10 October 2019
Lens on the Week
UK
BREXIT NEWS: Prospects of a deal seem to be fading fast as Mr Johnson’s latest proposal (that as a backstop Northern Ireland should remain within the EU system for regulatory purposes but not for tariffs) fails to gain traction in Brussels. It is rumoured that Mrs Merkel has told Mr Johnson that no deal is likely on this basis and all parties are making their calculations on the basis that that is correct. Still all sides are desperate for a deal and it may be that positions will change as 17th October gets nearer (see below).
Meanwhile:
• Parliament has been prorogued pending the delivery of the Queens speech on Monday. That is just the normal process of closing one Parliament before opening a new one and is uncontentious. The Queens speech (which is written for her by the Government) will be debated. If it is defeated, Mr Johnson may resign or, then again, he may not. If not, the Opposition may table a motion of no confidence which, if carried, would allow an alternative leader with command of the House of Commons to take over.
• On Thursday the 17th, the EU leaders meet for a summit. That is the last chance for them to approve the deal and, assuming they not do so, will mark the end of negotiations.
• On Saturday the 19th, the House of Commons will meet to debate Brexit. There will be any amount of manoeuvring as to the exact agenda but in the end Remainers will need to put up or shut up. A possible course would be a motion of no confidence followed by the appointment of an interim prime minister with authority to push back the leaving date and organise a referendum.
• Meanwhile there is litigation in the Scottish courts designed to ensure that Mr Johnson writes the letter to the EU seeking extra time which is required by the Benn Act. For the moment the Court Session has declined to rule until the political position is clarified.
MIDLAND ROW: Howard Riddle, the judge who approved the search warrants against public figures wrongly accused of child abuse and murder, has confirmed the findings by the Henriques review that he was misled by the Metropolitan Police. Although the Commissioner, Cressida Dick, continues to defend her officers against allegations of wrongdoing – and indeed one would think less of her if she did not – pressure is building for an independent enquiry with Harvey Proctor writing to Home Secretary Priti Patel demanding an investigation by another force. In the end it seems likely that Mr Proctor will get what he is asking for.
EXTINCTION REBELLION: Large protests broke out in central London on Monday as Extinction Rebellion set up camps, bands and demonstrations in politically sensitive locations. Trafalgar Square was one of the first targets but there are also large demonstrations outside Westminster and the Home Office. The problem for the authorities is what to do about it as good-humoured policing is ineffective against large numbers of demonstrators. Still, widespread public sympathy with the cause makes heavy-handed tactics unattractive.
DIPLOMATIC IMMUNITY: Anne Sacoolas, the Wife of a US diplomat, has made use of diplomatic immunity to leave the country after a road accident in which a teenager was killed. The foreign secretary Dominic Raab has asked the US embassy to reconsider the position and to bring her back to the UK to face charges. It is understood that Boris Johnson has taken the matter up with the US government.
International
SYRIA: One of the last unresolved questions of the conflict – whether the USA would stand by its anti-Isis ally the Syrian Kurds against an attack by Turkey, also an ally of the US and a Nato member – was apparently answered this week. President Trump ordered the withdrawal of all US troops from Kurdish Syria, effectively telling the Kurds there that they are now on their own. He also threatened Turkey with economic warfare if it moved against them. President Erdogan accuses the Syrian Kurds of aiding the Turkish Kurds insurrection in his own country, and has said that he wouldn’t tolerate an independent Kurdish state on the other side of Turkey’s border with Syria; he has also said that he would like to resettle the millions of Syrian refugees displaced across Turkey in the territory now controlled by the Kurds. In reality, however, he would be unwise to invade that territory; apart from Trump’s threats, it would only send even more refugees heading to Turkey, it would leave him with the Kurds’ current problem of what to do with the thousands of Isis prisoners on their hands, it would escalate the Kurdish conflict in his own country, and it would risk open conflict with the Assad regime (and its allies Russia and Iran) with whom the Kurds are on not unfriendly terms and who they would almost certainly call on for help.
PROTESTS: Across Ecuador, indigenous people have been protesting all week against rising prices. President Lenin Moreno has recently had to cut subsidies as a condition of a bailout of more than £4 billion from the IMF. Thousands of protesters demonstrated in the capital, Quito, and many managed to break into the National Assembly to demand the resignation of the president and his government. Elsewhere, protesters have seized several oil wells and brought production to a halt. Hundreds of people have been arrested. The president has declared a state of emergency and moved the government to Guayaquil on the coast.
More than one hundred people have been killed across central and southern Iraq as protesters, demonstrating against corruption and Iranian interference, have been confronted by police, the army and pro-Iran militias. The protests were triggered by the removal of a general who was trying to tackle corruption in the army and to contain the influence of militias sponsored by Iran. Most of the protesters are young Shia men who nevertheless feel they have been disadvantaged by the growing influence in their own country of Iran, the regional Shia power. Prime minister Adil Abd al-Mahdi has ordered the army to withdraw from the confrontation, and the army has admitted that excessive force has been used. Iran has passed the blame on to Israel and the USA.
In Hong Kong, the government has banned the wearing of face-coverings in an attempt to weaken the ongoing pro-democracy, pro-autonomy protests, the participants of which usually wear face-masks for anonymity and protection. The measure, however, only seems to have provoked further protests. The demonstrations are continuing to increase in violence; this week two more protesters were shot by police wielding fire-arms and using live ammunition.
In France, it was the police themselves who were demonstrating, for a change. They were protesting against over-work and under-funding. Morale is low and working conditions are deteriorating. Their workload this year has been particularly demanding and dangerous, with the gilets jaunes protests coinciding with the ongoing threat from radical Islam. Only days later, as if to prove their point, four people were killed in a police HQ in Paris by a knife-wielding civilian employee of the force, who is believed to have been a radicalised Muslim. He was shot dead by an armed policeman who had been in the job for only a few days.
Financial
TAX REFORM: The OECD has published a consultation paper containing proposals for dealing with tax avoidance by multinationals and tech companies. The problem here is that international tax rules focus on the places where profits are generated. That was all very well 30 years ago, but modern communications and transport systems mean that a multinational can place its profit generating activities anywhere in the world. Naturally they tend to choose places where tax is low and this is exploited by countries, such as Ireland, who provide beneficial tax rates for particular activities. The only way of countering this is to turn matters around so that the tax attaches to the market into which goods or services sold. If this approach is taken it becomes much harder to avoid tax because you cannot move your customer base. The difficulty, however, is that it is difficult to apply this consumer-based approach in some jurisdictions while the value generation basis is used in others. That could lead to double taxation (where profits are taxed both in the country in which value is created and in the country of the consumer) or no tax at all (where the country in which the profits are generated looks to where they are consumed and vice versa). Any reform, then, has to be global and the OECD’s paper is a move towards this.
COMPETITIVENESS: Britain has slipped from 8th to 9th place in the competitiveness index of the World Economic Forum. The change is down to a reduction in trade openness, market efficiency, and business dynamism, and poor technology adoption. Presumably the fact that everything is on hold pending the resolution of the Brexit issue has contributed to the problems.
COOKING UP A DEAL: The business of Thomas Cook, which went bankrupt last week, is being sold by the Official Receiver to competitor HaysTravel for an undisclosed sum. Hays which has around 190 shops in the UK will take over the 555 formerly operated by Cooks and is said to have already offered jobs to some 600 former employees. It is expected that more will be recruited. This will give Hays a very considerable presence on the high street but begs the question: how are they going to deal with the changing customer behaviour which took down Cooks? The answer to that will determine whether this is a great idea or a disaster in the making .
