4 October 2018
Lens on the Week
UK
BREXIT: It is no surprise that the Conservative party conference began with a row over Brexit, ex foreign secretary Boris Johnson calling on the Prime Minister to “Chuck Chequers” on the basis that the Chequers Agreement under which we would have to collect tariffs on behalf of the EU and would have to observe EU standards in relation to goods, leaves us too closely linked to the bloc. Johnson would prefer a hard Brexit, if necessary with no agreement.
Johnson’s speech at a conference fringe event attracted an audience of 1400 which included Priti Patel, Zac Goldsmith, Iain Duncan Smith, David Davis, Steve Baker, Conor Burns and John Redwood. As Mrs May says, Boris always puts on a good show (“Chuck Chequers” has rather a ring after all), but a number of his points clearly and understandably annoyed her.
CONSERVATIVE PARTY CONFERENCE: If Mrs May has changed her speechwriter, the new one is really rather good. Her one-and-a-quarter hour address to the party conference came over as assured and she did not fall into the trap of focusing exclusively on Brexit. Still, she could not avoid it altogether and, after the obvious points about wanting good relations with our neighbours and having the resilience to make a success of it whether or not there is an agreement, she took the opportunity to restate some red lines. We will not do a deal “at any cost”. We will not remain part of the EU in all but name. We will not do a deal which leaves Northern Ireland in the Customs Union. None of that is new, any more than a statement that she wants to see the frictionless movement of goods and the UK out of the fisheries and agricultural policies. Or that we will have a skills-based immigration system. The general message was to hold our nerve and that the Government was confident of its approach. Let us hope it is right.
More interesting were the prime minister’s statements on social policy and her attacks on Mr Corbyn. As to the first, she announced a new cancer strategy and that the rule which restricts local authority borrowing against the housing revenue account to fund new development will be removed as part of the drive to construct new homes. Fuel duty is to be frozen. So far so good. She went on, however, to signal increased public expenditure by promising a spending review post Brexit. The subtext here was that austerity had done its work in getting the public finances under control, but one can imagine that they may be all over the place by then. This could be a hostage to fortune she regrets but she may be lucky. Who knows?
The second, however, was more politically interesting. There has been much criticism of the Conservatives for feuding rather than attacking the new Labour leadership. Here the attacks were being run off the front foot and were clearly designed to do damage. The Inclusive Ownership Funds were exposed as the tax raid which they clearly are. (See our article Inclusive Ownership Plan as to this). Corbyn’s position on defence and his reaction to the Salisbury poisonings were attacked. There was a vigorous defence of free trade. It all made you wonder. There is an assumption in political circles that Mrs May will go once Brexit is achieved. Suddenly that seems far less certain. Still, conference speeches are one thing. There is a Brexit deal to be delivered too.
CIVIL PARTNERSHIPS: The Government is to change the law to permit heterosexual couples to have civil partnerships following a Supreme Court ruling that their restriction to persons of the same sex is discriminatory. That all sounds sensible until you remember that civil partnerships were introduced to enable homosexual couples to have rights equivalent to married couples. So now we will have two statuses doing the same thing.
International
IRAQ: The deadlock which followed last May’s inconclusive elections was broken this week. The parliament elected Barham Salih, a Kurdish politician, as president. Mr Salih nominated Adel Abdul Mahdi, a Shia politician, as prime minister, who now has 30 days to form a cabinet and get it approved by parliament.
The US consulate in Basra was attacked by missile fire. America blamed Iran-backed militias for the attack, and closed the consulate. The USA and Iran have been jostling with each other to influence the negotiations to form a new government which have been ongoing since the elections. Iran has been backing the Fateh party (which came second in the elections) and other Shia groups, while the US has been trying to form a coalition which would allow the outgoing prime-minister Haider al-Abadi to remain in power. Both are keen to limit the influence of reformed militant leader Moqtada al-Sadr, who came first in the election with a diverse and pluralistic group of parties, a promise to fight corruption and a “plague on both your houses” attitude to Iran and the USA and any other outsiders seeking to interfere in Iraq’s internal politics.
The US is also keen to prevent Iran from pushing a corridor through Iraq which would give it direct access through the region, all the way from Tehran to Lebanon via Syria. This week proxies backed by either side faced up to each other along a twelve-mile stretch of the Iraq / Syria border which is fundamental to this planned “Shia crescent”.
PAKISTAN: Imran Khan has inherited a more or less bankrupt state from the outgoing administration of Nawaz Sharif. The current account deficit stands at $18 billion. The government is due to start negotiations with the IMF for a $12 billion bailout (Pakistan’s 15th bailout from the IMF in 30 years). But Mr Khan is also pitching for new foreign investment. His attempts were undermined this week, however, when a senior official in Pakistan’s Economic Affairs Division was caught stealing the wallet of a Kuwaiti official leading a delegation considering investment in the country. The Kuwaitis decided not to invest in Pakistan after all.
ANIMAL FARM: In Russia, an opposition politician found a pig’s head impaled on a knife outside her flat; another was left outside her parent’s flat. Last month, a severed pig’s head was thrown through the window of a car belonging to another opposition politician.
In France, police have found that water cannons are much more effective against crowds of protestors when the water is mixed with “a foul-smelling additive made up from ground-up animal parts” (The Times) – horns, hooves, blood and feathers.
In Germany, the state of North Rhine-Westphalia has told its farmers that they must learn to live with the wild wolves which have recently moved into the area, the first in over a century. In France, farmers and shepherds have threatened to break the law by shooting two brown bears from Slovenia which were recently introduced into the Pyrenees to help restore the native bear population.
In the USA, the company Australis Aquaculture is attempting to combat climate change by developing a sea-weed based cattle feed which will stop cows from farting methane.
Financial
MANAGEMENT DIRECT: Mike Ashley, the ever controversial if oft entertaining boss of Sports Direct, is starting to make his presence felt in his new acquisition House of Fraser, bought out of administration. First he reversed the previous management plans to close 31 out of 59 stores, though 4, where he cannot agree substantial rent reductions with landlords, will close down. Second was the senior management itself; they were all sacked on Monday. Ashley’s statement to the Stock Exchange (required as Sports Direct, the ultimate parent, is a publicly quoted company) cited the failure of the business and subsequent calls for an investigation into the reasons for the failure. The Sports Direct group is famously run with a very thin layer of senior management; it appears that this will be the approach at the renewed House of Fraser also. How this squares with Ashley’s plan to turn the chain into a “Harrods type operation” has not yet been explained.
SECOND CLASS POSTING: Moya Greene, the former chief executive of the Post Office, who left four months ago, seems to have got her timing just right. Royal Mail announced that it will not hit profit targets for this year, with turnover static and a startling failure to cut costs as projected. Parcels traffic held up but letter post dropped in volume by 7%, and cost savings projected at 2% to 3% for the year look like coming out at 0.1%. Although the dividend will be maintained (at least for the time being), nobody was impressed by the warnings and the share price, already nervous following Ms Greene’s departure, dropped 38% in two days. Analysts could see very little positive in the future either; the business is saddled with large wage costs, the universal delivery obligation, continuing falls in letter traffic, and although the parcels business is holding up, pricing is intensely competitive.
NOT SUCH A STINK: The jokes will never end, but somebody has had a very bright idea. Where to run data cables for the ever improving and growing electronic communications systems we all so desire. Under our feet, of course. Billionaire Philip Anschutz thought of it first, buying the Rio Grande and Southern Pacific railroads – not least, for the rights to lay data cables alongside their tracks. Now Three and O2, the telecoms companies, have gone down a level – agreeing a deal with Thames Water to lay (water-proof) data cables in the London sewers. Initially this will be to increase capacity of data transmission in London’s West End, but the potential of the universal sewerage network makes it likely that the installation of the cable will rapidly expand right across town. This is bad news for Openreach, currently the main carrier, but good for Thames Water who will be receiving licence fees for the use of their pipes. And for endless jokers about how the internet is a sewer…
MORE NUTS: Our farming correspondent writes from Bhutan to tell us that the future of the mountain kingdom may be nuts. Hazelnuts, to be precise. Over the last ten years two entrepreneurs have been working with local farmers to develop hazelnut plantations. It seems the shrubby trees grow very well on the lower Himalaya slopes, and some seven million trees have been planted, which are now starting to carry nuts on a commercial scale. At the same time world demand for hazelnuts is growing, by 6% per year say analysts, not just from all those jars of Nutella, but from the increase in vegetarian eating and awareness of the health value of nuts in a diet.
