Issue 142: 2018 02 22: Lens on the week

22 February 2018

Lens on the Week

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BREXIT HIGH NOON: The Government’s internal wrangling over Brexit is now focussed on the length of the transitional period.

The European Research Group, a body chaired by Jacob Rees-Mogg and including among its members more than 60 Conservative MPs, has delivered a letter to the Prime Minister demanding that if the negotiations with the EU are not concluded by March 2019, the relationship between the EU and the UK should default to WTO rules rather than a continuation of the status quo.  This would not prevent an implementation period once an agreement is reached, but would prevent matters drifting on without agreement, with Britain following EU rules but excluded from decision making.

It clashes with a government negotiating paper seen by The Times which is reported as saying that “The UK believes the period’s duration should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership”  and appears to contemplate EU rules continuing until a deal is eventually struck.

Meanwhile Mr Corbyn moves in the Remainer direction with his assertion that the UK will have to remain within the single market, not least to deal with the border in Northern Ireland.

Matters seem to be coming to a head.

NEW PARTIES: There has been an increase in the number of new political parties being formed.  One is the “Sensible Party” formed to provide sensible policies for sensible people.  Another is the “Rubbish Party” which intends to deal with litter, fly tipping and fouling of footpaths by dogs.  There may be some confusion between this party and the mainstream parties which could be described in the same way.

CORBYN STUNTS: Jeremy Corbyn’s publicity stunts have a habit of going wrong.  Some time ago, he released a video of himself sitting on the floor of a Virgin Train because, he said, there were no free seats.  Virgin Trains released CCTV footage which showed that there had been quite a few empty seats in the carriage.  The other day, he left a message of condolence at the spot where a homeless man had been found dead.  Very commendable.  Later it transpired that the dead man was an illegal immigrant who was a paedophile and who had been deported twice.  There does not seem to have been a call for more resources to be allocated so that people like that are not able to re-enter the country.  If there had been, perhaps the man would still have been alive, in Portugal.

CORBYN IN CZECH: The press has sought to make much of the allegation that Corbyn, many years ago, met an intelligence officer from the Czech Intelligence Service.  In those days, Corbyn was an insignificant back bencher, who was probably considered to be an embarrassment by the Labour Party at the time.  He would have had no access to confidential information of any kind, so one wonders whether the Czechs were simply wasting their time.  Corbyn says that he did not know that the person was an intelligence officer (see comment).


WIND OF CHANGE: Jacob Zuma finally stepped down as president of South Africa. He’d been under pressure from his own party to do so since he lost the leadership of the ANC to Cyril Ramaphosa last year, but he hung on until the eleventh hour, resigning only the day before he was due to be humiliatingly forced out by a parliamentary vote of no confidence.  The new president Cyril Ramaphosa has vowed to purge the party and the country of the corruption which was endemic under Zuma; the Gupta brothers who allegedly had the government in their pocket have fled the country, current whereabouts unknown.  It’s not known whether Zuma secured any kind of immunity from prosecution (for the many allegations of corruption made against him) in return for resigning.

It looks as if Israel’s prime minister Benyamin Netanyahu may be following Zuma and Robert Mugabe of Zimbabwe before too long.  This week the Israeli police, after a year-long investigation, recommended that he should be charged with bribery, fraud and breach of trust.  The law in Israel doesn’t insist that  the prime minister has to resign before going on trial, and no trial will take place unless the attorney general accepts the police recommendation, but there will now be considerable public pressure on him to resign, and his government may collapse if his coalition partners decide they need to distance themselves from him.

Sad news from Zimbabwe; opposition leader Morgan Tsvangirai died, aged 65, after a two-year struggle against colon cancer.  With the removal of his enemy Robert Mugabe, and with elections looming, his death is a cruel and untimely blow to opposition hopes just as it looked as if the time had finally arrived for him to fulfil his political aims and potential.  Only last month, another opposition leader, Roy Bennet, was killed in a helicopter crash in the USA, where he was living in exile.

SYRIA: The advance of Turkish tanks and troops to Idlib has succeeded in deterring further attacks by the regime forces on the rebels there.  Instead, the regime and its ally Russia have turned their attention to another rebel enclave – the Damascus suburb of East Ghouta.  Its 350,000 residents are now under siege and suffering some of the worst attacks of the whole conflict.  The UN said that six hospitals have been hit (three of them destroyed) and civilians and the civil infrastructure are being deliberately targeted by airstrikes and artillery fire.  Doctors, aid workers and human rights observers said that at least 250 civilians were killed (54 of them children) and 1000 injured in just the first 48 hours of this week.  East Ghouta is supposed to be one of the ‘de-escalation zones’ subject to a cease-fire agreed by the regime, Russia, Iran and Turkey at Astana.  And not even the regime and its allies claim that the rebels there are militant jihadist terrorists.

Elsewhere in Syria, regime forces have rallied to the call for help from the Kurds in Afrin in the north-west who are under attack from Turkish forces.  Turkey’s President Erdogan claimed to have asked Russia’s President Putin to dissuade Assad from helping the Kurds against Turkish troops, but the regime still sent ‘popular forces’ i.e. local Shia militias, to fight alongside the Kurds against the Turks.  This adds even more confusion to an already confused war; last week, regime forces attacked against Kurdish forces in the north east of the country.


ABANDONING THE RAILS:  More signs of tough times on the high street.  Philip Green, who has dominated fashion retail for many years, is said to be discussing the sale of his empire.  His main two flagships now are Top Shop, created by merging a number of Green fashion businesses with Burton Group, and the Miss Selfridge group (no present relationship to Selfridges, the Weston family department store).  These are all owned by Arcadia Group, which has nearly 3,000 stores in the UK and in Europe, employing 26,000 people.  Green is said to be concerned about the long term prospects for the current shop based method of fashion retail, with ever more trade taking place via the internet – Arcadia sales were about 7% down in 2106, and the figures for 2017 are said to be not exciting either – hitting especially Top Shop, traditionally the top performer.  He is also thought to be disenchanted by the tumult which surrounded his sale of the loss making BHS business, which ended up going into bankruptcy a year after its sale – with much subsequent hoo-haa over the pension fund deficiency.  That issue could become a big factor in any sale of Arcadia – the deficit on its pension fund is around £1bn, and, given the problems over the BHS and pressures on the Pension Regulator to be more proactive, how the pensioner interests are protected will become a key matter.  But it is thought likely that there will be plenty of interest in any sale – not all retailers are as glum concerning the impact of the internet on shopping – especially when shopping is also a leisure experience, as retail so often seems to be.  Top of the list of rumoured purchasers is Shandong Ruyi, a Chinese group which has bought a number of European fashion retailers in the last few years, including Aquascutum and a controlling interest in Bally Shoes.

BUILDING BLOCKS: Also confident about the continuing attraction of the shopping experience is another Chinese entrepreneur, this time from Hong Kong, Sammy Tak Lee.  Lee has built up a major and worldwide property empire with holdings in Hong Kong, Tokyo, Switzerland, and London.  In London this is based on the Langham Estate, a large area of central London east of Great Portland Street and north of Oxford Street, formerly the centre of the wholesale rag trade.  Lee bought it at a bargain price in the 1990’s property recession from bankrupt owners, and over 25 years has gradually repositioned it with offices, boutique restaurants and hotels, and much retail.   For some time he has been openly stalking neighbouring land owner Shaftesbury plc, in which he has built up a stake of just over 25% – enough to be able to block many proposals by the board to deal with funding the business.  What Lee is after is not entirely clear, but the jewel in Shaftesbury’s crown is the Chinatown area, encompassing also Carnaby Street, which contains a diverse and fascinating blend of fashion shops, restaurants, bars, and offices for small businesses, and is very close to the Langham Estate.  At the moment Lee has not said what he is up to but analysts believe that he would have the financial firepower to take on Shaftesbury if he turned his mind to it.  However Lee is known to take a longterm view (and also to be very cautious about using debt) and it seems unlikely that he would bid in what is a relatively hot property market.  More likely is that he would swap his stake in the company for Chinatown – they have about the same value.  And Shaftesbury might be willing to do that to get back the ability to freely manage their business.





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