Thursday, December 12, 2013

He can't get them out of the Maidan

Well, it was too good to be true, the Yanukovych government did sent the riot police back into the Maidan overnight, but two bad things happened to them. The first is that even where the police pressed hardest, the crowd did not give way. The Berkut were simply not strong enough to get the crowd to move. The second was that the police themselves are now obviously divided. The most loyal forces of the government are wavering in the face of the spectacular size and determination of the crowds.

Meanwhile Yanukovych is getting desperate- the attempt to extort €20 billion out of the EU in exchange for signing the association pact is a frankly rather pathetic piece of blackmail and will privately laughed out of court in Brussels. It demonstrates how far away Yanukovych still is -or ever was- from engaging with either the European Union or the thousands still in the square. His obvious duplicity has weakened him still further.

The condemnation of last night's police action from the United States will have put a chill into the minds of the oligarchs backing Yanukovych- as the Magnitsky List did to Putin's oligarchs. The pressure on the regime has now gone up another notch. 

He can't get the crowd out of the square- he has very few cards left to play.   

Wednesday, December 11, 2013

Holding our breath for Ukraine and for Europe

The extraordinary roller coaster of the past twenty-four hours in K'yiv has not finished yet. I have friends in the Maidan at the moment and it does appear that the riot police are withdrawing. Inevitably rumours are swirling, but after the failure to dislodge the protest either in the City Hall or in the Maidan itself suggests that Yanukovych is in real trouble.

Three of the oligarchs are in the Maidan and it looks as though the rest are backing away from the regime. The presence of both Cathy Ashton and Victoria Nuland, the US Deputy Secretary of State seems to have focused minds in the regime about how to get out without the bloodbath that might have occurred last night. The huge cheer in the Maidan as the police withdrew to their buses certainly seems to suggest that crowd thinks that the threat level has eased a bit after the intense pressure of the past two days.

We can only watch and wait- and pray.

Ukraine has not perished yet.





Tuesday, December 03, 2013

Ukraine: Its the Russian economy, stupid!

Hundreds of Thousands of people on the streets of K'yiv. 

Viktor Yanukovych at bay facing allegations of corruption and criminality. 

Why it could almost be the Orange revolution of 2004 all over again.

Except it is 2013, and the stakes are even higher this time.

The root of the crisis does not lie in K'yiv, but in Moscow. The Kremlin is seeking to restore its influence in a remade USSR: the Eurasian Union. Ukraine is a country as similar to Russia as Denmark is to Sweden, so the idea that it would reject the Kremlin's overtures is shocking to many Russians. Yet the fact is that the Eurasian Union bears little resemblance to the European Union, which it seeks both to emulate and to compete with. Politically, Vladimir Putin's government lost its political legitimacy the day he sought to return to the Presidency, and as a result he was forced to fix the election in order to win it. Economically, Russia has little to offer except basic goods: oil, gas and other commodities. Its manufactured goods are low quality and -as a result of the oil-inflated Rouble- expensive. Russian competitiveness has been eroded by the kleptocracy to the point where only a captive market would buy Russian goods- a captive market such as the Eurasian Union.

Yet, for Ukraine the decision to head west has already been made. Over 60% of its trade is already now with the European Union and that percentage is growing, and the Ukrainians, like everyone else, have found Putin's Russia to be a distinctly unreliable trading partner: capriciously changing rules, breaking commitments and contracts at will. As a result Ukrainians have been forced- like Georgia before them- to upgrade their products to global standards of quality and seek out new markets.

Yet the process of Westernisation has been incomplete. Ukraine's political system is based on rival blocs of regional oligarchs. Unlike in Russia no one group has been able to achieve complete power, not even Viktor Yanukovych, despite the ruthless dispatch of his political enemy, Julia Timoshenko, to gaol has been able to avoid compromises with his rivals. To be quite clear, Ukraine has a political system, in a way that Russia does not; but like Russia it is a rule of plutocrats not democrats. Nevertheless, as the orange revolution showed, there is a very powerful democratic will in Ukraine- and Yanukovych has badly misplayed his hand. As the political system, so the economy, for the fact is that Ukraine has not modernized anything like enough to compete.

The problem for Yanukovych is that all sections of Ukraine are majority supporters of the EU association agreement- including his political rivals, and indeed his former supporters in Donetsk. By caving in to the overt pressure from Putin, he has alienated more or less everyone in his own country and made himself look like nothing more than Putin's puppet. Yet the crisis that this has created threatens to bring Ukraine to economic meltdown. 

A few weeks ago I was interviewed by the BBC about the chances of Ukraine signing the EU association agreement. I said then that Ukraine had little choice but to sign the agreement, because the Ukrainian economy urgently needs better access to the EU markets (and the prospect of visa free travel to the Schengen zone was a major incentive). Russia only has a negative hold on the Ukrainian economy- the gas weapon. The threat to deploy that weapon is only reinforcing the perception that Putin regards Ukraine as Russia's colony. In fact we now see that the pressure that Putin has exerted to get his way could lead to economic meltdown in Ukraine and have severe repercussions for Russia itself.

Putin has made himself into the enemy of the West. He believes that Russia is a separate civilization to the West- Orthodox and conservative. Yet what we might call this "Slavophile" vision is built on sand- Russia simply does not have the economic strength to stand alone. Any potential that it could have is undermined by the very polices of separate development that Putin wants to use to rebuild his authoritarian Empire. Russia is being destroyed by the greed and cronyism of late stage Putinism. The levels of corruption are way in excess of anything that Yeltsin might have tolerated, and the result has been the collapse of investment in the country. Russia itself is being consumed by the "party of crooks and thieves".

Of course that is what Yanukovych has been doing in Ukraine too. The Ukrainian economy has been undermined by the same kind of cronyism and corruption that is nibbling Russia to death. The difference is that the crisis in Ukraine is already happening now.

There are now three ways that the Ukrainian crisis might evolve. 

One is that Yanovych gets his way, faces down the protests and signs on to Putin's subversion of Ukrainian freedom. The consequences in the immediate term are economic meltdown, and the longer term profound political instability- and protests in Russia. 

The second is that Russia takes direct action and intervenes militarily. This would probably fail and might lead to revolution in Russia if it does so. 

The third is that Yanukovych is forced out and Ukraine decisively rejects the Russian road and starts down the road to full EU membership.

Last week Vladimir Putin must have been delighted at the humiliation he visited on the European Union. This week he has no good options. Putinism has crumbled a little further, and if one authoritarian, corrupt leader gets forced out in K'yiv, millions of Russians must be wondering if they might be able to do the same thing to their own brutal, incompetent and corrupt leader.

Wednesday, November 13, 2013

This is NOT the age of the train

Across the European Union- indeed world-wide- there are huge projects to develop high-speed rail systems. The pioneering days of the Japanese Shinkansen and the later French TGV network are now being followed by investments across the EU, and -especially- in China.

Yet there is a problem.

Railways may be more energy efficient once built, but they are hugely capital intensive- all of the components- track bed, signalling and rolling stock, must be built together and the project must be complete before it can operate. The power of rail is in the network, and without such a network, it does not work to anything like peak performance. Whereas road improvements can be made piecemeal and fit in with existing road infrastructure, high-speed rail lines are generally built from scratch. So the cost of such projects as HS2 in the UK or Rail Baltica (to link Tallinn with Warsaw) run into tens of billions of Euros. Even the Chinese are beginning to balk at the huge costs involved, while Californian fast rail projects smack more of Sci-Fi than properly costed and practical proposals.

The thinking behind making such investments is always that rail is faster that road and creates less emissions than air travel. We are told that investing in high-speed rail is visionary and exciting- and therefore naturally politicians tend to queue up to be associated with these projects. However in fact such investment may show a complete lack of vision and precisely the kind of blinkered thinking that our leaders say they deplore.

Over the course of the 19th century, rail investment created a dense network which allowed easy and cheap long distance travel for the first time. By the early twentieth century, rail was already facing significant competition from cars over short distances. By the late 1960s, the advent of jet aircraft- having destroyed the liner ships as inter-continental transport- were also making inroads against the slower railways. It became clear that above a certain distance and below a certain density of traffic, rail was simply not competitive. a retrenchment of the rail network in the UK focused efforts on commuting and point to point inter-city systems. Although efforts were made to increase speeds without massive investment in new track- the APT project, for example- these were not successful. The future by the 1970s was in the car and in particular the motorway network.

Yet the motorways became victims of their own popularity- huge amounts of freight moved to road and growing congestion out paced any (under) investment that was made into new road projects. By that time UK rail was also chronically underfunded and the lead that British Rail once had in locomotive engineering was destroyed by a series of botched rail privatizations. Yet infrastructure investment has been a political talisman for decades- even though the reality has been a series of abortive ideas rather than significant achievement, with the notable exception of the Channel tunnel.

Here we go again. 

The HS2 is already a series of unacceptable compromises, and even if it were built beyond Birmingham, it is a very dubious prospect as to whether the benefits would exceed the massive cost- currently projected to be over £42 billion (€50 billion). 

There is another significant problem emerging- the power of disruptive technology. The emergence of driverless car technology has the potential to transform the way we travel- and as large as the projected cost may be - the possibility of much faster and safer roads which can be invested in by stages and yet remain integrated with the existing road network, is a financial neutron bomb for rail investment. For moving both goods and people roads are far more flexible and much cheaper than rail over medium distances. Rail freight really only comes into its own at much longer distances, which is how the US rail system now works and why the rail silk rad from China to Europe makes sense. With the advent of driverless technology in trucks, the distance where road is more efficient than rail is being significantly expanded.

Which brings me on to Rail Baltica. This is a €3-4 billion project to link Tallinn to Warsaw with a new standard gauge line. Yet already it is clear that it will also be a rather weak compromise, since cost pressures will mean the line will most likely to built for speeds of 160 km/h, rather than the genuinely high speed lines of 260 km/h and faster. Tallinn is just short of 1000 km from Warsaw- it will be a minimum 6 hour journey- which is not competitive with the one hour flight. Rail Baltica is therefor being sold as freight solution, rather than a passenger solution. This- we are told- will relieve congestion on the roads. 

However there is currently less than 60 km of motorway on the 1000 km route. The best way to relieve congestion would surely be a wholesale upgrade of the via Baltica to a motorway standard. This would reduce the current four hour journey from Tallinn to Riga to two and a half hours, and the 7 hour trip to Vilnius to less than five. Warsaw would be around eight hours- as opposed to the current 12-14. Two hours slower than the rail transit time, to be sure, but the difference is that the truck or car unloads its cargo or passengers at the actual destination, rather than at a station where one must make other arrangements to get to your final end point. Building the motorway also prepares for the real future- driverless cars and trucks, since the motorway can still be used after the technology is widely introduced.

The fact is that the financial costs of these two projects are too big and that renders them classic examples of state-driven gigantism. We are told that the budget for Rail Baltica is already allocated, so therefore the railway will indeed be built.

This is not the way that Estonia used approach the world- once they would simply find best practice and then apply it. That is why the country has been able to become prosperous and influential. By contrast, Rail Baltica is a corrupt political bondoogle which is deeply flawed on economic and even ethical grounds. It is dead end technology- and later generations will be contemptuous of this mis-investment. The only good thing is that as a European project the pain to the Estonian tax payer will be very diluted. As for HS2- it represents a failure to invest in infrastructure and housing in the UK in any kind of even way- and the distortion that this mis-allocation of capital has created will be only added to by this white elephant.

The future of transport is coming- and it will not be in the shape of these monuments to 19th century technology.   

Friday, November 08, 2013

The Tragedy of Pskov

Pskov is one of the very oldest cities in Russia. It is 1110 years since the putative foundation of the city in 903 and it still possesses its ancient citadel - the Krom- and much of the city walls- dating from the time of the Pskov Republic, which like Great Novgorod, tells of an alternate, non-Czarist Russian tradition.

Unlike many Russian cities, Pskov lies close to the border of Russia- only 20 kilometres from the Estonian border. It has a history of trade and contacts all over Europe. Sometimes Pskov has been at the very centre of Russian events: Czar Nicholas II abdicated close by, and the most beloved Russian poet, Alexander Pushkin lived and worked- and is buried- in the region.

Yet there is little or no tourism in Pskov.

There is little or no anything. The bureaucracy of late Putinism and the corruption of the local civic leadership has strangled any potential this extraordinary city might have. No one goes to Pskov, few indeed have even heard of it.

Recently the local government set up a program to try to attract Russian speakers from neighbouring Estonia to settle in the region. Despite significant financial incentives, a pitiful total of 11 people made the move- mostly, it seems for family reasons. The fact is that the endless queues you need to negotiate in order to deal with the Gogolesque nightmare of the Russian state authorities is a standing rebuke to those used to dealing with the efficiency of Estonian government services.

Some newcomers have indeed come to the city- about 40 recently moved from Tajikistan- and all were "Slavic"- for dirt poor, isolated Pskov has also seen the racist violence that has convulsed Russia in recent weeks.

The stagnant, corrupt incompetence of late Putinism is as much a failure as the shabby tedium of late Communism was- and Pskov is just one of hundreds of cities across Russia that are slowly dying because no-one can change anything without the say-so of the Government Inspector.

What a waste.

Thursday, November 07, 2013

Paxman, heal thyself!

I see in the UK that the arch-inquisitor of Politicians, Jeremy Paxman, has said that he too is rather disillusioned with British Politics

Paxman treats politicians as self serving creeps who are only in it for themselves. His view seems to be that if they are not actually criminals, they are fools.

Paxman is paid a £1,000,000, plus generous expenses, a year- a back bench MP earns £66,396 a year and has to account for every penny of their expenses, from which they are also expected to employ several staff.

The fact is it is not politics or politicians we should be disillusioned about- the vast majority of MPs are hard working, decent human beings who are in politics because they believe it makes a positive difference to other peoples lives.

Russell Brand, whose absurd call for a revolution has hit the headlines this week, is a drug taking womaniser with dubious morals and even more dubious opinions, but hey, he is a celebrity- a film star no less. In the vacuous world of BBC celebrity, perhaps we should not be too surprised that Jeremy Paxman feels more sympathy with the glamorous life of the wastrel millionaire Brand than the low-paid drudgery of most political lives.

The world of the media seems to have things 180 degrees wrong. If Paxman is disillusioned, perhaps it is because he believes the poisonous bile with which he has been unfairly tarring all politicians in the last 20 years. 

The current trial of Rebekah Brookes et al is already showing the disgusting depths to which the news media have stooped to in the past 20 years. It strikes me that the arrogance of Paxman is also something that has reached the limit of public toleration.    

Tuesday, October 29, 2013

Whether the weather be fine or whether the weather be no...

The day after the "St Jude's day Storm":  it was a rough night, but let's face it, we've had worse- well anyway, enough of Estonia. 

In the UK the predicted zombie apocalypse seems not to have happened, although the press-inspired panic was by turns absurd and sinister- like most things in the British press.

In fact it is still pretty wet and windy in Tallinn, but we just get on with it- after all a year ago we were fighting the first blizzard of the year, at the beginning of a very long winter, and for sure there will be tricky days ahead when the winter finally does arrive.

As for the disruption and mild panic in Southern England- it all seems a very long way from the stiff upper lip, and makes the British look ridiculous. 

Monday, October 28, 2013

Politeness, Political Correctness & Censorship

In "1984" George Orwell created the idea that the way we express ourselves has a fundamental effect on the way we also view the world. In the world of Newspeak, bad things could not be permitted, they could only be ungood. In such a way, the party restricted the ability of the individual to dissent. If the idea of dissent could not be expressed, then the very concept of opposition to the party line became impossible.

In recent years the idea of political correctness has gained much traction in the way we talk about the world. Ideas deemed to be socially unacceptable- discrimination on the basis of race, creed, sex, sexual preference and so on- are to be eliminated by the use of carefully proscribed norms. Sometimes the earnestness of this exercise seems faintly comic, and at times "politically correct" has become a term of abuse.

I have generally been tolerant of politically correct language, on the basis that it is a matter of politeness to address a person or a group in the way that they feel most comfortable. Increasingly, however, I have grown more uncomfortable with the idea that the wrong words can justify violence. Words like Nigger, which once had general currency, have become completely taboo- and given the historic loading on that word, it is a matter of politeness not to use it to describe another human being. Where one does so, it is usually deliberately offensive. Yet the net of political correctness now spreads far wider than this, and even the social norms that determine what is or is not offensive can not necessarily agree as to the right term. Yet, even where there is such doubt, the boundaries of what is acceptable are guarded with a vigour that often seems to match Orwell's own Thought Police.

And this is where I must not merely part company with the politically correct, but oppose them. The intensity with which some would wish to clamp down on free expression- or at least free expression with which they disagree- is often quite shocking. A free society must allow dissent. The network of lobbying and sinecure jobs as political officers has created a large economic clientele for the new industry of political correctness, but the fundamental foundation is not in support of politeness, but is support of proscription. Bans and stern punishments are the basis for this industry. Things are not merely deemed unacceptable as a societal norm, but as a political imperative. It is a very short step to get to the use of language as a political weapon- precisely what Orwell warns us against with Newspeak.

Then there is the question of who decides what is and is not acceptable?

In general, again as a matter of politeness, I have been content to follow what the distinct groups prefer that they should be known as. This has sometimes changed. For example, Self-identifying homosexual groups have used "Gay", "LGBT"- as part of a wider group of sexual minorities- or even "Queer", as a dissenting academic construct. All, even the last, may be deemed inoffensive, depending on context.

"Aye, there's the rub": context.

The fact is that even using what we must now refer to as the N-word, as I did above, is a matter of context- almost all language is. So the idea that we must obey some iron rules as to how we express ourselves is not only wrong, it is actually dangerous.

I choose to avoid language which I think might cause offence, but I can not support condemning those who do not choose politeness rather than confrontation. Like Voltaire, I may not approve of what you say, but will defend to the death your right to say it.

Recently I have encountered American students who have been completely indoctrinated with the "politically correct" concept of language proscription- it is a humourless and neurotic world in which they live.

At my school it was "sticks and stones may break my bones, but words can never hurt me", in the US, such a blase approach seems impossible- and that is the beginning of the end of free discourse if such ideas infect the world beyond the campus gate.

Thursday, October 24, 2013

Unprofitable dinner

After the usual tedious journey to Riga, I attended the kind of dinner that wealth managers inflict on their customers. I happen to have a long history with these particular wealth managers, so received an invitation- probably to make up the numbers, since we have not transacted any business.

If I sound a little jaded, well, perhaps I am- the speaker was interesting in himself, but the topic- trying to institutionalize entrepreneurship- was not really what the first- really only- generation of Baltic millionaires is yet ready for. It was, of course a plug for the services that this particular house provides, and frankly, given the pleasant venue and good wine, fair enough.  Yet as so often in the past I was struck by the way that the large investment houses have a tin ear for the process of innovation and change that is hitting financial businesses around the world. 

They seek to trade on a brand which reflects "centuries of tradition and continuity", yet this particular house, while maintaining the same name, has been through at least four separate mergers and de-mergers- all of them value destroying- in the course of the last fifteen years. The fundamental brand equity, when you come down to it, is a big fat zero. There is little fundamental difference between this house and some no-name spivs also out there in the market. The DNA of the institution was long ago compromised, and the decades-long careers of the people I used to know has been replaced by a very much shorter-run attention span.

Neither truly based on traditions and long-term culture, nor particularly innovative, it is easy to see that this house has been the victim and not the moving force in the industry. Yet they will not change- they regard "Conservatism", in all meanings of the word, as the last best hope for retaining customer loyalty and with it their place in the market.

I think that this is wrong.

The storm of 2008 will be repeated, and possibly quite soon. This time, the power of disruptive technology will circumvent the outmoded business models of classical banking. Disruptive dis-intermediation, whether from Transferwise or peer-to-peer businesses, is already active in the financial market place. The classical investment houses are relying on the accumulated capital of decades to be able to buy- or break- this new competition. 

Except, there isn't any. The broken brands and wasted value involved in the consolidation of the banks leading up to the crisis has left the banks rather short- and what nimble entrepreneur would want to enter into the corporate embrace of decayed, hierarchical systems in any event?

So the lesson of a good dinner was that what the banks offer has changed very little, but the world has changed a lot and is about to change a lot more. 

Tuesday, October 22, 2013

Tallinn re-discovers an old tradition

Dimly remembered from my fourth year Latin is the idea in Virgil that a nation should "choose foreign leaders". 

It is surprising how often nations do in fact choose foreign leaders, the positive and negative examples are legion: of course there is Hitler, an Austrian, who led Germany, Eamonn De Valera, a half Sicilian New Yorker, who led Ireland and Napoleon, the scion of a Corsican speaking family, who led France. Winston Churchill was half American, and most royal houses trace their origins to each other and not necessarily to the countries that they reigned over.

In the Baltic there has been a civic tradition of foreign participation. The first Mayor of Riga was George Armitstead, who came from a family of British Merchants. 

Now we have a successor, Abdul Turay- whose family originated in Guinea, became prominent in Sierra Leone and later came to the UK. Abdul had already added another step in his family's journey, by marrying an Estonian wife, but now he is set to be elected as a Councillor of the City of Tallinn, when the results are ratified later this week. He is not the first foreigner to be successful in Estonian civic affairs, nor, considering Pushkin's Ethiopian grandfather, Hannibal, was Governor of Tallinn under Peter the Great, is he the first man of African heritage.

He is however the first foreigner to be democratically elected to the City.

It is quite an achievement, let's hope he lives up to the hopes that Virgil (and others) will place in him.

Monday, October 21, 2013

EU turn

The FT reports on the sharp rise in support for the limitation of the powers of the European Union- even amongst traditionally strong supporters of the bloc.

The context is interesting- the suggestion is that the backlash against the EU is coming as a result of the rapid growth of immigration. The rise of immigration has indeed been rapid, and there is obviously generally pretty limited support for expanding the rights of free movement to the citizens of Bulgaria and Romania. Yet the majority of immigrant attacks are not made against EU migrants but against those coming from the Arab World, the sub continent and sub-Saharan Africa.

To my mind, the issue of immigration is a kind of referred pain: discontent is far more entrenched than merely a right-wing backlash against immigration. The creation of giant government-lead projects, such as EU funded rail construction, is a symptom of a Brussels elite which is seeking to buy the support of the voters. Yet the elite is very isolated and as a result consistently hits the wrong note. Spiffy infrastructure funding looks more like pork-barrel politics when you move beyond the European quarter of Brussels. Whizzy initiatives lose their sparkle when we note how the last grand projet - the creation of the Euro- turned out.

The fact is that the EU clientele has lost its way. The idea of ever closer union has been buried for at least a decade by the economic shocks post-2008. They fear the loss of momentum that puts the creation of a single EU economic and political space at risk. Yet that fear is itself putting the EU into reverse. The point about the functionalist EU was that it sought to create practical agenda for integration, which was to be a lasting and mutual benefit to all the members. The fact is that the current system works to the benefit of Germany and not to the PIIGS, and the sense of injustice that this has created is undermining support for the Union across all member states.

The next EU elections will doubtless see a big upsurge in anti-EU groups, from UKIP and the True Finns in the North to Le Front National and the PVV in the West. Yet the fact is that the voters will give such support because they know that in the great scheme of things it doesn't matter much- and that is a measure of the failure of the Brussels political class: despite all the political influence and investment clout they can wield, they still don't matter to most voters.

It is not the hatred of the voters that the EU needs to be most afraid of- although that is growing- it is the sense of impotence and irrelevance that the EC still has in the eyes of most EU citizens, even compared to image of the national governments. That is a problem that will not go away, and the current thinking in Brussels- all free spending pork and no civic authority- will not address that crisis in the slightest.

Sunday, October 20, 2013

The Low Tax Problem of a Global City

A few weeks ago, Michael Goldfarb published an article in the New York Times highlighting the growing crisis in London property. His view- that Prime London property has become a global currency- has been said before, and rightly. However the timing of his article hit the zeitgeist of growing anxiety about the mismatch between London as a place to live, the capital of the United Kingdom, and London as a playground of the globalized rich. 

The squeeze in London is having a strongly negative effect on large areas of British Society, and the influx of hot money from places such as China, Russia and the Arab World- not to mention crisis-hit EU member states is not just undermining the social fabric of London but the economic fabric of the UK.

At the Liberal Democrat conference in Glasgow, several London based members made the point that these apartments now owned by the global uber-rich are often left empty, so at night you see few lights on in Mayfair and Belgravia- and the impact on the city is a kind of hollowing out.

The fact is that the taxes which are payable on Prime London property are so low as to represent a gigantic enticement to the emerging investor class of China to fill their boots in London, at the expense of the cohesion of the the city and the lifestyle of the British people.

It seems to me self-evident that the cost of this influx of investment has created social problems way in excess of the benefits. If the coalition government in the UK actually wants to fix the housing bubble, they should not be trying to distort the market still further by attempting to create even bigger mortgages: they must instead impose the appropriate level of property taxes on those assets which are held to the benefit of foreign, non-resident owners. Doubtless unscrupulous legal and accounting advisers will try to create UK domiciled structures, but as elsewhere in the world, notably the US, HMRC should be allowed to look through those structures to determine ultimate beneficial ownership.

The London property market is wrecking British competitiveness, and without decisive intervention, to remove the low tax incentive for foreigners to invest, this will become permanent and crippling burden for the UK..    

Thursday, October 17, 2013

Blogging On

Blogging has become more and more intermittent of late.

There are two reasons, one weak and one perhaps less so.

The weak reason is that I have been travelling even more than usual and have simply got out of the habit. 

The other reason is that this blog has its origin in my political activism, and although I am more motivated than ever to try to put forward a platform for economic, social and political change, the fact is that I am much less sure that conventional politics in the UK can deliver necessary reform.

The Liberal Democrats have been a great ideas factory. Many of their ideas were so powerful that they were adopted by the party's political competitors: most recently the increase in the tax-free rate, but also in many other things, such as the independence of the Bank of England.

Most of all the Lib Dems were the party that recognised the deep problems of the British constitution. The position of the citizen, which we call a "subject" in the UK, has been undermined by over mighty government and over mighty corporations. The need to create a more open society lay that the heart of the policy ideology of the party. 

Now, I am no longer so sure. The pragmatism of government has damaged the very soul of the party. We have taken the blame for unpopular policies, but failed to explain the value of fundamental reform- our core values- such as clearer English representation within the UK, which would actually, in my view, be popular. Our friends have left us, the party is down to a core group of activists. We are so few that we can not fight the general election in every seat: targeting has gone from a matter of pragmatic choice, to a matter of necessity.

Yet the weakness of the Lib Dems is only half the story. The fact is that the Liberal Democrats still remain the most thoughtful political party in the UK- but the UK isn't listening. 

The visceral anti-politics mood is throwing up even more damaging problems: UKIP in the party political sphere, but rent-a-mob responses to any issue of the day from fracking, to planning, to many other controversies. Intelligent debate gets left behind in a morass of simplistic cat-calling. As the world grows more complicated, British Society demands ever more simple solutions.

The result is a confused and leaderless country.

I have the privilege of living in Estonia- a country pioneering in its use of technology and uncompromising in its understanding of a free society. The UK is already 20 years behind Estonia, and far from catching up, it is falling ever further behind. I do not believe it can catch up in my life time.

So the focus of this blog must change. Less British and political; more Universal and social. More aware that the debate is already beyond the UK's capacity to contribute; less exhorting to the British political class, that can not respond the the required level of change. The UK is now in the remedial class, and I prefer to work with the best kids at school.

While that may not eliminate the time pressure that I still face, I hope that it will give a sharper edge to this blog, which is now in its eighth year, with nearly 1200 posts made and over 200,000 unique readers.  

Friday, September 06, 2013

Russia a large country that nobody likes

After the sensational rudeness of Dimitry Pleskov, "the voice of Putin" describing the UK as a small island that nobody listens to at the St Petersburg summit, it is hard to see how much further the Russians could descend into fiasco.

The tasteless Marie Antoinette costume ball, the vainglory of the spectacular corruption of late Putinism, all add up to a thoroughly nasty and inept display.

After all, Russia may be a large country, but the large numbers of Russians who prefer to live in London do so because no one likes or trusts the secret policeman who stole the election in Moscow and idles his time seeking the death and torture of gay people. His support for the butcher Assad in Syria just shows that you really can judge a man by his friends.

Sunday, September 01, 2013

British Interests

As the fallout of the government defeat in the House of Commons over the proposed military action against Syria rumbles on, it seems pertinent to ask a few questions.

Despite various attempts to place foreign policy analysis in some kind of ethical framework, the fact is that military action exists within a purely Darwinian framework: Right does not prevail, unless it has sufficient might. There are many despicable governments on the planet- including, not least, the government of Russia- but we do not propose to remove their corrupt and criminal incumbents by force. That would be inviting a trial of strength with a foe that has a nuclear arsenal that is quite sufficient to render the concept of victory a meaningless one. The West has disputes with China over human rights that are no less serious that with pre-war Syria, but we do not propose the use of force against Beijing- we use the instruments of soft power and persuasion to try to ameliorate the oppressed in that huge country.

So as the beleaguered Ba'athist dictatorship of Bashir Al Assad shakes on its foundations, we are entitled to ask what are the aims of the West in the Scorpions nest that Syria has now become?

Clearly the West would like the removal of the dictatorship in Damascus, as it did with the dictatorship of Saddam Hussein in Baghdad. It also believes that military action will tip the balance against Al Assad, as it did in the overthrow of Qaddafi in Libya. In short the United States is making a calculation that it can remove the Syrian government and replace it with a less hostile neighbour to Israel- its closest ally.

Both prospects are highly debatable, and the risks involved are potentially devastating, not merely for regional stability, but also for world peace. Yes, it is horrific that nerve gas has been used in the civil war now raging across Syria; and yes the West has always made clear that the use of "weapons of mass destruction", whether biological, nuclear or chemical, should carry the stiffest retribution. However, even if it becomes clear that it is indeed the regime, and not the rebels, that has used such a vile weapon, it is not automatic that the immediate consequence should be for the West to let slip the dogs of war.

Russia has a naval base in Syria. That is a fundamental fact that is at the heart of Russian policy in the Middle East. The sharp decline of Russia since the end of Communism has made the diminished Kremlin extremely sensitive both to any further weakness, but also extremely sensitive to further slights. The lesson of Libyan intervention, which Russia fiercely opposed, was that the West would not even pay lip service to Russian interests or even concerns. In Tripoli, Russia ultimately had few cards that it could play. In Syria it is an altogether different affair. Increasingly tyrannical, and increasingly anti-Western, Vladimir Putin has been dismissing the West's concerns in Syria with the same casual determination as he believes the West showed towards Russia in Libya. Russia has clear interests in Syria, but, unlike Libya, it has the means and the determination to defend them.

Meanwhile Russia has been making nice with Beijing, to the point where Russia and China are clearly expressing a common front towards certain, though not yet all, Western interests. From the point of view of NATO, the coming together of an aggressive Russia, which explicitly rejects the rights of European states to chose their own destinies, and China which grows increasingly assertive over the issue of its maritime and other borders, and especially Taiwan, is a strategic nightmare. As I have noted before, there is a horrible symmetry between the unexpected breakdown of the strategic order in Europe in 1914, and the potential for a similar Asian/global breakdown now. 

After several decades of internal instability and war, the Balkans- as Bismarck predicted- ended dragging the great powers into fighting each other. For "the Balkans", now read, "the Middle East".

So, although there has been a great deal of hand wringing over the House of Commons vote, I for one do not regret the opportunity for NATO and the West to reconsider their strategic imperatives. Russia may have done the West a favour by forcing us to reconsider what our goals are in the this fight. It has certainly done us the favour of considering the risks of war.

The regime of Assad is criminal and monstrous. However, the enemy of my enemy may not be my friend- as the events on Egypt have already made clear. It is time to consider not merely the tactics of any military strike, but the global strategy that we must adopt in order to avoid the same catastrophic breakdown that occurred in 1914.

In this we must consider not merely the actions of the great powers: Russia, China, the US and so on, but also their proxies in the Middle East. In particular the time has come for the United States to set red-lines to Israel. 

Israel has many rights. It has the right to exist. It has the right to order its government within borders based upon- if not precisely the same as- the 1967 armistice lines. It does not have the right to turn Gaza and much of the West Bank into prison camps and to oppress Palestinians in order to drive them out of the whole of the territory of the former mandate of Palestine. There will never be security for Israel for as long as that oppression continues: it is the running sore that has helped to destabilize the Arab and Muslim world for half a century. Israel will ultimately suffer the same fate as the Crusader Kingdoms of the Holy Land, unless it can find a way to live at peace with its neighbours, and it is in the interests of both Israel and the United States that a historic compromise is finally found- no matter what the state of Egypt, or Syria for that matter.

Of course that is, alas, for the much longer term. It seems that the Syrian civil war- as for so long predicted- is going to outlast the horrors of the Lebanon in both the savagery and brutality of the war- and maybe even its duration. The West must now consider what that means for the future of the Middle East and the wider world. It must recognise that a joint Russian-Chinese front is a serious strategic threat and either by hard words or soft power it must undo that threat. Most of all it must begin to unpick the knot of the wider Middle East- the challenge of Iran, the instability of North Africa, the economic deficiencies across the Arab world as much as the festering Arab-Israeli conflict. That requires real statesmanship- not the foaming short-termism that has disfigured most of the debate as to whether or how the gas attacks in Damascus can ever be revenged.

  



   

Friday, August 16, 2013

First they came for the Gays...

This blog is no fan of the regime of Vladimir Putin.

Russia has suffered enough authoritarian government and it has repeatedly ended in crisis as the inherent corruption of unchecked power brings the system to breakdown once more. 

At various points in Russian history, from the burning of the proto-democratic city of Novgorod by Ivan the Terrible in 1570, to the Great Terror of Stalin in the 1930s, the country has suffered catastrophe at the hands of a state appointed "gangster elite", whether called the Ophichniki, the Okrana, or the Cheka.

Vladimir Putin thinks that he is a man in the same mold as Ivan IV or Stalin- a strong leader who imposes order upon the fractious Russian body politic. Yet these leaders were ultimately failures- they murdered thousands or millions of Russians in their determination to crush dissent and impose order. Both were certainly monsters and probably both were mentally ill. 

In fact Putin is- thank God- not in the same class as his evil predecessors. His regime is as much a function of PR stunts and gimmicks as it is a function of the murder and intimidation of his enemies- although such murders have indeed taken place. Yet the reality is that the Putin government has used the iron rod relatively sparingly.

Nevertheless, the Kremlin is on the verge of a profound crisis and the probable collapse of its authority. 

The portrayal of Vladimir Putin as an action man- admittedly a deliberate contrast not only to President Yeltsin, but most of his Soviet predecessors too- has reached the level of an international joke. The heavy handed use of boycotts and selective border closings against neighbouring countries- Belarus as much as Ukraine- has reminded those countries how Russia continues to view itself as a hegemonic power in the "post Soviet" space. The aggressive support given to the Assad regime in Syria, after the failure of previous support to other Arab dictators, has alienated the West. Russia has continued to use the cold war language of strategic confrontation with the West, and acts on this language with a program of espionage more organised than at any time even in the cold war. Meanwhile, the Kremlin seeks to assert claims which are high disruptive of the international system and to back up these claims with a massive increase in arms expenditure. The virulent anti-American propaganda that the Kremlin pumps out day after day has reached the point where the United States can no longer dismiss it as the crassness of a sub-par government in Moscow. 

The Kremlin bases its claims to influence upon an economy that continues to struggle to adjust to the Post Soviet world. Putin's authoritarian government rests on the liquidity and largess generated by oil and gas. Gazprom, the national gas company of Russia has functioned as a state within a state and is said to be under Mr. Putin's personal control.  Yet as the United States both reduces its overall demand for energy and substitutes foreign gas imports for its own large domestic shale gas reserves, Gazprom has faced a transformed energy environment. From being an enormous cash cow, Gazprom has begun to create liabilities. The pressure on gas pipelines that previously "encouraged" downstream states to accede to the Putinist world view has now become an excuse to diversify supply away from Russia. Western Europe now regards dependency on Russian gas as a strategic weakness that must be eliminated as quickly as possible.

The response in the Kremlin to the weakening of Gazprom has been an attempt to create a Russian super-major oil company: Rosneft. Yet the hijacking of TNK and the assimilation of other assets which has propelled the company forward, apart from being of dubious legality, has also been extremely expensive. Rosneft has incurred at least $70 billion of debt, and the prospects for an early payback are dim, even with the oil price still above $100/bbl. Even despite this investment, which might have been seen as a major vote of confidence in the future of Russia, few are buying it. Capital continues to be exported from out of Kremlin control as fast as humanly possible- away from the trashy glitz of Moscow and St Petersburg, life in Russia continues to be a grim and short lived struggle for most Russians. The horrendous public health crisis that IV drug use has seeded- leading to the worlds fastest growing incidence of HIV/AIDS and MDR TB- is matched by poor diet and alcoholism to keep the average male Russian life expectancy at less than 60

But in the end "it's the economy, stupid", and the Russian economy is failing to attract investment on anything like the scale it needs to grow. As the Sochi Winter Olympics seems set fair to be the most expensive in history, it is clear that corruption continues to run rampant across the entire Russian economy, while legitimate investors and businesses are persecuted by the regime, presumably for the sin of not being under Kremlin control.

Ah yes, persecution. It is hard to characterise the ban on "gay propaganda" that the Putin regime has decreed as being anything except a witch hunt against a small, unpopular and vulnerable minority in Russian society. I have always tended to subscribe to the theory that if you call your opponent a Nazi, then you have already lost the argument, yet Stephen Fry's open letter to the IOC, where he makes precisely such a comparison I found both moving and appropriate.

The fact is that the Kremlin already fears that the game is up. Even as it seeks to embrace China as a new strategic partner, the Kremlin fears the dissolution of its power. The demonstrations on the streets of Russian cities are likely to grow, as the "electoral" cycle turns and anyone that poses even a theoretical threat to Putin is locked up. The economic situation in Russia is set to remain fragile, even if its main trading partners begin to recover. Of course Putin himself is already older than the average Russian male life expectancy, and shielded behind his PR wranglers, his understanding of the daily realities of his country is, at best, tenuous.

In such conditions it seems very likely that not only will repression against LGBT people increase significantly, but that repression will be extended far wider. The regime senses its own demise, yet in its dotage it will become more brutal and dangerous than ever. We can not exclude further military adventures such as the 2008 Georgia war (although, under Ivanishvili, Georgia itself appears to have fallen back under authoritarianism and is once again a Kremlin Satrap). 

NATO and the West face a period of great danger as the wounded bear may lash out, not merely in Syria, but in any other place where they have the capacity to disrupt Western interests. The outlook, both domestically and internationally for Russia is growing more dark by the day- Europe and the West must now take guard as the regime drifts into greater repression and ultimate collapse.

Saturday, August 03, 2013

"Realos" and "Fundis" debate misses the point for the Lib Dems

Ahead of the annual conference of the British Liberal Democrats there has been a certain amount of posturing. Nick Clegg has been talking about the need for a "grown up" party that can carry through the responsibilities of power. This supposed debate of Realos- the pragmatic party of government- versus Fundis- unrealistic keepers of some pure Liberal flame- is a complete straw man anyway. Clegg may actually wish to face a challenge in order to be seen as being the master of his party, but the truth is that the Lib Dem leadership is promoting an inward looking and irrelevant debate. The political weather is not going to be made by whether or not a Lib Dem junior minister receives the whole-hearted backing of the party membership in their promotion of some Civil Service inspired political initiative or not. The Cleggite "Realo" case is that the most Liberal thing that the party can do is support the parliamentary party in the exercise of power. The "Fundi" case, in as far as it is not an Aunt Sally set up by the leadership, is that the party must return to its principles.

In fact it is the so-called Realos who are living in Cloud-cuckoo land. Although it is true that the party can claim some success in administration, the party, as a junior coalition partner, can not claim ownership of these successes, because they are just too diffuse. There is no single area of policy that the Lib Dems can credibly say that they built a coherent agenda. If successes are nebulous, failure is all too obvious- not least on tuition fees. More seriously still, the comprehensive way that the party was outplayed on political reform in the first year of the coalition has left the progressive agenda for political reform much weaker. The disastrous failure of numerous attempts at political reform, notably the AV vote, and the subsequent collapse in Lib Dem support leaves the very real prospect of the Parliamentary party being decimated at the next general election. The only way the Liberal Democrats can make progress on this central plank of their political identity is to establish a coalition after the next election, and right now that looks, at best, a pretty iffy prospect. It may be that we can be more resilient than the polls suggest- we probably will be- but the opportunity to promote any kind of Liberal political agenda in government may not come again for decades as the political pendulum swings away in a different direction. 

The fact is that there are three problems that the party faces to try to address this and to turn prospective defeat into lasting victory.

The first is that the Liberal Democrats have become increasingly inward looking. The fact that Clegg felt that he had to ask for support in this way is almost a sign of pettiness. Even as a passionate and convinced Liberal I find it hard to get excited about the various initiatives that have emerged in office: they are at best tinkering with the administrative apparatus, and most could have come from any party- there is little that distinctively Liberal about almost any of them. As always, the leadership- as it has under successive leaders- retreats from internal party criticism. The appointment of new peers is a classic example: "Party donors and party hacks" was one withering criticism I have heard. I certainly would not go that far, but it is clear that the leadership has appointed people that it knew, rather than exploring outside a magic circle. I, for one, am disappointed that we did not take the opportunity to make a more radical political stand, and fear that this politics as usual approach falls far short, not merely of our ideals, but of what is politically necessary. The excuse for this failure is that the progress of political reform is blocked and we can therefore do little about it. In fact in the country at large there is real rage at the failures of the political class and in fact talking about radical political reform is exactly what we should be doing- precisely because the other parties continue to block it.

The second is that- as I mention above- we have failed to take control of a single part of the political agenda. There is a partial exception to this, and this lies in the raising of the income tax threshold. Tax in the UK is a national disgrace- we have one of the longest tax codes in the world, and one of the most expensive and inefficient systems of collection. The response to this scandal by all parties has been pathetic, and the Lib Dems, by suggesting that we need better enforcement and by boasting of hiring 3000 new tax inspectors have, sadly, been no exception. Frankly the 11,000 odd pages of tax code are not merely a cheaters charter, they also help to disguise that fact that the rich are taxed dramatically less than the poor. In my view we should be promoting a radical Liberal agenda for tax reform and simplification. The damage of Gordon Brown's micro management in the tax code should not have been extended under the coalition, but it was. The Liberal agenda should promote fair and transparent taxes- and this should include the wholesale repeal of taxes in many areas. 

Obviously the second area where the Liberal Democrats could seize the agenda remains political reform. With hindsight it is clear that we should not have compromised on AV, but should now go for broke with an integrated agenda for fair government and fair votes- the advent of home rule in Scotland and Wales as well as Northern Ireland is driving the agenda for a new Federalism - and the Liberal Democrats should be speaking out for a radical reform to create an ultimately more balanced democracy. 

With a twin track of tax reform and political reform, I believe we can be distinctive, radical and right.

The third area we need to tackle is what you might call the failure of ambition. In a sense this is a national as much as a party question, but the truth is that the party membership is dwindling and interest in politics as a whole declining because there is a sense that the political process no longer matters. Debates on great issues of principle have given way to the tedium of committees. Experts are ignored and political hacks promoted. The party system has become merely a mechanism to sustain these political hacks in their search for power, and to my deep anger, this has happened in our party too. Liberalism is a radical ideology determined to promote human freedom, it is not a claque of cheer leaders for the pupil premium or any other specific policy of the day. When Clegg asks for "grown up" politics he should initiate debate and not attempt to suppress it. It is the suppression of debate, the cover up and the facade of false political unity that insults the intelligence of the electorate and turns people off politics. It is unworthy of the leader of the Liberal Democrats that he is, or appears to be, attempting to stifle debate and not to engage with it. Grown up politics is being frank about the options- good and bad- and not misrepresenting the prices that we have to pay to achieve the gains we promise- or rather hope for. Politics is and should be passionate- and we have lost that fire.

The Glasgow conference will be critical for the next decade. We can work together to map out new way points on the Liberal road, building on the successes of the coalition and learning from the failures. We can seek ownership of a radical political agenda. We can recover our reputation for intelligent, multi-faceted discussion. We can engage in confident and forceful debate and attract support for our openness and honesty. We can rekindle our passion. 

That is politics for grown ups, and that is far more likely to attract the voters who deserted us than any cynical exercise in media management. 

The alternative, for our ideals, our party, and our country is bleak indeed. 

Wednesday, July 24, 2013

Property Madness in UK

London Prime Property has become an international asset in the same way as any other tradeable asset from gold to bonds. It may be that the majority of properties in Zone 1 are now owned by foreign non residents. Syrians and other Arabs, Russians, Chinese: the London Property market has attracted speculators from around the globe. Increasingly, however, these new owners do not let these properties, they simply leave them empty. Walking in some central London neighbourhoods at night is a sobering experience- there are few lights on, and the economic impact is growing ever more severe.

The reasons why London Prime property became so attractive are many and varied, but the primary reason is that the UK does not tax these empty properties. Council tax is not levied when no one lives at the property, and Capital gains and VAT can be avoided very simply.

This gross distortion of London Prime property prices is destroying the city and the country. As George Osborne seeks to reflate the property bubble, the fact is that this may simply lead to significant transfers of wealth away from the UK. 

I have rarely seen a more obvious case where a land tax should be levied. It is ridiculous at a time of major housing shortages in the UK to permit such a significant portion of the housing market to simply lie idle. In my view, apart from a land tax, foreign non-residents who own UK property should at least pay a punitive capital gain rate: announced early enough this might provoke major activity and begin to de-stress the property market and create more normal investment conditions. As the rest of the UK market stagnated, London Prime has doubled over four years: this is insanity caused by our failure to tax efficiently and it is time that some of these ill-gotten gains were returned to the UK.   

Tuesday, July 23, 2013

The Son of Our Future ex-King?

It is customary for the UK to get a bit Maiden Aunt at the news of a royal birth, and sure enough the pages of saccharin nonsense that cover the front pages, and indeed most of the middle pages, of the London press today completely conforms to type. Steely-eyed literary bitches with the morality of Caligula and a usual turn of phrase as uncompromising as nitric acid have suddenly turned into cooing imbeciles around the Royal pram. At least you know that these journalists are being moved to such soppy heights by something they hold most sacred of all: money.

So the endless articles about "Our Future King" whose star sign (Leo, apparently) will apparently guarantee him to be a good King and whose ineffable good breeding will make him endowed with the best blessings of existence, but still some how, you know, normal, will doubtless continue for a few days. The fact is that covering the Royal birth is so cheap, and thus TV, print media, Twitter and the rest of it will cover the story in depth. Meanwhile in eastern Congo where a difficult-to-explain war now rages, will receive the customary indifference, as will the latest outrages of the tyrannical Vladimir Putin- after all journalists pay a price of death in Russia that the side streets around St. Mary's Paddington do not usually exact. Doubtless there is plenty of RT coverage of the happy event too.

What kind of strikes me, is how presumptuous the whole coverage is. Since Prince William is a deal younger and doubtless fitter and much better looked after than I am, the fact is that Baby Windsor is not very likely to be my future King in any event. Yet the assumption that the Monarchy will continue unchanged into the twenty-second century seems to be a fairly debatable point too. Conservative Monarchists, like David Cameron, hope and believe it will, but the lesson of the last century is not too comforting for them. Edward VII was a fornicating voluptuary whose behaviour broke marriages and was the despair of his government. George V, described by HG Wells, as presiding over an "alien and uninspiring court", was an unbending martinet who terrorized his children, while Edward VIII was such a dreadful king that he was forced out. Had any of these Kings faced the kind of coverage that the latest heir has already received, then it is a moot point how popular they would have been.

For sure King George VI, the Second World War and the current Queen have certainly rescued the Monarchy in the national affections, but in an increasingly democratic age, can we be sure that the compact that they achieved is even possible in the prospective reigns of Charles III, William V, and onwards? Certainly if the Queen had behaved in the same arrogant and high handed way as both her sister, the late Princess Margaret, and son, the Duke of York have been know to do, then the popularity of the crown might be dramatically lower. 

The fact is that no one can say for sure if the dynasty can continue to earn the same level of support and respect in the future that it has at the moment, and it has to be earned. Queen Elizabeth II has given her subjects a deal where she expresses so little in public that we can more or less project anything we like onto her: she is a kind of cipher for national expectations. That trick is easier to pull off if you have grown old in the wearing of the Crown- it will be far harder for an elderly man, who is known to his future subjects, if at all, for some slightly cranky personal eccentricities and having the money and time to indulge them. 

Then comes back the old Monarchist chestnut: "would you have wanted Tony Blair or Margaret Thatcher as President?". To be honest it is hard to see how such polarizing figures would even have wanted the job, but I can certainly think of political or cultural figures that could serve well as the (temporary) constitutional figurehead. From Judi Dench to Martin Rees, from Zadie Smith to Richard Branson there are plenty of figures who can serve as the ring master of the political circus or as the dignified embodiment of our country. More importantly perhaps, the fact is that the Royal birth means it may be at least another century before the Royal Family provides another female leader, and somehow Britain seems to feel more comfortable with a woman. Across Europe and around the world there are or have been figures, such as Vaclav Havel of the Czech Republic, Nelson Mandela of South Africa, or President Joachim Gauck of Germany who have huge international prestige and moral authority, which they have acquired through sheer force of personality as opposed to simple longevity in office.

Even more to the point, at least in a democracy we would have the choice of mediocre leader, instead of being forced to accept whatever mediocre leader the act of settlement and the Royal family can provide.

So as the media Greek chorus responds to the Royal birth with raptures and rubbish, I find myself asking whether the attack dogs can be held off for ever. Would it not simply be prudent to question whether the Monarchy- with all the overhead of flummery and snobbery, and all the lickspittle arse-licking- might not be best cast into a dignified retirement before this baby is confronted with the unedifying prospect of having all his natural responses analysed or twisted, and who will be treated in a way that more or less will guarantee to deform his personality.

Tuesday, July 16, 2013

The Political-Journalistic Complex

The Ipsos Mori poll published last week showed a perhaps surprising amount of simple ignorance amongst the British Public. In major areas of public policy, it seems that large numbers of people do not have even a most basic understanding of the data behind the issues of the day. Alex Massie in the Spectator put forward the idea that this ignorance is why some kind of political class is necessary. Robert Sharp at Liberal Conspiracy rebutted this, making the fairly valid point that the ignorance on display can in fact be blamed on media failures as much as educational or political ones. The Liberator Blog, rightly points out that the ignorance of the Public does not let politicians off the hook.

So where does this shocking display of political ignorance leave us?

Aside from the structural failures of education, I think it clearly does underline the spectacular failure of the British media to either inform or educate- and the failure of the British public to ask the right questions, but it also opens up a whole raft of issues to do with our democracy too. 

At the moment the issue of MP's pay is a political hot potato and there have been a variety of proposals- including Richard Branson's idea that MPs pay should be improved substantially, but that the numbers of MPs should be reduced. As an aside I note that most national journalists earn a fair bit more than a backbench MP does, but they have been more than happy to pander to the visceral witch hunt response that MPs should not really earn anything at all. Of course one major source of added income for MPs is journalism, and several significant political figures earn large sums to top up their Parliamentary pay. All of this does rather get in the way of a sensible debate about what the role of MPs really is- or should be- and yet this role lies at the heart of our democracy.

As a Liberal, I share the view that the mistakes of economic and public policy that have been made since the Second World War have their roots in the very fabric of our constitution. In the eyes of most Liberals the closed shop of British politics has prevented new ideas and necessary change from entering the system, and unless and until greater competition forces change upon the system, then the British government will continue to grow ever more sclerotic. The failure of both journalism and politics to explain even basic facts to the electorate does not make me optimistic that such radical change can be made attractive, however necessary it is. Even still, I think it is incumbent upon Liberals of all persuasions to stand up and speak for ideas which may not merely be unpopular, they may not be even understood. 

I shall continue to speak up for radical reform, and just hope that the public ignorance on this and, as it turns out, on so many other issues can finally be defeated.


Thursday, July 11, 2013

What is to be done?

In nineteenth century Russia a perennial theme of commentators was "What is to be done?". 

In pamphlets, articles and even novels, the question "What is to be done?" is endlessly repeated- notably by Lenin. The crisis of Czarism was obvious, and yet the solutions were not so clear, and in the end the breakdown of Czarist autocracy led to the totalitarianism of Stalin and the murder of millions on a scale that would have been beyond the comprehension of even the most absolute of the Czars.

Now in Russia the question "What is to be done?" is being asked again.

The kleptocratic system that has replaced the faded brutality of the Soviet Union is no more responsive to the winds of freedom than its predecessor. All of the KGB instincts of Vladimir Putin, honed under the stagnant tyranny of Brezhnev, rebel against even the most basic of Western Democratic freedoms. On almost every issue, the gangsters and spooks who have shared the spoils of Post Soviet Russia now stand directly against the West. Whether in their determination to support the bloodstained and gory regime of Bashir Al-Assad in Syria, or their attempts to subvert democracy in their neighbours, or their contempt for rule of law, Russia has become a pariah state.

In the past 48 hours alone we have seen the grimly comedic results of the brutal arrogance of modern Russia: a dead man is convicted of trumped-up charges; any aspect of being gay renders even tourists liable to detention on further trumped up charges; Russia has vetoed the establishment of a fisheries protection zone in the South Atlantic. These are just the latest outrages in a country that is now categorized by Freedom House as "Not Free". Meanwhile Mikhail Khodorkovsky has just marked 10 years as a political prisoner in a prison near Murmansk.

Yet despite the clumsy brutality of those schooled by the camps of the Gulag- whether as jailers or indeed as former prisoners, the regime of the Chekists is failing, just as its Czarist predecessor did. 

In the end the contempt that the regime shows for rule of law has eliminated most potential investors who could help renew the shattered post-Soviet economy. A reliance on oil and gas, and specifically the use of the "gas weapon" has led to a backlash, and the frantic diversification of supplies by the major markets of Gazprom. Qatari LNG and US shale gas have severely weakened Russia's hold on the EU energy market. Meanwhile ever fewer Western majors regard Russia as being worth the risk, so production stagnates. Meanwhile, after the failure of Gazprom as a super major, the creation of Rossneft as an oil replacement is hampered by the heavy level of debt which has been required to create the group. The company can not expand beyond Russia, and can barely finance the fields that it controls within Russia.

And really Russia only has commodities. Yet coal is far less attractive these days, gold: ditto, even silver and platinum group metals are expensive to mine in a society where almost everything needs a bribe. Meanwhile manufacturing in Russia has to cope with a Rouble made stronger by the sale of oil and gas: Russia has the "Dutch disease", yet unlike the Netherlands it has no strong brands or quality industry that can compete even if the currency was at more normal levels. The Russian economy- far from being a dynamic source of growth- is being crushed by the incompetence and corruption of the Kremlin. Over three million entrepreneurs have been imprisoned in the course of the last ten years, and perhaps another million potential business leaders have fled the country.

All that is left is the increasingly troll-like figure of Vladimir Putin and the Siloviki regime that he fronts, and it is a disastrous failure. Putin, at 60 is an old man in Russian terms. Despite his Berlusconi-like PR stunts- and probable cosmetic surgery- it is clear that the regime is well past its sell-by date. Although the huge protests that greeted his clumsy transfer of power back to the Presidency have died down, there is little doubt that Russian society remains deeply resentful of the stolen election with which Putin intended to cement his grip. At any time- as in the late Czarist times- a new wave of protest could arise to challenge the fragile regime. The "Mubarak scenario" is widely discussed in the parties and salons of the politically connected in Moscow.

So then, to coin a phrase, "What is to be done?"

From the point of view of the West, it seems that, as usual in their relationship with the Kremlin, they always prefer to deal with the devil they know, whether that devil is Gorbachev, Yeltsin, or even Putin. Yet, as so many times before, it is a blinkered policy. The Kremlin under Putin is a proven enemy of the West- it seems perverse to treat such a regime in any favorable light. The increasing repression in Russia will make it ever more difficult for Western governments to ignore popular disgust with Russia among their own electorates. Indeed the militant gay rights lobby is well organised and well funded, and in the absurd "Gay propaganda" laws that Putin has just passed into law, they have a very obvious target: and through a boycott of the Sochi winter Olympics a very obvious means to apply pressure.

Yet these may be mere pinpricks. Now Russia has Edward Snowden, they also have a means to dissuade the US from formal action against them. Nevertheless, as the cold war of spies continues between Russia and the West, the West will be forced to take more public and firmer steps against the Kremlin. Dusting off George Kennan's policy papers on "Containment", would be no bad start. Furthermore, the West should match the tough rhetoric of Putin with some of its own. The frozen conflicts in Moldova and Georgia allow Russian troops to interfere in the internal affairs of those two countries- they should rise further up the international agenda, if only to embarass the expansionst designs of Russia in the Caucasus. The Russian contention of a sphere of interest in the Post Soviet space should also be resisted, as it becomes clear that Ukraine and even Belarus are now more firmly in the Western economic orbit than the Russian one.

Meanwhile Vladimir Putin might reflect that Czarism was once defined as: "Autocracy, mitigated by assassination", and hope against hope that no one on his own side is thinking the same thing.