic values. Leaving the European Union is not an option: we must engage and make it work.

Britain faces serious political and economic challenges in this new world system.

Part of the challenge that the decline of the US Dollar and the growth of economic power in the BRIC powers is that there is a squeeze on global resources. In addition, the relatively energy inefficient Chinese economy is adding to global Carbon Dioxide emissions. As the planet faces the costs of the human population growth over the course of the next decades- leveling off at around 10 billion- combined with the forecast oil production peak, it is clear that our planet faces a serious problem of sustainability.

Britain faces serious challenges of sustainable growth and energy security.

In the past few years, the United Kingdom has been successful in attracting high quality individuals to work in our economy. The influx of several hundred thousand people, both from inside the European Union, and to a lesser degree from outside it, has been a major factor in the success of the British economy over the past decade. It is changed our country, but by and large these changes have been welcomed. However, that there is a cost to these social changes is undeniable. Furthermore, it underlines the weakness in several key areas of British infrastructure, including especially education. While the general quality of higher education is globally competitive, the quality of British schools has not kept pace. Too many pupils leave school lacking basic skills, such as literacy and numeracy. Furthermore, the average quality of British state education, despite the soaring grade inflation showing in examination results, appears to be declining. The lack of language skills in British pupils is particularly striking. Although the UK has benefited from the influx of hard working and well educated foreigners, our domestic education levels should cause us concern.

Britain faces serious problems across its whole infrastructure- and the failure to provide timely investment is undermining our competitiveness. Although we can plug the gaps in our human capital through immigration, the weakness across our physical capital will take decades to fix- even if a sustained programme of renewal was started now, which it has not been.

In my opinion the Liberal Democrats are the British political party that most recognises the challenges that we face and has developed coherent ideas to tackle them. In particular, the ideas of accountability and political reform that the party espouses makes it more likely that the challenges that we face can be dealt with in an intellectually coherent way.

I have listened to both Nick Clegg and Chris Huhne. Both have put forward ideas that are credibly Liberal. I have not had complete answers to the questions that this big picture survey raises, but I am satisfied that both would be credible and attractive leaders. I believe that either could take advantage of what I believe could become the best opportunity to achieve the reforms we believe are required to our country and to create a more open, fairer system of government and perhaps a fairer and more tolerant society. Although as regular readers of this blog will know, I am sceptical about the value of detailed policy promises, I believe that both have the right instincts. I will be happy with either as leader.

I am close to making my decision. I will make public that decision when I have made it.

Wednesday, November 21, 2007

The Lesson of HMRC and UK Treasury incompetence

This is the central problem of modern British politics: too many kid politicians who have never had any experience outside of politics. Both Brown and Cameron and most of their respective front benches are people who have no understanding of even the first principles of management. They literally know nothing about it. The professionalisation of politics has created machine pols with limited life experience and poor administration skills.

Meanwhile the machinery of government is being required to do more and more difficult and complex things. The result is a recipe for disaster. Without major simplification of administration and the constitution it is hard to avoid the idea that government will grow more alienated from the people it purports to represent and that administration will deliver more and more foul ups on this scale.

This is a disaster for Labour, but the implications are as much constitutional as they are party political, in my view. The fact is that a Minister, from whatever party, has generally only a limited idea of the workings of their department, and serving maybe 20-30 months on average, they do not get the chance to find out much more. Without any managerial skills, they are doomed to be ineffectual figureheads.

The Liberal Democrat case for constitutional reform rests on two key ideas: the principled case based upon the Philosophy of openness and accountability embedded in Liberalism. The second is the pragmatic case based upon the fact that the State apparatus can not deliver anything like the results that are expected.

After the past few days, I have seen Vince Cable rip the government to bits. I believe that, despite the fact that the Lib Dems have been derided and dismissed, the time for our ideas has come.

The Conservative party is also led by yet another machine politician and the backlash against the idea that politics is a career and not a vocation is going to grow ever stronger as it becomes apparent that professional politicians are incompetent at everything... except politics.

Tuesday, November 20, 2007

Continuing qualms about Clegg

I don't have much to say about the Politics Show battle, but the "outrage" amongst the Lib Dem bloggers for Clegg feels a bit manufactured to me, and I am not sure that Nick was well advised to formally complain.

I did think that Huhne coped well with the obvious ambush though.

I have still not decided on this one, but I do not see that Nick Clegg is the great communicator that is backers have suggested. I do see that Chris Huhne has put forward some interesting and challenging ideas.

I like the idea of a leader with real life experience, (unlike Cameron or Brown), but also see that Nick Clegg does have considerable talent.

Mind you, I think one man who has come out from all of this looking like a complete star is Vince Cable- I am tempted to start a write in campaign to get him to stay on as leader!

UK Media now a provincial backwater

I have been wondering about the British media recently.

The constant coverage of "Slebs" and "infotainment" has got to have a price.

I finally see that it it does.

Did you know that a large demonstration took place yesterday in Brussels protesting the delay in forming a government and supporting Belgian unity?

One might have thought that such a significant event might warrant a story on the BBC. In fact I got the story from Al Jazeera. On the British media, neither press nor the BBC seems to have reported this at all- not even as a five line story.

Now some will find the very idea of Belgium faintly comical. The Economist has recently called for the country to be dissolved. However the fact that the majority of Belgians still rather like their country and thousands are prepared to demonstrate this support will presumably come as a surprise to British commentators.

If we are so ignorant of the affairs of a country which is practically our closest neighbour, it can hardly be a surprise when our country makes misjudgements in countries much further away, like- to pick two examples at random- Iraq and Afghanistan.

Dumbing down is quite literally making our country stupid.

On the London paper last week, there was even- and I am not making this up- a headline on the front page: "Amy Winehouse goes to the shops".

Galina Starovoitova RIP


It is now nine years to the day since Galina Starovoitova was shot dead in cold blood.

Hers was just one of the more brutal murders of political figures in Russia over the past few years. Before her death she established a prize for the promotion of Human Rights in Russia. One of the recipients was Antoly Sobczak, the former mayor of St. Petersburg.

He too died in suspicious circumstances- of a heart attack.

Why suspicious? Because two other people in the room also had heart attacks at the same time.

Friday, November 16, 2007

Is this the shape of the Universe?


This is the E8 pattern, the most intricate shape known to mathematics. It is an eight-dimensional mathematical pattern with 248 points first found in 1887, but only fully understood by mathematicians this year after workings, that, if written out in small print, would cover an area "the size of Manhattan".

E8 encapsulates the symmetries of a geometric object that is 57-dimensional and is itself is 248-dimensional.
Garrett Lisi, a scientist who rather splendidly seems to spend most of his time surfing or snowboarding, reckons that the mathematics of particle physics conforms to the same pattern, and he predicts that a further twenty particles will be discovered when the Large Hadron Collider comes online next year.
Exciting times to be a physicist!

Wednesday, November 14, 2007

Happy Birthday PJ!

Today is the sixtieth birthday of the great American satirist and Libertarian, PJ O'Rourke.

One could hardly let the day go by without quoting my current top ten all time great PJ quotes:

10. I'm a registered Republican and consider socialism a violation of the American principle that you shouldn't stick your nose in other people's business except to make a buck.

9. The larger the German body, the smaller the German bathing suit and the louder the German voice issuing German demands and German orders to everybody who doesn't speak German. For this, and several other reasons, Germany is known as 'the land where Israelis learned their manners'.

8. The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then get elected and prove it.

7. Giving money and power to government is like giving whiskey and car keys to teenage boys.

6. In fact, safety has no place anywhere. Everything that's fun in life is dangerous. Horse races, for instance, are very dangerous. But attempt to design a safe horse and the result is a cow (an appalling animal to watch at the trotters.) And everything that isn't fun is dangerous too. It is impossible to be alive and safe.

5. Cockfighting has always been my idea of a great sport— two armed entrĂ©es battling to see who'll be dinner.

4. The interesting thing about staring down a gun barrel is how small the hole is where the bullet comes out, yet what a big difference it would make in your social schedule.

3. Politics is the business of getting power and privilege without possessing merit. A politician is anyone who asks individuals to surrender part of their liberty— their power and privilege— to State, Masses, Mankind, Planet Earth, or whatever. This state, those masses, that mankind, and the planet will then be run by ... politicians.

2. You can't shame or humiliate modern celebrities. What used to be called shame and humiliation is now called publicity. And forget traditional character assassination; if you say a modern celebrity is an adulterer, a pervert and a drug addict, all it means is that you've read his autobiography.

1. I have often been called a Nazi, and, although it is unfair, I don't let it bother me. I don't let it bother me for one simple reason. No one has ever had a fantasy about being tied to a bed an sexually ravished by someone dressed as a liberal.

As always- a Genius: Have a happy day, PJ !

The Tories are the Enemy of the UK

I see the corpulent Simon Heffer has outdone himself in ranting this morning.

He essentially demands that the Union that links England and Scotland should be dissolved because England and Scotland are different nations and that the Scots have too much power over England even though the whinging Jocks are just a bunch of subsidy junkies (I paraphrase lightly).

I have warned about the Conservatives' attitude to the Union in the past, and it is now quite clear what the agenda of much of the right wing press has become: to "big up" Alex Salmond and drive Scotland out of the United Kingdom.

I think that it will fail.

I think those who play fast and loose with the Union should be treated with utter contempt.

(and incidentally at $100 bbl oil prices, the idea that Scotland is dependent on the Union is simply barking)

Monday, November 12, 2007

"Archer, Aitken, Ashcroft..."

It was a real blast from the past this morning, hearing Jonathan Aitken, the ex-con Conservative, who is apparently being considered as an advisor on prisoner conditions. I know we are supposed to be a bit forgiving he has, after all, "paid his debt to society", but there was still just a whisper of the old arrogance in his interview on Radio 4. It was hard to avoid the contrast with another disgraced ex-minister John Profumo, who genuinely did serve a penance for his behaviour. Of course the political opponents of the Conservatives will make hay- it is a misjudgement by Iain Duncan Smith that only serves to remind us of the sleaze of the last Conservative administration. As Lord Ashcroft struggles to answer questions about the assurances that he is alleged to have given concerning his tax status upon being ennobled, the old taint fills the air once more.

I have three questions about the behaviour of other previous members of the cabinet.

As regular readers here will know, I have expressed astonishment and considerable concern at the fact that the Conservatives are formally allied to the Putinist "United Russia" faction in the Parliamentary Assembly of the Council of Europe. I found it inconceivable that any democratic party could be associated with United Russia, least of all in the Council of Europe, which is an organisation founded upon a commitment to Human Rights.

Perhaps the link might be more understandable when one considers that several Conservative Peers receive remuneration for their work with companies that are wholly or largely deriving their business in Russia. If you go through the register of Lords' interests, a pattern begins to emerge:

Lord Howe is the President of The Russian Enterprise Trust.

Lord Howell is a member of the advisory board of Hermitage Capital, a Russian Investment Company

Lord Hurd is a consultant to Alfa Bank,

So is Lord Powell of Bayswater, (a cross bencher, but strongly associated with the Conservatives)

Lord Lamont is a consultant to Hermitage, but also serves on the board of Rotch Property, whose sister company is Rotch Energy which appears to have acted as a front for potential Russian acquisitions in Poland.

Lord Lang is paid by Charlemagne Capital, which derives most of its income from Central Europe and Russia.

Lord Lawson is a member of Central European Trust.

Lady Neville Jones has yet to declare her interests, but she has previously had interests in firms active in Russia.

Thus several senior members of the Conservative Party are receiving substantial amounts of income from companies that have major interests in Russia.

Several others have incomes derived from companies where Russia is a significant but not dominant source of revenue.

The questions are:

Whether the views of these peers are moderated or influenced by the income that they receive.

and

Has any of these peers expressed an opinion on the continuing alliance in PACE with United Russia?

If so, what was it?

Friday, November 09, 2007

Nick Clegg will need to do better

I have refrained from commenting on the Lib Dem leadership election, partly because I am genuinely undecided and have been examining both candidates ideas. My initial reaction was to favour Nick Clegg. I had listened to his speech at Brighton and felt that he had put forward a genuinely modern, intellectually coherent and above all Liberal policy on Home affairs. Indeed on 18 Doughty St, I more or less said I would be supporting Nick Clegg. Nevertheless, I have also seen Chris Huhne put forward some genuinely radical policies- including taking the idea of Land tax seriously- which I think is a positive.

http://www.politicalbetting.com/, in something of a coup for its host Mike Smithson, has had both of the contenders on to answer questions from the large number of people who comment (not to mention the even larger number of people who read the site).

To my surprise, I must admit that Chris Huhne gave more coherent and more fully thought out answers- possibly because he was invited on a weekend and also answered far more questions, but what disappointed me more about Nick Clegg was this answer to a question Mike Killingworth put forward about the placing of Liberalism on the Political Spectrum:

"I am squarely part of the radical liberal tradition of British political thought. When I was young there were only two options: you either had a social conscience but were economically illiterate and voted Labour; or you were economically literate but had a heart of stone, in which case you voted Tory. That has now all changed. Politics is more fluid and society is more diverse. Liberalism is the creed of our times."

Why Disappointed?

Because Chris put it so much better:

"Left and right are old terms in a debate that is often about liberal and illiberal, authoritarian and laissez-faire. They apply to the particular 1945-1970 period of British politics when voting was largely explained by class. Now that voting is more open, and based on ideas and attitudes, there is a role for a big liberal party in British politics. My model is the Canadian Liberal Party, able to represent the half of the electorate who think of themselves as liberal."

Many of my friends have characterised the debate between the two candidates as "Huhne who can communicate to the party, but Clegg can communicate to the country". However, I am concerned that Nick is not crisp enough in communicating to his party or his country, whereas Huhne is coming across as more intellectually coherent. Having read in detail Chris' comment about Trident, I was very surprised to find that I agreed with him. Trident is not an independent nuclear deterrent, and if we need one, we can still have one without Trident. Chris is not being a unilateralist, whatever some remarkably ill tempered comments in the Lib Dem blogosphere may say. It was dishonest of Nick's team to try to tar Chris with that particular brush.

So, to my great surprise I am still undecided, I favoured Nick Clegg at first, I now find that Chris is coming across better. I am also not persuaded by Paddy and Shirley's email in support of Nick, partly because their judgement in the matter of the leadership has not been universally strong: they supported Charles, knowing that he had issues about drink, and also Ming, when perhaps we should have thought more carefully.

So, I will listen some more, but I an surprisingly uneasy with Nick Clegg's communication so far: he needs to provide more intellectual bottom to his campaign. To be honest I would like to see his manifesto- to match Chris's in clarity.

Could it even be- highly unlikely when the campaign began- that Chris Huhne gets my vote?

We shall see.

Georgia in the Russian cross hairs

The last few days have been difficult, even in the context of the tumultuous recent history of Georgia. Riots, and government demonstrations in Tbilisi, the declaration of a state of emergency. A familiar tale of instability in the Caucasus, would be most observers diagnosis.

Except it is not.

Georgia is a country of absolutely critical geo-strategic significance. Put simply the Baku-Tbilisi corridor is the only way that oil can get to the global markets from the vast fields of Kazakhstan and the Caspian without passing through Russia.

For the West Georgia is a vital part of global energy security: for Russia Georgia poses a defiant challenge to Russian hegemony over the central Asian energy reserves.

Constantly Russia has harried and harassed the Western oriented government of Mikheil Saakashvili- it illegally expelled thousands of Georgian traders and business people in 2006- a policy condemned by Human Rights Watch . In August of this year the repeated illegal over flights of Georgia by the Russian Air force even included a missile attack.

The constant open pressure by Russia has not caused Georgia to fold, but there is also a more secretive aspect to the Russian policy. The mysterious death of the previous Prime Minister, Zurab Zhavania has been linked to the Russian secret service. Last October, Russia sealed the border after Georgia uncovered a series of Russian officials and soldiers in the country illegally with plans to either take hostage or kill several Georgian officials: the soldiers involved were handed over to the OSCE .

In the context of the constant pressure from Russia, the latest unrest in Georgia begins to assume a far more sinister shape. The extraordinary allegations made against the government by the former defence minister, Irakli Okruashvili, are so extreme that they carry eerie echos of the kind of brainwashing that former GRU agent Viktor Suvorov alleges took place under the Soviet Union.

In the face of the protests that these extraordinary allegations provoked, President Saakashvili has done the right thing: brought forward elections which he hopes will confirm that he has a mandate to continue the open market, democratic policies that have led the country into dramatic economic growth and a close relationship with the West.

It looks as though this move has defused the protests- but it has also revealed that the regime, far from being the dictatorship of Russian imagination, is firmly rooted in a democratic outlook. In fact the economy minister, Kakha Bedukidze, Is an openly avowed libertarian, who has pursued a complete transformation in the Georgian economy by massive deregulation and by a radical privatisation programme. These are not generally policies consistent with dictatorship.

The Russian propaganda machine continues to launch attacks against Georgia, while the West has been more tepid in its support for a critical ally. Georgia may be "a faraway country of which we know nothing", but as in 1938 Czechoslovakia, the fall of Georgia into the Russian sphere would dramatically weaken the strategic position of the West.

It is a game of high stakes. The Russians need to be told that their meddling must cease- now.

Wednesday, November 07, 2007

A Third Mellenium Great Depression ?

Last night I attended a seminar over dinner with a group of Traders and Hedge Fund Managers.

Over the course of the evening, various theories were discussed as to "what is happening in the global economy".

The answers put forward were complicated but more or less uniformly bleak. The overnight gyrations of the dollar and the price of oil as the result of the Chinese openly talking about "diversifying" their currency holdings seems to reinforce the sense that we are not looking a a simple turn in the cycle.

Put simply, the scale of the credit losses is now so large that the United States can not avoid a prolonged period of painful adjustment. As Hans-Redeker, currency chief at BNP Paribas, puts it "Our view is that these losses are so substantial that it puts current business models at risk."

The US is now caught is a deadly trap. The price of oil and other commodities is in Dollars, so the effect of the dramatic appreciation of the Oil price is felt directly in the US, with no mitigation from currency effects. Meanwhile, the credit meltdown is sending the economy deep into recession. The Fed keeps trying to cut rates, but each time it does so, the Dollar falls further- the oil price rises and American inflation grows. The ability of the Fed to cut rates further is extremely limited, but the necessity of doing so grows more urgent with each foreclosure. Meanwhile the forecasts now suggest that if anything, the first half of next year will be even worse as "teaser mortgages" roll over to commercial rates.

The single bright spot is that the US external imbalances are correcting more rapidly than expected- but this is a painful adjustment too- since it at least partly reflects the drastically weakening purchasing power of the US currency.

However the consensus of our discussion was sobering: the current crisis only looks like the first stage of a gigantic change that will leave few areas in the world unaffected. Despite this, the view around the table was that the markets will eventually correct many of the problems on their own- or at least they would, were it not for the biggest risk of all: bad decisions by political figures who chose to intervene too directly.

Political risk is seen as the element that could turn the current crisis into something far more prolonged. Yet, we face the current crisis bereft of political figures with any real understanding of the workings of the global economy. Even major policy formers in central banks have had to have the workings of the CDO market explained to them, and when looking at the prospective Presidents of the United States, ones heart begins to sink.

Meanwhile, the incumbent, by sabre rattling on Iran, could drive the price of oil far higher: with consequences that could simply destroy the US Dollar as a reserve currency.

As the US faces a credit crunch and property crash unprecedented since the Great Depression, too many Americans remain complacent.

Too many British fail to understand: the risks in the UK are now also approaching critical levels. A major Bank failure is still a real risk, and the bickering between the Finance Minister, Alistair Darling, and the Central bank chief, Mervyn King, over Northern Rock, do not bode well if and when that perfect storm hits the UK.

Friday, November 02, 2007

Grand Designs face down the NIMBYs

I must admit to being a secret fan of Grand Designs.

It puts forward an idea that is a very attractive pipe dream: the creation of a dream home, and as the subject of each programme meets the challenge of creating a home that expresses something of themselves, it allows the rest of us the fantasy that maybe, just maybe, we could do the same.

Last night I watched the programme that showed the presenter, Kevin McLeod's favourite design. It was, as is often the way with the designs selected by the programme to be filmed, highly eco-friendly. It was, unusually, built in a patch of woodland in southern England. How unusual that was was then made clear: no permissions are ever normally given in the UK to allow such construction. It was only because the builder was a Woodman who needed to be in the wood, for the sake of his livelihood, that any permission was allowed, but that he could not sell the house on, once built, and should he sell the woodland, from which he derived his living, he must demolish the house. It meant, of course that he could not borrow any money to fund the project, since the building had no market value. I must say this does offend my idea of rights to property, but the builder accepted the stipulation- and built it from his own resources.

To me, this brought home just how draconian the planning regulations are in Britain. As Marcus Brigstocke pointed out in his Radio Programme As safe as Houses , the fact is that the UK has an extremely small area devoted to housing- less than 7%. As you fly over the country, even the supposedly crowded South East England, the overwhelming prospect is not of a concrete jungle, but of how green the country is. As the population has grown, however, the availability of housing has fallen. Despite the headline grabbing large scale house programmes that were particularly proposed by the government in the past few years, relatively little is being built.

The Town & Country Planning Act of 1947 essentially nationalised the planning process, and like many other acts passed by the Attlee government, it is showing its age. Yet, unlike most other economic legislation, such as the nationalisation of coal, steel, the Bank of England, health care and so on, the planning regime has not been liberalised. In fact if anything the planning regime has grown ever tighter.

The result is that the market can not respond to the excess of demand over supply. It is not just a function of environmental impact- as the Grand Designs build shows, construction these days can indeed be exceptionally light on the ground. The problem is that the current regime is totally inflexible. The vested interests that Kevin Cahill points out in his book, "Who owns Britain?" have lost very little of their influence- and this influence is pervasive in the Green movement. A Land Tax might not only address the vexed issue of land use, but also reveal who owns the large unbuilt areas of rural Britain. This information is not public, as the result of a loophole in the law establishing the land registry.

The UK now faces a housing crisis: the cost of home ownership is beyond the means of an increasing number of Britons. Although house prices may now stall, as the result of the instability in the credit market and the prospect of recession, the structural imbalance will remain. The simplistic attacks that the right wing press have made on immigration being the root of this housing shortage conveniently ignores that fact that the Poles have brought with them many with the skills lacking in the domestic labour force: plumbing, not least. It also ignores that fact that the increasing demand is a function of far reaching social changes which have dramatically increased the number of people leaving alone.

Attempts to reduce demand will fail and can not solve the housing crisis. Only increasing supply can make a long term difference. However, this is not the same as "concreting over the South of England" that is the perennial warning of NIMBYs. In fact the easing of supply could be brought about with fairly small changes in land use- even a 1% increase in the land available for housing would dramatically alter the situation. At a time when rural life is declining: shops and pubs closing etc., the arrival of new residents in new houses could help to keep schools, pubs and other services open.

Those that refuse to allow any building are killing rural life in this country.

Yet politicians have found it easy simply to go with the NIMBYs.

The right position is to relax the draconian ban on new housing in the countryside.

I too have a grand design in mind. A wooden house inspired by Frank Lloyd Wright, set in a clearing overlooking the sea. It will also be a low environmental impact building, using the best of insulation and wood pellet heating.

However I will build it in Estonia- a place where the market works far more sensibly and where NIMBYs do not -always- have the last word..

Thursday, November 01, 2007

Playing with fire

There has been a lot of hot air wafted about recently on the subject of the relationship between Scotland and the rest of the UK.

Despite the fact that oil is now on the brink of $100 a bbl, support for independence in Scotland is falling rapidly.

Nevertheless a certain section of the English press is stirring things up. We see resentful headlines in the London Paper about supposed extra payments being made to the Scottish government merely because the long overdue investment in London's crossrail is finally taking place. The idea that Scotland is a whining subsidy junkie - indeed little more than a parasite on England- is gaining ground in England based on these wilfully misleading headlines.

Not surprisingly, support for English independence has risen, even last year reaching 30%.

Therefore the latest proposals from the Conservatives for addressing the supposed anomaly of Scottish MPs voting on English affairs is treading on very tricky ground.

This is not to say that no action is needed. In fact I and other Lib Dems would argue that major constitutional change is increasingly urgent. However the idea of the English Grand Committee does not address the real issue. Along with much else, local decision making across the UK was emasculated by the centralisation that began under Margaret Thatcher and came to full flower under Tony Blair.

Personally the answer to the West Lothian question is obvious: a federal Britain. The question though is whether either England should be a single entity, or that smaller units or regions are better. Many oppose federalism because they argue that regional government would be another, expensive layer of government. Yet a single English government, covering 50 million population seems so much out of line compared to Scotland with 5 million, Wales with 3 million and Northern Ireland with only 1.7 million.

Nevertheless it is undeniable that were the choice of a regional government was offered- in the North of England- it was rejected by voters. Nevertheless, I would argue that smaller units, rather than a single entity would put English affairs more firmly into the hands of the people it most affects. In Spain, there is no "one-size-fits all" federalism: several governments: La Rioja, Asturias, Murcia are based on a single county. My view would be to make the County the prime unit of English local government: the long history of each place makes local loyalties very strong. Many Counties have large populations: Surrey, for example has over a million people. Even smaller counties, such as Cornwall with about 500,000 still have substantial populations.

It strikes me that the grouping of counties on an ad hoc regional basis would happen anyway, if the need arose, but that it should happen in the traditional English evolutionary way.

At the end of the day, how the English rule themselves within the United Kingdom is a matter for the English people, but the problems that Malcolm Rifkind identifies are the result of too much centralisation. creating an English Grand Committee does not address that problem.

Fueling resentment with false stories of supposed Scottish profligacy, simply because the Scottish government chooses different policies that those imposed from Whitehall on England is the politics of the playground- and very dangerously negative.

Moving our government to a less centralised model is long overdue- having begun the process with devolution to Stormont, Holyrood and Cardiff Bay, we must now turn to changes inside England and to creating a genuinely federal system of home rule for Scotland, Wales, Northern Ireland- and England or at least those parts of England that wish for it.

The unholy alliance of the SNP and some Conservatives who wish for the break up of the Union can be challenged and indeed beaten but it is time that our constitution received a major overhaul.