Category Archives: World

Is the Euro worth saving?

Anglo-Saxon economists were always sceptical. And so was much of the British establishment, though less so in the early days. But sponsors of the European dream were determined. And at first European Monetary Union defied the sceptics. But now the dreams are vanished and the only people defending the union seem to be those that have face to lose. Is it all over for the Euro?

It is Greece that seems to prove the scheme’s futility. The Greek government cannot repay its debts; its banking system depends on a bankrupt government for solvency and the European Central Bank (ECB) for liquidity. Greece cannot print its own money to inflate its way out of the hole. Instead European institutions and the IMF have to bail it out, and they are demanding conditions that add up to a loss of the Greek government’s sovereignty over its economic policy. Both sides blame the other, and the more the blame game goes on, the more trust and solidarity break down. The Euro is tearing the union apart, when it was supposed to bring Europe’s peoples together.

It doesn’t take hindsight to see what went wrong. Mostly the scheme’s weaknesses were pointed out at the start. Its supporters (who included me) just thought that this time it would be different.

Monetary policy is set at continental level, and yet there isn’t a great deal of economic integration. In order to adjust to local business cycles and local economic shocks, national governments have only a very limited set of tools. And the most important, fiscal policy, is constrained by the Stability & Growth Pact. This was instituted to try and prevent member governments becoming insolvent, a contingency that the zone had no process to deal with. This made it quite unlike a federal system, like the US, the only comparable monetary system that most knew. In the US there is a strong federal level of government, which draws substantial taxes from all parts of the union, and can make big fiscal transfers between the union’s members to compensate for the lack of monetary flexibility.

Funnily enough the problems with this set up did not play out in the way that most critics foresaw.  They thought that different business cycles or local shocks in different parts of the union would be the big problem. This happened – especially when the central economies of Germany and France endured recession, while peripheral economies, such as Spain and Ireland fizzed. But these were not the main cause of the crisis that emerged following the global financial meltdown in 2008.

The first problem was that investors assumed that member governments could not go bust, and that if they got into difficulties somebody would bail them out. As a result, it became much easier for the peripheral governments to borrow, and this allowed them to run their economies with a looser hand than they should. This was most egregious in the case of Greece, who produced misleading economic statistics, which put their government into a completely unsustainable position. And when it was clear Greece could not repay its debts, the system had no set of processes with which to manage the crisis.

Perhaps Portugal and Italy were guilty of something similar without the fraud, though Italy has not needed a bailout. But the other bailout cases (Spain, Ireland, and Cyprus, though I am less confident that Cyprus follows quite the same narrative) the main problem was not government finances, but a reckless private sector that fuelled property bubbles. What added fuel to these bubbles was cross-border flows from elsewhere in the Euro area, and especially German banks. The Euro system had greatly facilitated such flows. When the bubble burst, it brought down the countries’ respective banks, and this in turn draw their governments down with them. Governments couldn’t let the banks go bust, since they controlled local payments systems and economic chaos would have resulted. Like Greece these countries then needed external support and bail-out.

The important point to make about this series of crises was that they were to great extent “endogenous” as economists like to say – they have to do with the way the system itself operated – and not exogenous – the external shocks and uncontrollable factors which most economists thought was the system’s weakness. That suggests that bad systems design was a large part of the problem – and that, in theory, could be fixed. Most suggest that it implies a fully federalised system, with a federal government, supported by federal taxes and federal debt. An alternative route would have two main elements: a national insolvency regime (a bit like US states, but not Puerto Rico, which is on the path to creating a US version of the Greek crisis); and banking reform to produce a more federalised banking system firewalled from member governments.

But either route would leave member governments facing a grim reality. The Euro offers a straitjacket for government finances, and not a liberation. In the fully federalised case, the scope of government responsibilities would be curtailed and handed over to a federal government. In the alternative governments would be heavily restricted by their ability to borrow in financial markets (which would do away with the need for the Stability & Growth Pact). This latter is, in fact, what many supporters of the Euro (including me) envisaged all along (though in my case I completely failed to grasp the difficulties of managing the banking system). It was rather a Thatcherite project. But others thought EMU would be a step along the path towards a federalised Europe. It was the unresolved conflict between these two visions of the Euro that got the system into its current mess.

And this conflict is still unresolved. But the federal vision is losing ground; there simply isn’t the political support for it. That doesn’t stop people in the European Commission from quietly pushing for it though. But those who aren’t convinced by the federal idea, aren’t convinced by the multi-state currency area alternative either. Why opt for a straitjacket? Wouldn’t it be more democratic and easier to say goodbye to monetary union altogether and let each country go its own way with its own currency?

And I don’t have the answer to that. One thing I will say is that the quality of economic commentary in the media is pretty dire. From this you would think that the advantages of having a floating currency make doing anything else foolish. But all Economics students are asked to do an essay on the pros and cons of floating currencies, and frankly it is not that obvious that either route is a winner. As a rule, the smaller and more open the economy, the more there is to be said for a fixed currency regime – which is why the Euro is popular with so many smaller EU members. Floating currencies reduce the effectiveness of fiscal policy, especially in such small and open economies. The rather loose fiscal policy of the Britain’s government in the 2000s caused the exchange rate to be too high, leading to a trade deficit and a hollowing out of British industry the country still have not recovered from. By contrast Germany has been able to maintain its industrial base within the Euro, albeit with some painful restructuring.

And a floating rate does not prevent banking bubbles. Iceland had one in parallel with Ireland, with its own currency. Recovering from the bust best no less painful for Iceland than for Ireland, though arguably not really any worse either.

But setting up a more secure banking system across the Euro area is no small thing, and its feasibility is an unknown. Against this, taking the Euro apart would be a huge undertaking, so there is there is much to say for trying to make it work on a rather less ambitious scope. Inertia is on the side of the Euro. But the starry-eyed enthusiam is gone

 

 

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Greek crisis: the problem is loss of trust

The leaders of Greece’s Syriza government are clever people. They include university academics, well versed in modern economics, including game theory and the theory of negotiations. After yesterday’s decisive No vote in the referendum on settlement terms, these negotiators now feel they have a strong hand. I don’t share their optimism.

Unless you believe the conspiracy theories that Syriza’s real aim is to create a Venezuela in the Mediterranean, they appear to think that their EU counterparts and the IMF will be forced to negotiate because the consequences of not doing so are dire. What they seek are two things. First is that the level of government debt be reduced through forgiveness. The second is that the Greek government has a free, or freer, hand to follow an economic policy of its choosing, supported by fresh funding, primarily in the form of support for the Greek banking system by the European central Bank (ECB).

On the face of it neither of these requests is all that unreasonable. The moral case for debt forgiveness is a sound one. In the modern age more responsibility needs to be pinned on creditors to lend responsibly, and to suffer losses otherwise. The lending made to Greece before the crisis was not responsible, although misinformation from the Greek government contributed. This moral case is softened but still stands after two things. The Greek debt has already been substantially restructured so that the country’s interest rate burden is proportionately less than even Germany’s; the net present value of Greece’s debt is not nearly as high as you might assume for its nominal size. And now the debt has been taken over mostly by government agencies; the private sector banks that originally lent the money have mostly been paid off, after significant losses were forced on them.

And as for economic policy, the nominal Greek aim is to set up a virtuous circle of increasing demand that will help the economy to recover, so that its banks can repay the ECB, and that other lending becomes more sustainable. There is a familiar, Keynesian demand management logic to this. I think this is why so many respectable economists (especially based far away in the US)  support the Greek government’s standpoint. There is also a powerful argument about democracy – surely a democratic Greek government should choose its own path to a sustainable economy? The sight of so many unelected functionaries dictating terms to the Greek government has angered not just Greek citizens. I have seen many comments this morning about how the Greek referendum vote was a blow for democracy. The People have spoken!

So what’s the problem? International leaders are masters of fudge and pragmatism. Surely some kind of face-saving formula can be found that will be better than the consequences of a collapse of the Greek banking system? This is now a clear and present danger. Greeks having been withdrawing deposits from their banks, making the system insolvent. Since this looks like a temporary problem, the ECB has been prepared to prop the system up with emergency funding, awaiting the return of those deposits once a new deal has been struck. But last week this support was cut off, as the confidence of European governments was shaken about the ability to do any deal, when the Greek government called the referendum. With the referendum done the outgoing Greek Finance Minister, Yanis Varoufakis, suggested that this funding would return while a new and more reasonable deal was in prospect. Mr Varoufakis, who had taken to lecturing his European colleagues on basic economics, even resigned to make such a deal easier to negotiate.

But all negotiations are built on trust. You have to believe that your counterpart will stick to their side of the deal. And this has always been the problem with Greece and its creditors. What these creditors fear is that the Greek government do not put their economy on the path to true sustainability, and that it and the country’s banks will continue to need injections of foreign money without any real prospect of these being repaid. And this further support will have to supplied or underwritten by fellow European governments. There is little feeling of solidarity with the Greeks from other European electorates. Better off countries, like Germany, Finland and the Netherlands are outraged about the prospect of more taxpayers’ money being sent to countries that they see as feckless. Many east European governments, like Slovakia or Lithuania, are poorer than the Greeks overall, and see no reason to let the Greeks off; in some cases they have been forced to endure harsher austerity regimes than the Greeks were. Governments in other countries that have been subject to bailouts, Spain and Portugal in particular, do not want to give an easy victory to Syriza, lest it encourage similar movements in their own countries.

And why isn’t the Greek economy sustainable? This is a familiar combination of corruption, clientalism and ineffective government. Tax collection is inefficient; many benefits are too generous; there are too many meaningless publicly funded jobs. Many Greeks are entrepreneurial and hard working, but overall the economy does not pay its way – consumption is sustained by net imports. To create something more sustainable would require a programme of reforms, most of which would be politically unpopular. They would also suck demand out of the economy in the short term, i.e. they involve what has become known as “austerity”. Some theoretical economists, like Joe Stiglitz and Paul Krugman, seem to think that economic reform programmes can be designed without austerity. But this requires a favourable context and an efficient government – which does not apply here. The commonest way for such reforms to be imposed is through the government following a programme designed by outsiders, such as the IMF. Or else it is the threat of such an intervention that forces governments to act. These outsiders become convenient scapegoats, but in the longer term the reforms may be popular, as they deliver a healthier economy.

But the hidden background to the current crisis is that the Syriza government has not offered any convincing programme of reforms, while reversing reforms enacted by its predecessor. You wouldn’t guess this from listening to their smooth-talking spokespeople on the international media. But the Syriza movement contains many with more extreme, anti-foreigner views, limiting the government’s ability to act. The IMF in particular have found their plans utterly unconvincing. Politically they seem happy to go after rich people to tax them more. But rich people’s money is a notoriously elusive quarry; and the government is unwilling to take on any other reform with a political cost.

So what are the European governments to do? They are the critical parties on whom a deal depends. They have been humiliated by the referendum. Their electorates are telling them to not throw good money after bad. Their expert advisers suggest the Greek offers of reform are unconvincing, which means that the crisis will simply repeat itself. Over the years they have increasingly embraced an idea that had been unthinkable: that countries may be able to drop out of the Eurozone. The political costs of a negotiating failure have never been lower.

So what might happen? This depends in some measure on how well-prepared the Greek government is for this moment. If they have in their back pocket a credible compromise deal that saves some face for the European governments, we might pull back from the brink. Mr Varoufakis’s resignation is a good start, it has to be said.

What are the ingredients of such a deal? The Greek banking system must be at its heart. The banks must be recapitalised using external capital. They need to be insulated from the Greek government – in other words the money supplied by outsiders shouldn’t be simply channelled into government debt. Something needs to be offered to reduce the principal of older debts – though perhaps the interest bill can be kept intact. The Greek government can then be left to work its own way out of its short-term economic problems.

Such a deal would point towards the sort of reforms that might make the Euro more sustainable. Separating the banking system from government, with a more centralised regulatory and ultimately deposit insurance scheme. A resolution system for insolvent governments that means debts can get written down quickly. More nominal freedom for government fiscal policy – with discipline forced by bond markets, not EU agencies.

Such a deal would be a way forward. But it still needs trust. Alternatively the Greeks will have to create a quasi-currency of their own to keep their banks afloat – a first step towards the Euro exit. I am not optimistic.

 

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The European dream slowly unravels

I am one of nature’s political optimists. But 2015 is one of those years where it is all going wrong. The Lib Dem near wipe out in this year’s UK General Election, for one thing. The rise of Islamic State is another – along with the spread of vicious Islamophobia promoted by such outfits as Britain First. Meanwhile state after state in the Middle East and Africa is failing, with vicious dictatorships taking hold in other countries. This gives Israeli hardliners the cover they need advance their own brand of apartheid, and the ghettoisation of Gaza. Any attempt at finding a humane middle way is undermined by extremists of one sort or another, in country after country.

And now, as Gideon Rachman points out in yesterday’s FT, the European dream is dying before our eyes. The idea of ever closer European union was one of the formative ones in my own politics. In 1975 I was a 17-year old that was definitely ready to vote in that year’s British referendum on Europe. I’m not sure why it should have caught my imagination so – I grew up in postwar prosperity, where the World War was just an interesting piece of history. I suppose I found British society so staid and constricting that I wished for its institutions to be subsumed into something much more modern and exciting. I meet many people of my age that feel the same way though.

But apart from opening out British society and commerce, the EU represented a path towards civilised governance and prosperity for the undemocratic countries on its fringes. Greece was the first country to take the path of throwing off dictatorship and coming in to the mothership of Europe. 35 years on and the achievements look hollow. Greece took on the trappings of a well-managed European democracy but did not take it to heart. It remained run by a rich elite which did as it pleased, while bribing the rest of society with generous pensions and meaningless public sector jobs. They became artful in keeping that show on the road by extracting grants and loans from the rest of the union at the same time as disregarding rules they did not like. They even managed to join the Euro, reducing borrowing costs, and allowing the fiction of a properly functioning European state to continue. But sooner or later the music had to stop. And when it did the foundations of the European project looked shallow. There is an absence of trust and solidarity.

The Greeks themselves, or at least those that govern them, seem in denial about the sort of reforms that will be needed to get them on the path to prosperity. They claim to be victims, condemned as to doom-spiral of “austerity”, with many Anglo-Saxon economic commentators (Noble Laureates Paul Krugman and Joseph Stiglitz among them) cheering them on. But dig a bit deeper and we find that words such as “austerity” and “reform” have been abused so that a lot of the dialogue is at cross purposes. The Syriza government wants to reform some aspects of the Greek state, but sees no problem with those aspects that I have referred to as “bribery”: maintaining ineffective public sector jobs and unaffordable state benefits, such as pensions.This leads to the suspicion, especially amongst Germans, that all the Greek government want to do is to keep the old, failed way of running the state on the road, lurching from bailout to bailout, using moral blackmail each time.

The Germans, of course, are hardly blameless. Their banks kept the Greek show on the road, in the apparent anticipation that their government would bail them out if things went wrong. That expectation proved sound enough – most of the bailout money went to them, and practically nothing towards providing the investment the Greeks so badly need. The Greek government’s moral case is not entirely hollow – but their combative approach to negotiation is destroying trust. No wonder that British Eurosceptics urge the UK government to emulate such tactics in their dealings with the EU! Even now the Greek Prime Minister, Alexis Tsipras, suggests that a No vote in the forthcoming referendum is just a step in the negotiation, not a real moment of decision. Those European leaders who have been trying to fudge things to get a deal, like Claude Juncker, the President of the EU Commission, feel betrayed.

The prospect of Greece dropping out of the Euro and then the EU is steadily growing. This would be a calamity for Greeks, and raises the prospect of yet another failed state. As more than one commentator has suggested, if the Greek ruling elites had what ti takes to run an independent monetary policy, they would not have got into this mess in the first place. It would mark a big moment for the EU too. Its first major defeat. But it has limited powers; it cannot make an unwilling partner reform itself.

And old Europhiles like me must wake up and acknowledge the truth behind that. Our dream cannot be fulfilled. The EU is a confederation, not a federal state. It cannot bind its members by force of arms, as the United Stares did when some of its members tried to secede over 150 years ago.

The question now is whether the EU can survive a Greek exit, or will it be the start of a general process of disintegration. Greece is not the only country to be a cause for concern. The other bailout cases -Spain, Portugal and Ireland – were always more serious about reform and integration, and I do not see these as being of immediate concern. Cyprus, with its cultural ties to Greece, may be different. But the future integration of Hungary, Romania and Bulgaria are far from secure.  At least they are not members of the Euro.

Greece seems to be the lesson that the EU learns by. After its entry to the Euro, the EU became much stricter about allowing further new members. After its flawed bailout, which let many private sector investors off the hook, it was much stricter with Cyprus.

But what is emerging is a different Europe. One where much less solidarity is expected. And one with an Exit door. It is a system of rules and standards that facilitate free trade, environmental cooperation and good governance – but one where it if you fail you are out. Integration is not necessarily in one direction. The union will no longer be ever closer.

Into this sad situation the British Prime Minister David Cameron enters with his attempt at British renegotiation, leading to a referendum. This may seem to be the last thing that Europe needs. But Mr Cameron’s negotiating skills are far more advanced than Mr Tsipras’s, and he is showing much more application than hitherto. This cloud offers a silver lining. It may define a looser union, but if the British public votes to stay in it will offer a counter-narrative to the slow disintegration that is happening elsewhere. Such is what is left of my European dream.

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Greece: can you have reform without austerity?

The standoff between the Greek government and most other EU governments continues. The other governments are happy to extend loan facilities, but only if Greece stands by the conditions it had previously agreed. For the Greeks that is anathema, because it means holding to austerity. Many observers here in Britain seem to sympathise with the Greek side. And they offer a middle way: reform without austerity.

Three columns in the FT make the case. I have provided links, but beware – the FT operates a paywall with a very limited number of free goes. First was the weighty (intellectually) Martin Wolf. He condemns the EU programme for focusing too much on austerity and not enough on reform. Austerity sucks demand out of the economy, causing mass hardship; reform would make Greece’s economy more efficient. Next came the intellectually much lighter Tony Blair: Two false paths for Europe – and a new third way. This puts the idea into more overt political terms, though conjuring up memories of his own British “third way” that was politically successful for a while, but whose reputation is now somewhat tarnished. As an aside this is interesting because it shows that Mr Blair accepts uncritically the basic left wing economic narrative – looser fiscal and monetary policy will lead to growth. On Monday was regular FT columnist Wolfgang Munchau: Athens must stand firm on failed policies. This is positively vitriolic about the EU conventional wisdom on austerity, which he regards as economically illiterate and a complete failure. This article contributes to the picture by exploring Greece’s options in the event of breakdown, including the intriguing one of the country printing its own money.

So what to think? Austerity refers to the reduction of public spending and the increase of taxation. It is considered economically counterproductive because it sucks demand out of the economy, which in turn knocks tax receipts – which makes things worse by creating a downward spiral. In Greece’s case the object of vitriol is the target that the government should run a primary budget surplus of 3% , to pay for debt interest, which comes to about 3%, after the recent restructurings (and a remarkably low figure for debt of 175% of GDP). Surely even prudent governments should be allowed a deficit in a recession? So what about reform? It is here that each of these commentators is awkwardly silent. Just what on earth do they mean?

Economic reforms to promote efficiency usually mean changes to product and labour market regulation to make them more open to free market forces. These are undoubtedly required in Greece.  But they promote short-term insecurity to jobs and businesses. They are not politically popular, and I doubt very much that there that the Greek public distinguishes between these reforms and austerity. They all part of the same hateful phenomenon.

And the problem goes deeper. Regulation tends to create public service jobs., which deregulation threatens. Besides it is the scale of the public sector, both in terms of jobs and transfer payments, that is a large part of the problem. In several ways this undermines a dynamic private sector. They tie up resources; they undermine labour markets, and so on. For too many people the way to wealth involves politicking rather than delivering things that people actually need and want. And so reform often means cuts – which is back to austerity.

In fact to find ways of stimulating demand without blocking reform is quite hard. There is the economists’ old favourite: investment. But efficient public investment requires an efficient state to direct it. Otherwise the money simply lines the pockets of well-connected people. Surely Greece is vulnerable to this? More bank lending? Another can of worms. Frankly I will not be convinced that reform without austerity is a possibility until somebody can spell out a programme which delivers it. The Greek government is proposing a reversal of both austerity and reform. Once again British (and American) economists are guilty of using macroeconomic analysis to skate over practical problems that turn out to be the very heart of the issue.

There may be some hope a middle way though. Perhaps some fudge around economic cycles can be used to cut the target for primary surplus. And there must be some opportunity to reshape the austerity/reform programme to put more weight on collecting tax from wealthiest – which the new Greek government seems much better placed to do that the last.  Alas I am too far away from it all to have any feel for how likely such a deal might be. All I will say is that British commentators are generous with the taxpayers’ money of other nations, but their credibility would rise if they suggested that British taxpayers should join in. All the talk of respecting Greek democracy would then be put into a clearer perspective.

Meanwhile it seems quite likely that there will be some kind of Greek default. Following Mr Munchau it looks quite likely that the Greek government would issue some form of electronic currency of its own, in the from of IOUs, to keep things going. This may well be against the letter of the rules for the Euro area, but it could buy enough time for a compromise to be reached. And perhaps the development of a safety mechanism for the Euro currency area. The Eurozone needs to find some sort of middle way between the inflexibility of a gold standard, and the creation of a federal state without democratic consent. Might what amounts to local currencies be part of this?

Meanwhile, as the saying goes, if something looks too good to be true, it probably is. That is surely the case for reform without austerity. Sorry Mr Blair.

 

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How far will liberals go to defend their values? Putin poses the question.

Liberal values are under attack by people happy to use violence to stop their advance. Two main groups of attackers have emerged: various flavours of Islamic extremism, and Vladimir Putin’s Russia. This onslaught is causing stress for traditional liberals.

We are used to dealing with constitutional opponents: from the collectivist ideas of the left to the social conservatism of the right. But these opponents play by a set of rules which, though they include some manipulation of the media, by and large do not involve killing people. The debate is engaged on liberal terms and settled democratically. But what happens when our opponents do not accept such rules? What happens somebody else has declared war on liberalism?

We have an ideal that we defend ourselves using the minimum level of force, while trying to move the dispute on, and into a liberal and democratic form. In particular we want to maintain peacetime rights and methods as far as possible – since the idealisation of war is itself a rejection of liberal values. This is largely appropriate as we confront Islamic extremism. This is guerilla activity from within our societies. But there are some types of threat where we have to accept something far from the peacetime ideal. Hitler was stopped in Stalingrad, by forces whose methods were no less ruthless than his own. Sanctions and a peace conference would not have liberated Germany. The problem arises when a state decides to project its military power to evil ends. In recent memory we have the appalling example of the former Yugoslavia. There the state power of Serbia was used to promote ethnic cleansing. Liberals in the West tried to step back, not takes sides, and talked of promoting dialogue. But to Serbia this was just weakness. It was not until the appalling massacre of Srebenica that Western countries realised that they had to take sides.

And now Vladimir Putin’s Russia poses a similar threat. Ethnic cleansing may not be on their agenda, though defence of Russian-speaking people is supposed be one of their motivators. The Russian aim seems to be to maintain the power of its ruling elite, not just in Russia, but across a broad sphere of influence outside. This involves a cordon-sanitaire of neighbouring client-states, and undermining the multinational organisations of NATO and the EU that represent opposing value systems. In this they are building on a deep sense of Russian otherness to the rest of Europe, and widespread suspicion, or outright hostility, to liberal values. Persecution of gays, for example, is something of a totem. The Economist this week has published an analysis, though some might doubtless it to be a little paranoid. Russia is prepared to use a projection of military power to secure its aims, and it is also projecting “soft power” of propaganda and sponsorship of extremist political parties, such as the National front in France. They are deploying great subtlety on both fronts, having learnt much from previous adventures, for example in Georgia.

And I worry about the reaction here in the West. I recently had a din-dong on Facebook after somebody started posting a series of stories (from respectable sources) to suggest that the Kiev government were a bunch of ruffians and that we should leave them to their fate. I will quote at length from this conversation, perhaps stretching Facebook etiquette a little (Facebook is regarded as “semi-private”, but the person publishing these views is using a political label rather than their own name, so I feel fewer scruples about quoting them here).

We are talking apples and oranges. You seem to be more concerned with the geo-political battle between Washington and Moscow. Liberals should be more interested in protecting the rights of minorities in Ukraine rather than standing up for a nationalist state who wants to crush opposition by violence. Very few people seem to be speaking up for the innocent civilians caught up in what is a classic proxy civil war, with the USA and most of the west supporting and funding one side and the Russians the other, no doubt with covert support. The constant blame game by both sides means little to people who have had their homes or family blown up. 
There is no military solution for Kiev, Putin will increase his support for the rebels to match anything that we can provide. Even if Kiev could conquer the rebel territory, what then? Journalists who have been there report real anger by local people with the Kiev government. In the Ukrainian parliamentary elections last October in government held areas of the Donbass the turnout was less than a third and in those areas less than 20% of voters voted for government parties. There clearly needs to be proper political dialogue between Kiev and the rebels, anything less than this will prolong the misery for everyone. It was not a wise move for Kiev to declare war on their own people and call them terrorists. Kiev is very dependant on western financial support, we need to start pressuring Kiev to stop breaking international law on human rights and war crimes and start entering serious negotiations with the rebels as we did with the IRA. Russia needs to do the same with the rebels. Ultimately, this conflict needs to be resolved by the will of the people through a proper referendum not through violence.

This is interesting because it is largely accurate on the core facts. The people of the Donbass never trusted the Kiev government; the war has polarised their views against it; a projection of Russia’s military power means that a military reconquest by Kiev looks impractical. The Kiev government has been responsible for indiscriminate shelling of civilian areas, and some fairly robust enforcement of its conscription laws, which can, of course, be described as violations of human rights.

But hang on. Moscow’s intervention is what prevented any kind of peaceful or constitutional solution. The “anti-terrorist operation” by the Kiev government was only started after the “little green men” had appeared to stiffen up the rebels, and persecute anybody that supported a united Ukraine. Russia was building on genuine discontent by the people of the Donbass, but ultimately it was and is a projection of Russian military power. It is not wrong to respond to such a projection of power by military means, and if the Ukrainian government had not, the “rebels” would control a much broader area of territory – to say nothing of encouraging the Russians to push their luck elsewhere. And when wars start, things get messy – especially when the  Ukrainian military is not the fully modern, professional and well-equipped forced force that we are used to seeing in the West. They have not, so far as I know, bombarded civilian areas that were not part of a military conflict zone (i.e. containing Russian weapons) – unlike the indiscriminate recent attack by Russian rockets on Mariupol, or, indeed, the attack on MH17. Finally, the Ukrainian government has the backing of its citizens in the areas it controls, even Russian speaking ones, as Kiron Reid’s article in the current edition of Liberator makes clear (and also my limited personal contacts in the country).

The best chance of promoting liberal values in Ukraine remains a strong government in Kiev that is aligned to the West in outlook, if not formally a member of NATO or the EU. The current government is the best prospect so far of achieving the sort of reforms that will push back the influence of the malign oligarchs and security aparatchiks that are the hallmark of the Putin way. It is clear that the sort of peaceful settlement that Russia would allow in Ukraine would fatally undermine such a government and give it (or its puppets) a veto over any serious effort at reform. Liberals in the West can’t use the familiar formula from Yugoslavia that there is bad on both sides, and wash their hands of it. We must take sides. This does not necessarily mean supplying arms, still less military assistance, though we should not rule out such support on principle.

It is not just the people of Ukraine that would suffer if Ukraine is humiliated further. There is no reason to think that Russia’s adventurism will end there. The Russian elite has never accepted the loss of the Baltic states, all of whom have large Russian-speaking minorities.  Russian adventurism there could involve Western, and British, troops.

At its best liberalism means the defence of the weak and the promotion of universal human dignity. At its worst it can be camouflage for avoiding difficult choices. In the face of the lethal threat posed by Mr Putin, please let it be the former.

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Syriza’s victory. This is going to end badly for somebody

Last weekend the anti-establishment, far-left party Syriza won the general election in Greece, and did better than most people forecast. Under Greece’s unique electoral system, which gives the largest party a bonus of 50 seats, they almost won an overall majority. Guardian journalists jumped for joy. For them it showed that their hated austerity policies can be challenged and beaten. Elsewhere there are quite a few calming voices; things can be worked out, seemed to be attitude. Both views are naïve.

First, in fairness, a couple of positive things need to be said about Syriza. The Greeks have been badly let down by their political establishment, represented in two political parties: New Democracy and Pasok. And yet it is these establishment parties that have been entrusted with sorting the mess out so far. Syriza are coming to government with fresh eyes and should be in a better position to clean things up and distribute the burden more fairly. They should certainly be given the benefit of the doubt for now.

And one of their central positions, that Greece should be forgiven much of its debt, is perfectly coherent. We need more caveat emptor from buyers of sovereign debt. Repayment of debts is not a sacred duty that comes before basic human needs. A more liberal attitude to debt is one of the ways in which progress can be made in unfamiliar economic environment we find ourselves in. There are, of course, trying consequences to such liberality: it will become more difficult to borrow.

That I think is were the more moderate commentators start. But difficulties with Syriza’s position start come thick and fast after that. This is what Syriza’s leader Alexis Tsipras said immediately after his victory:

Greece is leaving behind catastrophic austerity, it is leaving behind the fear and the autocracy, it is leaving behind five years of humiliation and pain. Your mandate is undoubtedly cancelling the bailouts of austerity and destruction. The troika for Greece is the thing of the past.

This is rage against austerity: the need to cut back government expenditure and raise taxes in response to the economic crisis. And this is what those Guardian writers like. The left wing narrative, applied to countries as diverse as Britain, France and Greece, runs something like this. In the 1980s a malign conventional wisdom infected the governments of the western world: neoliberalism. This sought to reduce the scope of government and regulation, and in its place rely on free markets.  All this did was to enrich an elite at everybody else’s expense. And it ended in banking madness that led to economic collapse in 2008. And yet these neoliberals remain in charge! They have used the crisis as a reason to pursue austerity policies. But these policies are an evident failure: everywhere they have been applied growth has been stagnant. When will the world come to its senses, reverse austerity and let growth return?

Syriza’s victory will test this narrative to destruction. The first problem is the debt renegotiation. Sovereign debt is about 175% of Greek national income. This sounds unsustainable. Surely all Syriza is doing is asking for common sense to be applied so that everybody can move on? But all is not what it seems. The size of that debt is a bit of an accounting fiction. Debtors have already conceded a lot on both interest rates and repayment schedules; the debt is not anything like as burdensome as the headline figure suggests.

And there are powerful reasons for preserving that accounting fiction. First, outright debt forgiveness is unpopular right across northern Europe – and not just Germany. Conceding ground on it will nourish the far right from France to Finland. And of course, it will undermine mainstream governments in Europe’s periphery: Portugal, Ireland, Spain and even Italy. The original Greek deal, put together with the hated Troika (the European Commission, the European Central Bank and the IMF) was an elegant compromise designed to balance these destructive forces. The best the Greek government can hope for is a bit more of the same fudge. Allowing Greece to drop out of the Euro and the EU would be very destabilising for the rest of Europe; but it is hardly clear that conceding a lot of ground to “renegotiation” (a euphemism I have always hated) is any better.

And then there are those austerity policies on which the Troika have insisted. These are often portrayed as economic nonsense by the left, because of their effect on aggregate demand, which leads to a sort of doom loop. That is indeed a problem, but their fundamental aim is to put the Greek economy on a sustainable footing. Government expenditure and taxation were way out of line with each other; Greek industry was internationally uncompetitive. Unless these problems are tackled no solution is credible, which means that nobody will lend the Greek government money. Read the more thoughtful “Keynesian” critics and you will suggest that stimulus is focused on initiatives that do not undermine sustainability – infrastructure investment is a favourite. And that, as I have pointed out before, is not as easy as it appears.

Now the Syriza leaders are not stupid, even if some of those Guardian commentators are. Elements of their programme address the issue of sustainability: improving tax collection and targeting the wealthy elite more effectively. But many of their promises seem to go in the absolute opposite direction – reinstating government jobs and raising salaries; reversing changes to employment protection.

Now it is possible to sketch out a fudged way forward; changing the balance of Greece’s reforms, allowing a little more short-term slack, and a little more debt rescheduling.  But how is this “leaving behind catastrophic austerity”? It is impossible for Syriza to meet the expectations it has raised. The Vox Pops broadcast by the BBC over the last week or so suggest that the Greek voters themselves largely understand this – which is one reason to think that maybe such an outcome is what is in store. Mr Tsipras will simply follow the trail blazed by France’s Francois Hollande. In that event it will be the far left in other countries that will be left empty handed.

But a Greek exit from the Eurozone, and the EU, is the other likely outcome. If that happens Greece will indeed have banished the Troika and liberated itself from its debt burden. But the austerity that the Greek populace have suffered to date will look tame.

There is very little middle ground. This is not going to be an easy year. Behind that we can see a flaw in the leftist narrative. The economic policies of the 1990s and 2000s did not just benefit a wealthy elite in developed countries; benefits were spread right across society, including an expansion of government programmes. But these advances were built on sand. Lacklustre growth since 2008 is shaped by fundamental economic forces. It is the new normal. We had better get used to it.

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Charlie Hebdo – time for cosmopolitans to show leadership

As the dust settles from the Charlie Hebdo shootings in Paris, an ugly picture emerges. The consensus that holds society together is breaking down. We may all agree that murder is wrong, but we disagree on how to combat extremists, how to live with foreign cultures and, indeed, the scope of free speech. The cosmopolitanism that prevails amongst society’s elite is challenged. And yet the only solution is to embrace cosmopolitan ideas yet further.

On the one hand we have the Islamic extremists themselves. We haven’t learnt much new here. Their alienation is such that they feel at war with western (and not just western) states, and they have ceased to see their opponents as human beings. The Paris assailants drew a distinction between “civilians”, whom they should not attack, and others, including journalists and Jews, whom it was OK to kill. This will no doubt aid the process of self-justification in their own circles – but the contradictions are too obvious to everybody else. The extremists appear to have momentum, especially led by the success of the Islamic State in Syria and Iraq. But their attacks, and their revelling in the power of life and death, should alienate them from the rest of society, outside the failed states in the Middle East and Africa.

We could take comfort from that if it wasn’t for dark forces working within the rest of society. Foremost amongst these is the rise of nativism in Europe and America. Nativists are intensely suspicious of any foreigners in their land. As we come to the end of the era of easy economic growth, and as technology destroys swathes of stable, clerical and factory jobs, faith in the idea of progress wanes. Nativists hark back to an earlier age that seemed simpler. They blame immigration for its undermining. Islamic immigrants have become a particular focus of suspicion. Ideas of a clash of civilisations, even a war, take currency. Nativism seems particularly strong in places with small immigrant communities, such as Clacton in England or, on an altogether larger scale, Dresden in Germany. But large, unintegrated ethnic minority communities provoke similar fears in neighbouring communities too. This accounts for the rise of perhaps the most important nativist movement: the National Front in France.

In Britain the rise of nativism is led by Ukip. Originally  Ukip focused on Britain’s membership of the European Union, but it struck electoral gold when it shifted to opposition to immigration. The mainstream Conservative and Labour parties started to panic as Ukip ate into their core support, giving nativism further impetus. Tabloid newspapers stirred things up. As a result public attitudes to ethnic minorities have soured in much of the country. The idea of “freedom of speech” is now used to defend the open expression of Islamophobic views – though the idea that such freedoms should extend to the expression of Islamist or anti-Semitic views is not aired.  The outcry of the Charlie Hebdo killings has given such nativists and their prejudices a real fillip.

Which makes matters worse. The entire Islamic community finds itself under attack. People say that all Muslims are to blame for extremists, and should apologise for them. Now the Muslim communities must face up to some important questions about how they are to progress and integrate into a modern world – questions that many are reluctant to confront. But ignorant prejudice serves only to alienate them, and prolong the sense of grievance on which the extremists feed.

And so we face the prospect of an unravelling.  Globalisation is integral to the western way of life. Just think of the rise of the British Empire and the cities that have been built on the back of the African slave trade in the 18th Century if you think it is anything recent. Large immigrant communities are simply a continuation of that process, in an actually much more benign way. Denying globalisation is as futile as Britons denying that their country is European. Nativism is a road to nowhere, or rather a road to poverty and conflict.

Instead we must embrace the values of cosmopolitanism. These are articulated most clearly by the Ghanaian-born author Kwame Anthony Appiah (as in Cosmopolitanism – Ethics in a world of Strangers). We must accept that our culture is the product of many cultures melding together in a process that has being going on for millennia, and which is destined to continue. There is no such thing as cultural purity, and no point in trying to defend it. This is not the same as relativism, which backs away from defining any kind of right or wrong ethical values. It means embracing ethical values which accept that all the globe’s inhabitants are part of an “us”, even though we recognise stronger affinities with some rather than others. People of different cultures should enter conversations with each other, and accept that their outlooks may change as a result.

Cosmopolitanism has always been embraced by elites, especially in the west after the nightmare of Fascism, which showed the futility of its opposite. That accounts for the many cosmopolitan aspects of our institutions. But now it is vital that it is taken up by all of society: amongst working class communities and ethnic minorities too. Here in London, perhaps, this process is quite well advanced, though hardly complete (I’m afraid that Islamophobic attitudes remain commonplace). Different communities are forced to mingle. We go to school together; we work together; increasingly we have children together. Elsewhere, though, we have just taken a backward step.

But I remain hopeful. The young are more cosmopolitan than their elders. Our cultural and business leaders, by and large, remain firm. At a time when elites are under attack for being out of touch, it is time for them do what elites should: to show leadership.

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The slow suicide of Britain’s two party system. Only AV might have saved it

Two-party politics used to be the norm for developed democracies. Most countries’ politics were divided between tribal blocks based on the urban working class and on the aspirant middle classes. But the dominance of these two blocks has faded in most countries. There are two interesting exceptions: the USA and Australia. Here in Britain two-party politics looked as if it would triumph with the demise of the Liberal Democrat,s and the No vote in the referendum on the Alternative Vote (AV) in 2011. But now the system is its death throes.

It is worth considering the architecture of two party politics for a moment. Electoral politics is dominated by two political parties, each of which may govern on its own, without the need for support from smaller parties in coalitions or pacts. Each of these parties has a tribal character, defining themselves as much in opposition to the other as by their own core values. But there is an undeniable class base two. This divides the country into heartlands, where one or other of the parties dominates to the exclusion of all others, and marginal territory, contested by both parties, where elections are won and loss. Many, if not most, politicians build their own careers in the heartlands, where advancement depends on internal party politics, rather than winning over marginal voters. This leads to the system’s major flaw – the political classes are more worried about their own backyard and internal politics than in appealing to the electorate at large. Or they worry about marginal voters to the exclusion of the heartlands. Distance between voters and politicians grows.

The breakdown of this system follows the weakening of class loyalties from the 1960s onwards. New parties have emerged, from the liberal centre, from populist anti-political movements, from environmentalists, and from parties based on regional identity. In much of Europe coalitions became commonplace. Electoral systems played an important role. Those with proportional representation (PR) were the first to find that one party could not govern on its own. But in countries with single member constituencies one party could still aspire to win on its own. France’s two-round system promoted pacts and alliances between parties, and the major blocks split into separate parties – before the whole system started to be challenged by the populist Front National. Countries with First Past the Post (FPTP) systems have placed a greater role on party solidarity. But in New Zealand disillusion with two-party politics led to the introduction of PR; in Canada each of the two party blocks suffered existential crises that allowed more modern alternatives to replace them, at least in part. Australia’s AV system seems to have entrenched the two party system there, however. I will come back to that.

In the biggest and oldest developed-world democracy of them all, however, the two party system remains completely dominant. In the USA there is no alternative to the Republicans or Democrats, although the occasional challenge comes and goes – even as more and more voters self-describe as Independent. But the US system of democracy is unique. Apart from the widespread use of FPTP (some states use a two round system – which is why the Louisiana Senate race is not yet over after this month’s nationwide election), I think there are three, inter-related factors: primary elections, decentralised  power, and direct executive elections. Each party’s candidates are selected using primary elections which include much more than official party members. Such elections are part of the formal, state electoral process. Voters may register as Democrat or Republican. This allows them to take part in publicly-run primaries; in some states primaries are open – any voter can take part. That makes heartland elections competitive – and not a matter of manipulating small groups of insiders to secure your party’s nomination. It helps that each party’s national leadership is weak – so wheeler-dealing in Washington will not help a political career by much. This is a function of a system where much of the power is wielded at state level. One of the factors that keeps party functionaries weak is the prominence of direct executive elections, notably for President and state governors. In these cases personality often matters more than tribal allegiance.

It is an interesting paradox – for the two party system to be robust, the party leaderships must not be too strong. This allows the primary system to flourish, and gives outsiders a chance to break into politics. But party solidarity is important enough for those in power to rig the system to provide incumbent politicians with electorally safe seats through the gerrymandering of boundaries. A diminishing proportion of seats in the House of Representatives are competitive between the two blocks. A large proportion of the important politics is now in the tribal heartlands, and not in marginal territory. As a result of this, it would not be right to describe the state of politics in the USA as healthy. There is increasing polarisation, which is causing deadlock and the prospect of extremist policies. Most Americans seem fed up with the state of politics in their country, though not necessarily with the system itself.

Another case study in the survival of two-party politics is Australia. Politics is divided between two long-standing political blocks: Labor and the Liberal party, though the latter is a coalition of state parties (some of which refer to themselves as National or Country). There have been challenges to this duopoly over the years, but these have not made headway. No doubt there a number of factors that have contributed to this – but I think one factor is critical. And this is the AV electoral system. The legislature comprises single-member constituencies, and there is a single election day. Voters are asked to rank candidates in order of preference. If one candidate does not achieve more than 50% of the votes casts, the lower ranking candidates are eliminated and their votes redistributed. This is a bit like the French two round run-off system, except that with a single election day there is little scope for political deal making over second preferences. It is so important for candidates to maximise first preferences that it best not to talk too much about second preferences.

This makes it very hard for challengers to win seats. First their first preferences have to overhaul one or other of the two main parties. But to do so they cannot say “vote for me to keep the other guy out”, because that is an argument for second preference votes, not first. Second preference votes are useless without sufficient first preferences. And then, of course, you must have sufficient first and second preference votes to get a majority. In marginal seats challengers will be beaten by the lack of first preferences; in heartland seats there will be lack of second preference votes. As a result almost all seats go to one or other of the blocks. In 2013 in order to turn out a lacklustre Labor government, voters opted for a Liberal one that is now pushing forward a series of extremist policies on the environment and immigration.

So what of Britain? For a long time the main challenge to the two party system came from the Liberal Democrats, based in the liberal centre. It was skilful in winning seats under FPTP by establishing a local base, and then winning tactical votes from the weaker of the two blocks. This allowed it to win a substantial block of parliamentary seats in 1997, but not the balance of power until 2010. It then entered coalition with the Conservatives. And then disaster struck – the transition from a protest party to one of government was too much for the voters, and its poll ratings collapsed. Labour and Tory politicians breathed a sigh of relief – normal two-party politics could be resumed.

Ironically, in view of the Australian experience, the Lib Dems placed some hope by proposing to change Britain’s FPTP system to AV. This would have helped the party in the short term, where it had built up a sufficient local base to win second place in first preference votes. Both major parties agreed with the Lib Dem analysis, and for that reason opposed the change (Labour through faint praise rather than explicit opposition). In a referendum on the change in 2011 an overwhelming majority opposed AV. This seemed to secure the future of two-party politics.

But unlike the US, Britain’s politics is highly centralised. Party managers in Westminster like to keep a tight grip on their parties. And, again unlike the US, executives are elected indirectly, and candidates must master the internal politics of their own party in order to progress to high office. The idea of primary elections has not been allowed to gain traction. The Tories have moved small steps towards it, but without being able to harness state resources. The public has no way to channel its disillusion with politics than to vote for insurgent parties – since they are denied a role in the main party elections. And this they have been doing by supporting the populist Ukip in England and the SNP in Scotland.

Unlike the Lib Dem challenge, these insurgencies have affected the main parties’ heartland voters. They are creating unbearable pressures with both party blocks. The Conservative and Labour leaders try both to fend off the insurgent challenge, and to retain the political centre – and as a result both appear weak, driven by events rather than leading them. This is creating unbearable strains and it seems likely both will fracture, especially if they have to endure the pressures of being in government. Labour face calamity in Scotland, as the SNP overturn their heartlands. In England Labour are a fragile coalition of public sector unions, liberal centrists and heartland machine politicians; each’s expectations of the party seems completely incompatible. The Tories look likely to fracture over Europe.

Ironically, if both parties had embraced AV, they would have been in a stronger position to fend off the insurgents and maintain party solidarity. And yet this is just another face of a bigger problem that both party’s face. their obsession with winning the next election has meant a loss of strategic focus. The demise of the two party system looks alarming, as fringe parties gain prominence. But in the long term it is to be welcomed. As the USA and Australia shows, a two-party system is too easily captured by political extremes.

 

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Can the Republican tide in the US be reversed? Maybe not.

I hate to comment on the politics of other countries. I know more than most British about the US political scene, but I’m no expert. Still, wider lessons about the process of politics can be seen from the US. And they are rather worrying.

As a liberal I root for the Democrats in the US elections – though their record on some issues, such as business regulation and education is not good. So the scale of their defeat in this year’s mid-terms was a shock: not just in the Senate, but in state gubernatorial contests too. I had subscribed to a rather optimistic theory: that where California goes, so the rest of the US follows. In California the Republicans did very well, until, one day they didn’t. And then it was all over. They were overwhelmed by demographic trends – especially the rise of the Hispanic population. They had so misused their period in power that they had damaged their brand beyond repair to those outside their diminishing band of natural supporters.

So perhaps 2014 is their high water mark, as was the Pete Wilson governorship in California , which ended in 1999? Alas I fear not: Republican strategy and tactics seem far to solid for that. These elections were revealing. Republican success was largely driven by low turnout. Younger voters, and those from minority groups, failed to turn up to vote. That seems to be the cornerstone of the Republican strategy. This is achieved through relentless negative campaigning that has poisoned the political process. Their opponents go in for negative campaigns too, but they lose more from the diminishing reputation of politicians as a whole. Republican politicians are not well regarded by the US public. They just keep winning.

The insidious thing is that the Republicans are using their short-term successes to rig the democratic process in their favour. This is conspicuous in three ways. First, Republican governors have gerrymandered Congressional districts so that they can win comfortably in the House of Representatives even if they lose the popular vote – as happened in 2012. Second, Republican sympathising justices in the Supreme Court have destroyed attempts to regulate campaign finance – in the guise of supporting free speech. This includes the ludicrous proposition that corporations have the same free speech rights as individuals. This unlocks the door to vast quantities of money from billionaires, like the Koch brothers, who want to impose their rather bizarre world view on voters, and to fund all that negative campaigning. There is already well-funded right wing news media. Third, they are trying to make it more difficult for people to vote, in the guise of limiting electoral fraud. This is aimed especially at blacks. These ratchet up a series of advantages for the right. There is no sign that they might be reversed.

Of course, the success of the right is not just because of the malign influence of shadowy billionaires corrupting the political process. They have a well-motivated core group of supporters, who hold to a strong series of myths about the American way. This core, with strong conservative religious attitudes, a hatred of central government and taxes, and a belief in American exceptionalism, make American politics a very strange place to Europeans, including us British. This core support can’t be taken for granted by political leaders, as the “Tea Party” rebellion has shown – but there is no equivalent on the left or liberal wing of US politics.

So it does not take a huge amount of paranoia to picture a Republican strategy. The rising anti-Republican demographic groups find it more difficult to vote, or find that their vote affects the outcome little. They grow frustrated, but generalise their frustration to the entire political process and political class, and this leads to political apathy. Meanwhile the right consolidates its control over the whole process.

What can go wrong? Over-reach by the right can lead to a backlash, which in turn leads to electoral upsets in areas that are less easy to rig – such as the Presidency and the Senate. This happened under the Presidency of George Bush Junior – when many Republicans thought that they had won for good, and the feeding frenzy of their corporate friends became so conspicuous that the public were motivated to vote against it. Republicans may lack the discipline to avoid that mistake again. In due course the left might reform itself into a more coherent and robust political movement that will overcome the increasingly rigged electoral system and media.

Does it matter? The irony is that the conventional wisdom on the political economy is shifting steadily leftwards. The ideology of laissez-faire and small government that took off in the 1980s has run its course. Increasingly it seems that a healthy economy needs more taxes and a bigger role for government. Republicans want to take their country in the opposite direction. This will simply feed the crisis of capitalism, not resolve it. The American economy will start to fall apart. Also the tendency of Americans to use world politics as an extension of domestic politics will only get worse. American bullying plays well at home, but is counterproductive in its actual effects. A properly engaged, constructive role for the world’s only superpower is less likely. And climate-change denial seems to be one of the core beliefs of the right – this will make global progress harder – though a failing US economy will offset this somewhat. Ultimately, this attempt by the right to reverse the tide of history is the most likely cause of its failure in the long term – but it could take a decade or more.

Are their further political lessons? The American political system is unique. Two party politics is deeply entrenched, and the electoral system promotes it. But it can lead to what amounts to minority government, and it can be captured by extremes. In Australia we have seen this too: disappointment with a lacklustre left of centre administration has led to the capture of the government by the wayward right.

Britain may escape this fate. The wayward right is progressively taking over the Conservative Party. But many of the wayward millionaires that are behind this trend have lost patience, and are supporting the Ukip insurgency instead. This is ruining the chances of a takeover of the right – though a weak Labour leadership means that we can’t rule this out. Ironically the rejection by the right of electoral reform in the shape of the Alternative Vote (the system in Australia) is probably a shot in the foot. This naturally tends to push politics into a duopoly, as the Australian experience shows. Now electoral chaos is likely to discredit First Past the Post, and any reform is likely to towards proportional representation.

The multi-party, proportional model of politics has its faults. But increasingly it seems to be a better direction to take – it is less open to capture by the extremes. I hope that Britain will follow that path.

 

 

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Bombing Isis: why am I so uncomfortable?

Paddy Ashdown says it’s OK. I supported the Nato intervention in Libya. As British MPs meet to consider whether the country should actively join the US and other nations in bombing the outfit that calls itself “The Islamic State”, and which I still refer to as “Isis”, this should be quite straightforward. But I have deep misgivings.

There are enough reasons why such action should be supported. Firstly Isis are evil. They represent a particular sort of totalitarianism that I detest, casually terminating the lives of anybody that gets in its way. Its attempt to appropriate the religion of Islam is as contemptible as the Ku Klux Klan’s similar appropriation of Christianity.

Secondly the action is legal under international law, provided that it stays within the boundaries of the Iraqi state, since the Iraqi government has requested it. Having said that I set less store by the norms of international law in such matters than many. It concedes too much power to sovereignty of national governments, and to the veto of UN Security Council members.

Thirdly, there is some level of direct threat. Isis has said that it wants to carry its crazy war into developed nations, including ours, through random acts of violence. It will kill any of our non-Muslim citizens that it can lay its hands on. Having said which it has not put much organisational effort into intervention in Western countries – being more interested in carving out its own statelet in Greater Syria.

I place some weight to showing solidarity with the USA. The Western powers are stronger if they act together, and we do have a very strong common interest. Still, the world view of many American politicians is ignorant nonsense, and we should not be too tied to them.

I find that my unease reflects a rather similar attitude with many on the political right to domestic politics. Actions driven by a  bleeding heart or anger can so often lead to the opposite of what we intend.

The first problem is dependency. The interventions by the USA and its allies in Iraq have led to an expectation that the Western powers will intervene to sort out any nasty problem in any neighbourhood (outside Russia, China or India, anyway). So the locals lose any incentive to sort out problems for themselves. We have seen this with Afghan government of Hamid Khazai. We have seen it with post Saddam governments in Iraq. They use the US security umbrella to carve out their own corrupt polities without any regard to their country’s long term future. They governments don’t even act as loyal allies.

The whole Isis mess was created by the failure of two governments: those of Syria and Iraq, drawing on the support of Iran and the Lebanese faction of Hezbollah. Their ineptitude created a political vacuum which Isis has exploited. They have shown themselves incapable and unfit to rule the areas that Isis now controls. But we have no other party to back, beyond the nascent Kurdish state. The US has wrought concessions from the Iraqi state, but I can’t see how these will be enough to regain the trust of the Sunni tribes. Past experience shows that as soon as US pressure is withdrawn, the Iraqi government reverts to type.

A further problem is lack of proximity. I firmly believe that the closer we as a country are to another, the more prepared we should be to intervene in its affairs. This is not just a matter of physical proximity, but also cultural. The Falkland Islands were (and are) close to Britain in that sense. Iraq and Syria are a long way off. I feel happier about our country intervening in Kosovo and Bosnia and, perhaps, Sierra Leone. If Turkey, which is on the edge of being a European nation, and is part of Nato, had chosen to involve itself in this affair, then perhaps we could make a case for helping its defence. But Turkey is staying firmly neutral.

I am not persuaded that this country’s participation in the 2003 gives us any obligation to help sort the mess out. I think responsibility for the mess lies with the Iraqi and Syrian governments. Neither is the presence of British volunteers amongst Isis’s ranks – though we should takes steps to reduce the flow of such people. However, I do think that our past involvement points towards humanitarian and economic assistance now.

And another thing. I am deeply uncomfortable with the idea that air power (including the use of drones) is some kind of morally clean way of involving ourselves in a conflict. It may put fewer of our servicemen’s lives at risk, but the death and destruction that they deal out is as real as anything that an infantryman does. And it leaves unanswered the question of who controls the ground after Isis has been beaten.

The world has a problem with failed states and power vacuums. This is what Isis exploited in Syria and Iraq. We also have Somalia, Libya and many other parts of the African continent. Post-imperial occupation by foreign powers has not proved a robust solution. Neither does the projection of Nato military might, outside Europe, anyway.

We need to find a better way. This needs to be led by the local powers, with perhaps further support as required through the UN. In the case of Iraq-Syria these local powers are Turkey, Iran and the Gulf Arab states. These powers somehow need to work out a new political settlement for the region, which, in my view, will require the redrawing of international boundaries. That Iran and Saudi Arabia have behaved in a highly irresponsible manner to date does not mean we can avoid making them part of the solution.

Perhaps President Obama’s coalition will help bring about such a resolution; he at least grasps the limits of military power better then most – though he is buffeted by the winds of US domestic politics. I would need to be convinced that this is so before endorsing any further British military intervention.

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