Search Results for : globalisation


If the Banks Had Bust

This is an astonishing truth. Average real wages in the UK today are worth 5% less than they were precisely a decade ago. This chart is from the Office of National Statistics.

I often see wage stagnation referenced in the media. It is only stagnation if your baseline is post bank crash. If your baseline is a decade ago, it is not stagnation but collapse. This is the worst decade for real wages since at least 1814-24, and I would argue this is worse than that. It is also worth noting that sharp recession also was triggered by a reduction in public spending, albeit from much lower levels.

One constant theme from the Labour Party in the election campaign, which gained traction, is that the last Labour government did not overspend. It was the banking crisis which crashed the economy.

Up to a point. The last Labour government did in fact overspend disastrously. But not on public services. Brown and Darling overspent on pumping incredible amounts of public money into bailing out the banks. That is what caused the initial massive inflation of public debt. The huge irony is of course that the interest on the debt is paid to – the same bankers who received the money as a bailout.

It is fashionable for right wingers to argue that the bank bailouts somehow did not really happen, or did not really cost anything. That rewriting of history is gaining much strength in mainstream media narrative. But the National Debt was 36% of GDP in 2007 (and on a downward trend) but leapt to 60% of GDP by 2009. That was the bank bailout.

The bank crash bailout triggered the austerity policies designed to repair the public finances, but which stifled economic growth. The lack of growth allied to neo-liberal deregulation of the labour market, and in particular the massive diminution in the role of unions, have caused the collapse in wages.

The government is fond of claiming that in this period the income gap between the top 10% of earners and the bottom 10% has shrunk slightly. That does appear to be true. But it is not the key figure. The gap between the top 1% of earners and the bottom 99% of earners has more than doubled during this decade. What has happened is that society has returned towards a more Victorian model. One per cent are super rich, everybody else is getting poorer and differentials are slightly shrinking.

It particularly interests me that the income disaster for ordinary people has been worse and more sustained than it was following the financial disaster of the 1930’s.

I opposed the bank bailout at the time, and I am now convinced that I was right. The bad banks should have been allowed to crash.

For the government to give people and companies their cash under the deposit guarantee scheme would have cost the public purse less than 10% of the money spent on the bank bailout.

The property bubble would have collapsed, making property realistically valued in relation to earnings and avoiding the landlord/tenant society we are becoming.

Bad bankers would have lost their jobs and a salutary lesson have been learnt the hard way on banking practices – instead we have had the opposite effect where bankers now believe they can do anything and will always be bailed out. The bailout was a massive perverse incentive.

Crashed banks would have been taken over by other better run banks that had not crashed, or new banks would have arisen. This is how economies progress.

It is possible the immediate recession would have been deeper. Top end London property, Porsche sales, cocaine and lap dancing would all have taken big hits. But there would have followed the kind of strong and sustained recovery with real growth seen in all previous historical financial crashes, instead of this lengthy crippling pain.

There are of course many other factors affecting the economy, which makes it very hard to isolate the effect of the UK banking bailout. But in the same decade Germany, France and Italy have seen growth in real wages. Mistaken continuation of the attack on public spending has of course made the situation much worse. But given the disaster for ordinary people that has ensued and been with us so very long, I think it would be very difficult for anybody to argue that life would be worse had the bank bailout not happened.

It is remarkable to me that this root cause of so many of our woes is almost never referenced n the media nowadays.

New Labour were not only responsible for much of the financial deregulation that made the great crash possible. Policies such as the Public Finance Initiative were simply devices for pouring billions of pounds in public spending straight into the pockets of the bankers. To bail out their city friends with the money of everybody else required no thought from Darling and Brown. Lord Darling has of course been having a little money poured into his personal pocket from the bankers almost ever since. There is a special circle of Hell reserved for Brown and Darling.

Peculiarly, I have never seen the question asked anywhere. But please, knock yourself out with ideas. What do you think would have happened by now if the banks had been allowed to crash?

UPDATE

In response to a comment, I have looked at Icelandic real wage growth in this period. Iceland let banks fail. Of course its economy has different qualities to the UK, but there may nonetheless be some interest in the comparison. In fact, exactly as I postulated above might have happened in the UK, after a sharper initial downturn, real wages in Iceland then recovered extremely healthily, giving very strong overall real wage growth for the whole period.


source: tradingeconomics.com

NB this graph is measuring something different to the above UK graph. The UK graph is measuring the level of wages in constant 2015 real terms. The Iceland grow is measuring the rate of growth in real wages.

While the two economies not being entirely comparable, this cannot prove my thesis, it certainly does support it.

This is a very interesting posting from a blog which shares my belief that it is wrong to view globalisation and neo-liberal deregulation as tied together or part of the same process. Globalisation is good. Deregulation is bad.

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Globalism, Neoliberalism and the Big Questions of Our Time

France is a standing affront to neo-liberals. Despite a failure to bow down to deregulation, despite extensive worker protections, despite complex health and safety, environmental and building regulations, despite strong and legally entrenched trade unions, France persists year in year in having productivity levels 20% higher than those achieved by unprotected, deregulated Britons. Despite the fact French workers put in 15% less hours per week, and refuse to be less Gallic.

You can find right wing economists who attempt to explain this away so as to make it consistent with the neo-liberal narrative. The most hilarious right wing propagandists like Professor Ryan Bourne argue that this is because the French economy, due to over-regulation, does not produce enough low skilled jobs. This is nonsense. There are not far less people picking vegetables, sweeping streets, serving coffee or washing restaurant dishes in France. A related argument is that high productivity somehow causes high unemployment. This is based on a strange fallacy that an economy is of a fixed size. If economic output was limited to x, then using less people to produce x would indeed cause unemployment. But I cannot readily conceive how stupid you would have to be to believe that. No, unemployment in France is caused by insufficient demand, which cannot be caused by high productivity. The answer to unemployment plus high productivity is a stimulus from public spending.

The truth of the matter is that deregulation does nothing to increase productivity. What deregulation does do is increase corporate profits, by decreasing workers pay and conditions, and decreasing public health and safety and environmental benefits. Deregulation transfers monetary and other goods from people to corporations. It is just a lie that it is anything to do with productivity – indeed the evidence is that a workforce with no job protection and few other rights is demoralised and less productive. That is certainly the obvious conclusion to draw from the comparison between France and the UK.

The concern on the left in France is that Macron is a creature of the corporations who wishes to introduce Anglo-Saxon style deregulation into France. This is, in a word, true.

Deregulation is a bad thing because it vastly reduces a whole stock of public goods.

Where confusion has arisen in public discourse is the notion, propounded also by neo-liberals, that globalisation and domestic deregulation go hand in hand. They do not and there is no reason at all that they should.

There are many definitions of globalisation, but I use it here as meaning the increasingly free movement of goods, capital and people around the globe. In that sense, I am a strong advocate of globalisation. Yet, at the same time, I am a strong opponent of deregulation.

Trade is a good thing. There are things that grow in different climates, there are raw material resources which make production particularly suitable in a particular location, there is local expertise and cultural flair. Trade has existed as long as men have existed, and is undoubtedly a common good. The increase in trade is a good thing too. There is not a single person in the UK who has not benefited from the massive fall in the consumer price of white and electronic goods caused by globalisation. I am today in Ghana where the availability of technical and trading partners from Turkey, Singapore, China etc, in competition with the traditional powers, is part of the revolution which has transformed the economy and the living standards of ordinary Ghanaians since 2000. The economy here grew by an average of over 7% over that entire period and is about to take off into higher regions again. (After a brief interlude of ultra-corrupt government very much sponsored by the USA and the multinational GE, but that is another story).

Globalisation is caused by a combination of technology and reduction of artificial barriers to trade and movement of people and money. It has beyond any doubt caused a huge amount of economic growth in Asia, and although from a very low base, in Africa too. Africa is the coming continent. The opponents of globalisation are those who wish to see a disproportionate amount of the world’s resources continue to be consumed in the old industrialised countries. They disguise this as protection of the working class.

Immigration does not depress living standards. Again, to believe that it does you would have to be extremely stupid and to imagine that an economy was a fixed size. If immigration depressed living standards, the United States and Germany would be among the poorest countries in the world. It is a complete and utter nonsense.

If it were not for immigrants, there would have been no growth at all in the UK economy for a decade, and absolutely no chance Britain could maintain its pensioner population. Immigration does not depress wages, it grows the economy. To take but one example, Polish immigration has contributed enormously to the British economy and to British society. It has given new economic opportunities to Polish people, and a Polish person is worth every bit as much as a British person. But the competition for Labour is also an upward pressure on wages in Poland, which is a good thing too.

I support globalisation very strongly as boosting the economies and raising the living standards of the entire world. That is the internationalist view.

But globalisation is not synonymous with the deregulation agenda. Neo-liberals have managed to establish in the public mind the idea that globalisation and domestic deregulation are necessarily part of the same process. The left has accepted the fight on this neo-liberal ground, with disastrous consequences to which I shall revert. But as is often my style when I say a truth outside the accepted political discourse, I am going to say this twice.

Domestic deregulation is not a necessary concomitant of globalisation.

Domestic deregulation is not a necessary concomitant of globalisation.

The neo-liberals, whose interest is that corporations rather than people profit from the process of globalisation, argue that domestic deregulation is necessary in the face of globalisation. This is the so-called model of the “race to the bottom”. Whoever pays the least, can shed labour easiest, has least health and safety and environmental regulation, will succeed in the global market. Therefore to face the challenges of globalisation, domestic protection must be dismantled.

I offer two irrefutable proofs that the neo-liberals are wrong:

1) France. And Germany too.

Annoyingly for the neo-liberals, many of the most regulated economies in the world continue to be the most productive countries in the world. This stubborn fact is extremely frustrating for the neo-liberals, and leads them to make fools of themselves coming up with the daftest possible explanations (see Ryan Bourne above). It is also why they are desperate to destroy the French model (see Macron above).

2) TTIP. And more or less every other multilateral trade agreement too.

Why did the neo-liberals have to stuff the proposed TTIP with proposals to destroy regulation within the EU market? If the neo-liberals believed their own propaganda about deregulation increasing productivity, then by a natural and ineluctable process the EU would be doing this as the invisible hand moved them to compete in the globalised market. But actually it is not a natural part of the process of globalisation at all, and has to be forced on by the corrupt political class in the pockets of corporations. Hence the deregulation provisions in the trade agreements, along with other corporation boosting measures like extra-territorial arbitration.

Frequent USA/EU rows over Boeing vs Airbus illustrate my point very well. Each accuses the other continually, and fines the other continually, over state subsidy. But within free trade, why is it of any interest how the state(s) trading mobilise their own internal resources? Again, if neo-liberals really believed what they say they believe, then by subsidising aircraft production a state is damaging its own economy massively elsewhere and opening up other comparative advantage opportunities for its trading partner. It makes no more sense for states trading to try to police their internal mechanisms, than for a car manufacturer to argue about where another car manufacturer places its canteen in relation to its production line.

How a state organises its internal resources, how much it pays people and how it protects its inhabitants from unfair dismissal, pollution or bad food, even how it subsidises a particular industry, cannot give it any unfair advantage across the whole range of trade with another state. The most economically productive and successful states are those which do regulate strongly for worker and general welfare and health, not those who raced to the bottom.

Domestic deregulation provisions are unnecessary, inappropriate and damaging to trade treaties.

You can reject deregulation without rejecting globalisation. That is a largely ignored intellectual position and it is one which the Left needs to adopt if it is to distinguish itself from the far right. In France, Macron represents the neoliberal position of embracing both deregulation and globalisation. LePen stands for the rejection of both. A worrying number of people who call themselves “left wing”, in France, throughout the media, and on this blog, allow themselves to flirt with the notion that LePen’s position is preferable.

The anti-globalisation angle that attracts the left is recidivist. In the name of protectionism it opposes the movement of capital, of goods and, its strongest emotional pull, of people. Here it blends neatly into the fascist agenda.

I argued earlier that those who oppose globalisation are opposing the trends which have pulled a huge proportion of the population of the earth out of extreme poverty in the last decade. I have argued that those who oppose globalisation were happy with a situation where a massively disproportionate share of the world’s economic resources was consumed by those in the first industrial world, and wished to return to that situation. This in itself is an inherently xenophobic position.

But they are also racist in another way. The process of domestic deregulation – a different process to globalisation – has massively increased wealth disparities in western states. The Tories are parroting that the top 1% of taxpayers pay 28% of all taxes. That is because the top 1% of taxpayers consume over 28% of all income.

The ultra-rich have distracted the mass of the people, who are suffering increasing and real poverty and an inability to acquire housing and other fixed capital.

The wealthy and their political and media propagandists have pointed to immigrants and persuaded people that it is not the obscene share of resources sucked out of the economy by the ultra-rich, but rather the productive immigrants who are responsible for their poverty. And people fall for it. This is the attraction of the racist dog-whistle on immigration blown by Trump. LePen, UKIP and now shamelessly by Theresa May and the Tories. Some who consider themselves Left fall for this racism to the extent they are prepared to tolerate LePen.

LePen is a genuine fascist. She is in the tradition of the Nazis and Vichy. Her chosen senior colleagues are Nazi sympathisers and holocaust deniers. She is the grossest of crude Islamophobes. I detest the lies and callousness of neo-liberals, their complete absence of empathy, but there is no moral equivalence between a neo-liberal and a Nazi, and it is ludicrous to pretend that there is. Anybody who does so is not welcome, as I have said, to comment on this blog. I have no desire to associate with Nazis. The rest of the internet is open to you.

The Left has failed to formulate a coherent intellectual response to globalisation, largely because they have fallen for the neoliberal intellectual trap of believing domestic deregulation to be a necessary concomitant. The rejection of internationalism has led some who consider themselves “left” to be attracted to LePen and fascism, at least to the extent they do not recognise her extreme evil. Anybody who has felt that should be deeply ashamed.

Nick Cohen’s book “What’s Left” identified tolerance of Islam as the weakness of the British and European Left. In fact he was diametrically wrong. The weakness is an abandonment of internationalism and a susceptibility to racist anti-immigrant dialogue.

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Trump and the Media

With no sense of irony, a “liberal” media which rightly excoriates the President of Gambia for failing to accept an election result, continues to do precisely the same thing in the case of Donald Trump. No invective is too strong to be cast against a man whose election the “liberal” media did everything possible to prevent.

With the happy resignation of Stephen Daisley, a strong contender for worst journalist in the World is now Jonathan Freedland of the Guardian. He takes the irony to an entirely new level. He claims that Trump will destroy the legacy by which smaller nations “long looked to the US to maintain something close to a rules-based international system.” He completely ignores the fact that the greatest single hammer blow against the rules based international system was delivered by Freedland’s idol Tony Blair, when he supported the invasion of Iraq without a Security Council Resolution and in the specific knowledge that, if the matter of force were properly put to the Security Council, it would not merely meet three vetoes but lose a majority vote.

The UN, and the rule of international law, have never recovered from that hammer blow, which Freedland enthusiastically cheered on. Nor has Freedland apparently noticed that the smaller nations rather detest than worship the USA. It has invaded and bombed them, interfered in their elections, supported right wing coups and armies, run destabilising CIA drug rings in them, and armed and even sometimes led dictatorial death squads. Look at all those US Security Council vetoes and the resolutions that never got to a vote because of threatened US vetoes. Look at all those General Assembly votes that were everyone against the USA, Israel and the poor occupied Marshall Islands. Freedland’s hymn to the Pax Americana is a sick joke. For much of the world, a period of American isolationism would be extremely welcome.

I am thankfully too clear-headed to like Trump because of the extraordinary campaign of vilification to which he has been subjected. Freedland has no shame about repeating the lie that Trump kept Hitler’s speeches by his bedside. I was in a position to know for sure that the “Russian hacking” elements of the extraordinary “Manchurian candidate” rubbish which the entire establishment threw at Trump was definitively untrue. I had the background and training to see that the Christopher Steele dossier was not only nonsense, but a fake, not in fact produced seriatim on the dates claimed. The involvement of the US security services in spreading lies as intelligence to undermine an incoming President will go down as a crucial moment in US history. We have not yet seen the denouement of that story.

But none of that makes Trump a good person. He could be an appalling monster and still be subjected to dirty tricks by other very bad people. There is much about Trump to dislike. His sensible desire for better relations with Russia is matched by a stupid drive to goad China.

Trump’s anti-immigrant rhetoric did tap in to the populist racism which is unfortunately sweeping developed countries at the moment. The very wealthy have succeeded in diverting justified anger at the results of globalisation on to immigrant populations, who are themselves victims of globalisation. By shamelessly tapping in to the deep wells of popular atavism, the elite have managed the extraordinary trick of escaping the wrath their appalling profiteering and extreme levels of wealth should bring. His words on race in his inauguration address were good, but does he really mean them? His anti-Muslim rhetoric remains deeply troubling. His ludicrous boast yesterday that he would end radical Islamic terrorism is precisely indicative of the counter-productive stupidity that feeds it.

I am a free trader and dislike the march of protectionism. But on the other hand, international trade agreements have become routinely not about tariffs but much more about the allocation of resources within the states concerned, mandating a neo-liberal model and giving extraordinary legal status to multinational companies. The collapse of the current model of international trade agreement, if that is what Trump really heralds, has both its positive and negative aspects.

It is of course a major question whether the establishment and his own Republican party allow him to do anything too radical at all. My own suspicion is that after all the huffing and puffing, nothing much is going to change. The key intra-party battle will probably be over the only policy he affirmed in any detail yesterday, the return of New Deal type state infrastructure spending. The idea of a massive state funded programme of national infrastructure, particularly in transport, to get heavy industry back on its feet, is the very antithesis of neo-liberalism. I think yesterday cleared up the question of whether Trump really meant it – he does. Will he be allowed to do it by a party committed to small state and balanced budgets, is a huge question. As Trump is also committed to tax cuts, it implies a massive budget deficit – with which Trump might well be comfortable. If Trump does succeed, it could fundamentally shift the way western governments look at economics, turning back the clock to the happier days before the advent of monetarism.

So that is Trump. Much that is bad but some fascinating things to watch. I suppose the reason I can’t join in the “it’s a disaster” screams, is that I thought it was already a disaster. The neo-liberal, warmongering orthodoxies did not have my support, despite Obama’s suave veneer. The pandering to racist populism of Trump is bad, and we must keep a watch on it. He may turn out not really to be different at all. Like all politicians, personal enrichment will doubtless be high on his agenda. But I do not start from the presumption the world is now a worse place than it was last week. I shall wait and see.

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The Spiral of Despair

If somebody wishes to be a ghazi, I should much prefer them to do it in Tikrit rather than in Peterborough or Penicuik. To that extent I agree with Bob Quick. The periodic media scares about Sunni families going to Syria to “join ISIS” are very peculiar. We appear, with no public debate, to have adopted a de facto system of exit visas. Ronald Reagan famously said to Mikhail Gorbachev that we never had to lock our people in. It seems that now in the UK we do.

We have companies that recruit and control active armies of mercenaries, which are responsible for thousands of deaths overseas. I detest the violence of “ISIS” but it is not morally different from Executive Outcomes machine gunning villages from helicopters in Angola or from Aegis killing random vehicle occupants in Iraq who happened to be near their convoys. Yet Tony Buckingham and Tim Spicer became extremely rich after founding their careers on the latter killings, and now are respected figures in the London establishment. Apparently killing for money is good; only killing for religion is bad.

Nor is there any official objection to the young Britons who go to Israel to fight with the IDF, and were involved in the war crimes that last year killed hundreds upon hundreds of little Palestinian children.

Terrorism is appalling. The desire by some of the inhabitants of the Middle East to establish a Caliphate run on what they interpret as theological lines is a legitimate desire, if that is the kind of society people want. We devastated Iraq: we bombed Iraq into a failed state. We we were part of the nexus of interests that conspired to arm and facilitate armed insurrection in Syria. In the Blairite creed, we apparently believed that unleashing death, devastation and destruction of physical infrastructure and social institutions, would result in an embrace of democracy and western values by the people.

You would have to be mad to believe that, but it appears to remain the guiding principle of western foreign policy.

Even the remotest claim to wisdom would lead to the embrace of two principles. The first is that we cannot dictate how societies very different to our own ought to organise themselves. We can try to encourage a dialogue leading to respect of universal human rights, and hope for gradual improvement in that direction. But the second lesson is stop bombing. It is plainly counter-productive.

Today the BBC is wall to wall 7/7 commemoration. The coverage keeps focusing on military uniforms, even though the military were in no capacity whatsoever involved in 7/7. It is inappropriate militarism, just as we saw with the return of the bodies of the Tunisian victims.

There is an elephant in the room. Nobody is mentioning the starkly obvious truth. If we had not invaded Iraq, 7/7 would never have happened. Let me say it again, because it is not sayable within the corporate media and establishment consensus. If we had not invaded Iraq, 7/7 would never have happened.

Our response to “Isis” illustrates that we have become no more sophisticated than the Victorian portrayal of the “Mad Mahdi”. The difference is that, due to globalisation, we cannot just pound foreign lands into submission without provoking the blowback of terrorism elsewhere. I detest terrorism and do not believe random killing of civilians can ever be justified. But it is not an inexplicable manifestation of evil. We are causing it.

It is a fact that ISIS was never implicated in any terrorist activity in the UK before we started bombing ISIS in Iraq. We created the appalling mess in Iraq and Syria. By bombing we continually make it worse. It will take some time for the Middle East to recover from the profound effects of the Western wars against Muslim countries at the beginning of the 21st Century. Our response to the provocation of Bin Laden has been so stupid as to attain most of his goals for him. We have of course also attained most of the goals of the armaments and security state industries, which have sucked wealth from the rest of us. A spiral of despair for us has made billions for them. When a policy is as obviously counter-productive as our continual Middle Eastern wars, then ask cui bono?

I am not claiming that if we stop bombing then terrorism will stop instantly. There will be a lag effect. And in even the most benign scenario, Iraq and Syria will take decades to normalise. That is our fault, but we can best now help by staying well away.

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Milliband Prepares to Stab Brown

Globalisation really has made the world a small place. I am currently in Africa, and last night was speaking with an African minister well connected to a group of New Labour’s senior black activists. He told me that David Milliband has been talking with his brother, two other cabinet ministers and Alan Johnson about how to ditch Brown if New Labour come fourth in the European Elections, behind the Tories, Lib Dems and UKIP.

There is a view now inside New Labour that coming fourth is a very real possibility, and would trigger mass panic among MPs and possibly a spiral downwards to electoral annihilation next year. They fear the Lib Dems traditionally poor performance in Euro elections will be outweighed by a failure of the New Labour core vote to turn out. There are also tensions over the Hazel Blears strategy of trying to motivate the core vote by talking up the BNP threat, with many in the black community feeling this was counter-productive in giving the BNP extra publicity.

Obviously there is an element of Chinese whispers here, but I have no doubt that his account is broadly true and does reflect what it now feels like to be inside as New Labour implodes – as witness the appalling revelation that 52 New Labour MPs have formally requested to be appointed for life to the disgusting croneyism that is the House of Lords.

I wonder if Uzbek government spokesman Andrew Dismore MP is one? No way he’ll hold Hendon, thank God.

http://www.craigmurray.org.uk/archives/2009/05/andrew_dismore.html#comments

Good article on New Labour’s rush for the Lords by Andrew Kettle. Comments are even better.

http://www.guardian.co.uk/commentisfree/2009/may/28/labour-reform-a-new-politics?commentpage=1

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Russia/Georgia: Uncle Craig Answers Your Questions

Are We Entering A New Cold War?

Possibly. Although thankfully less people are now dying in Georgia, in diplomatic terms the crisis is in fact worsening fast. The formal US signing of the agreement to station missiles in Poland was rapidly followed by recognition by the Russian parliament of the independence of South Ossetia and Abkhazia. Those are both major inflammatory acts for the other side, and it is difficult to see how the current administrations in Russia and USA can pull back on either the missiles or the recognitions.

More significantly, Russia announced it was increasing its troop numbers in the port of Poti. This effectively kills the six point peace treaty Russia signed. Almost certainly, Russia will argue that its commitment to withdraw troops from Georgia does not include Abkhazia or South Ossetia as it now views them as not part of Georgia. But Poti is not in Abkhazia or South Ossetia, so there is no figleaf of justification for the Russian occupation there. This is straightforward military aggression against a sovereign state.

Won’t The Oligarchs Rein Back Putin To Protect Their Financial Interests?

There is no doubt that the Russian and Western economies are now much more interlinked than during the Cold War. Russian commodities production, particularly oil, gas and metals and wheat, are essential to Western economies. Germany’s dependence on Russian gas for forty per cent of its electricity has a visible effect on German foreign policy and is the most striking example of the diplomatic effect of this integration. On the other side, Russia’s economic resurgence is almost entirely commodity driven and it still produces very little by way of manufactured goods for its own population. Most of these are imported from the West. The international tension has contributed to a 20% plunge in Moscow stock markets this year, and dipped sharply on the Georgia invasion.

Is this enough to prevent a cold war? In many ways, this is a subset of the question, is globalisation the end to war?

The answer I fear is no.

Take the Iraq war. Direct costs alone to the US taxpayer have spiralled to over a trillion dollars, while massive US government debt to fund it, and subsequent acceleration in the decline of the dollar, has been a major contributory factor to the global credit crunch. Economically it has been disastrous for the US population.

But it has not been disastrous for the people who fund George Bush. Oil prices have soared because of the Iraq war, and powerful oil companies have made excess profits totalling hundreds of billions. Very obviously, profits of the big armaments companies have also leapt substantially. The military and security services have also benefited from a massive increase of resources. Big oil, big arms companies, the military and security services – those are a government-swaying conglomeration of private interests with loads of money to buy politicians. That is true in both the US and Russia. It is a peculiar paradox of human society that those who benefit from war, hot or cold, are always able to get their hands on the levers of power much more readily than the bulk of the population, who lose out badly from the misallocation of resources.

Symbolically, Russia signaled yesterday it is turning away from the open economic path with a very significant announcement that it is resiling from several commitments needed for WTO membership.

Wasn’t Russia Provoked Into This Conflict?

Yes. The Georgian attempt to reclaim South Ossetia by force was foolish, even if provoked by South Ossetian shelling. It also appears to have been pretty vicious. But Russian claims of genocide are absolute rubbish. I have witnessed first hand the work of Human Rights Watch in several different parts of the Former Soviet Union, and been very impressed by their methods. They put the South Ossetian dead in the low scores, not the thousands. Of course that is still several score too many. But the Russian response has been grossly disproportionate. There are two key points of international law here. Georgian action was limited to its own sovereign territory. Russia invaded another country and failed the important test of proportionality.

But We Invaded Iraq, right?

Yes we did, and that was illegal too. But just because President Bush says Russia is in the wrong, it does not necessarily follow that Russia is not in the wrong, just as if President Bush said “The time is 10am” it does not necessarily follow that it isn’t (though I’d check, unless someone gave him a nice easy digital watch).

Kosovo is a very precise parallel. Serbia invaded a secessionist area of its sovereign territory, and NATO responded by attacking Serbia – killing many more people than the Russians did in Georgia. NATO would argue that proven genocidal tendencies of the Serb army made it necessary, and that has some weight in assessing proportionality. Nonetheless the NATO response was disproportionate. Most of NATO of course went on to recognise Kosovo as independent, just as Russia has South Ossetia and Abkhazia. Again, NATO being wrong then does not make Russia right now.

But Aren’t South Ossetia and Abkhazia Entitled To Their Independence?

I would argue yes, they are, if it is plainly the will of their population. I would argue the same of Chechnya, Dagestan, Kosovo and Scotland. But there lies the rub – the application of the accepted international law principle of self-determination of peoples, as it applies to separatist entities within a sovereign state, is the hottest dispute in international law. There is no doubt that the precedent of the break-up of the Soviet Union and of Yugoslavia had moved the law in favour of the separatists, but how far? Agreed separations like the Czech and Slovak are no problem, but there is no fixed law for a region wishing to separate against the wishes of the state it is in. Quite simply it depends on having the political clout to get the UN to agree.

North Cyprus is a de facto state which never managed to pull this off, and seems a good parallel for the likely future of Abkhazia and South Ossetia. Many “Western” states are deeply wary of acknowledging separatists for their own internal reasons – Canada and Spain being good examples.

The Chechen case is important, because it illustrates both Putin’s extreme ruthlessness, and the fact that Russia has no principle on its side. Russia supports or opposes the rights of separatists purely as they benefit Putin’s aims to expand Russian influence.

Isn’t It All About Oil and Gas?

To quite a degree, yes. European powers have been trying to obtain a Trans-Caucasian pipeline which would enable Central Asian gas to pass to Europe without going through Russia, which currently has a monopoly of Eastern supply. Russia has been pressurising Georgia to block such a pipeline.

Georgia is just one pawn in the New Great Game of securing the Caucasus and Central Asian hydrocarbons. It is a game Putin has been winning hands down for the past five years. He has evicted US influence from Uzbekistan and tied up Uzbek and Turkmen gas supply. Rigged elections got Azerbaijan sewn up under the leadership of the son of the former head of the KGB. Shell have been chucked out of Russia and BP are in the process of being chucked out. Georgia was a last remaining pro-western irritant. Western oil companies remain strong in Kazakhstan, where President Nazarbaev has carried out a brilliant balancing act between Russia and the West. Putin is now bound to ratchet up the pressure on him.

Do We Need a Strong NATO to Counteract Russia?

No. That is the stupid and unimaginative answer – hence espoused by David Miliband, our foreign secretary.

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4560698.ece

His proposal to accelerate Ukrainian and Georgian NATO membership is foolish beyond belief. It will guarantee a new Cold War and boost the Zhirinvosky nationalist tendency in an already scarey Russia. NATO is part of the cause of the problem, not part of the solution. I recall when the Soviet Bloc collapsed reading an internal FCO paper entitled “Finding a New Role for NATO”. The options of a fundamental redesign or abolition were not considered. It simply dwelt on positioning a massive and unwieldy alliance, built to face down Russia, to tackle peace-keeping, drug-smuggling and human-trafficking. Of course, most of that was a cover for the structures, and jobs for the boys, to continue and in fact it just continued to control a massive nuclear-led arsenal still pointed at a disarming Russia, while all the time creeping closer to Russia. We pile on top of that new missile systems and US bases in former Russian satellite states, and our infamous decision to upgrade Trident with a system that means the UK alone could destroy every Russian city. The we worry about why Russia got paranoid and aggressive.

NATO has had its time, and the disaster of Afghanistan and brutality of Kosovo are not pointers to a new future. You can sense the relief of fools like Miliband at the comfort of returning the institution to massive cold war posture. We need a new start with Russia, which involved designing a completely new security architecture in which Russia plays a full part.

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Henry Porter and Tony Blair: The letters

This exchenge of letters between Henry Porter to Tony Blair were published in The Observer earlier this year.

From: Henry Porter To: Tony Blair Re: Liberty

Dear Prime Minister,

Nine years ago, as I watched you arrive at the South Bank on the night when you became Prime Minister, I would never have imagined that I’d come to view you as a serious threat to British democracy. But regrettably I have. Either by accident or design, your ‘modernising’ Labour government has steadily attacked our rights and freedoms, eroding the Rule of Law and profoundly altering the relationship between authority and the people.

Successive laws passed by New Labour have pared down our liberty at an astonishing rate. The right to trial by jury, the right to silence, the right not to be punished until a court has decided that the law has been broken, the right to demonstrate and protest, the presumption of innocence, the right to private communication, the right to travel without surveillance and the details of that journey being retained – all have been curtailed by your legislation.

While hearsay has become admissible in court, free speech is being patrolled by officious use of public order laws. In Parliament Square we now see people parading with blank placards to make the point that they are not allowed to demonstrate within one kilometre of the Square under the new Serious Organised Crime and Police Act (SOCPA). And this in the land once called the Mother of Parliaments.

For a democrat, this is all profoundly troubling. I hope that you believe you are acting in good faith; that you are simply motivated by the need to respond to the threats of terrorism and organised crime and the nuisance of anti-social behaviour, but I wonder if you have any idea of the cumulative effect of the 15 or so bills which have incrementally removed or compromised our liberties.

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Government washes its hands of weapons sales to the Uzbek government

The British government has tried to circumvent restrictions on the supply of military vehicles to the Uzbek government by allowing the sale of land rovers to be modified for military use by a third party.

From Hansard

Q56 Richard Burden: One thing that was in your submission was the Land Rovers, the Turkish made Land Rover Defender 110 military vehicles which were used by Uzbek troops during the massacre of 2005. What you have said about that in your submission is that they were a gift from the Turkish government to the Uzbek government, and you think it is likely that they were produced under licence from the UK by Otokar, the Turkish company, although 70 per cent of the components were exported from the UK and therefore you say there is a loophole. We actually put this to the Government and said what do you say about this then, and I would like to read out to you what the Government said in response to that, and then perhaps you can give your response to that. What the Government told us was: “We understand that Land Rover sells flat-pack civilian Land Rover Defenders to the Turkish company in question, which then assembles and re-badges them for onward sale under its own name, using its own products and components, and according to designs for which that company holds the intellectual property rights. It is the Government’s understanding that these are not Land Rover approved products and it is therefore inaccurate to describe the company concerned as an overseas production facility for Land Rover. Under the EC Dual-Use Regulations … the UK has no power to control the export of civilian specification Land Rovers. To the extent that the buyer in Turkey converts the civilian vehicles using his own technology and without UK involvement, this is a matter for the Turkish authorities as regards any export from there.” That is what the Government said to us and I would be interested in your reaction to that.

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