10 January 2019
Lens on the Week
UK
BREXIT: The year got off to a confusing start with 22 Tory MPs voting to restrict the Treasury’s power to prepare for a no deal exit. Michael Fallon and Oliver Letwin were among the rebels, politicians who regard a no-deal exit as something which should be avoided at all cost. It is not clear how their move is designed to change the dynamics. Presumably they will vote in favour of Mrs May’s deal so it does not change the arithmetic there. Perhaps the idea is to make a no-deal outcome as ugly as possible to push doubters into the May fold. If so the planning is a little oblique but the move certainly shows how unstable the parliamentary position actually is.
DRONES: First Gatwick, now Heathrow, where departures were halted for an hour on Tuesday following a drone sighting to the north of the airport. With drones available to every teenager bent on causing trouble the only answer is to use technology to keep them out of danger areas. Gatwick now has it but Heathrow is awaiting delivery. Clearly all commercial airports in the world will need it. Could the drones have been flown by the manufacturers?
COLLEGE GREEN: There is something nasty going on down at College Green. No it isn’t that the replies given by MPs to interviewers on the Green are even more fatuous than normal. Now the MPs themselves are being abused, with remainer Anna Soubry being called a Nazi by Brexiteer groups (odd, as many of them are hard right, do they mean it as a compliment?) and the political editor of Sky News being called a rapist (which he isn’t). Actually the terms used don’t matter much. Ranting demonstrators are not particularly elegant communicators and will use any form of abuse they can think of; but it is not good to see this type of verbal bullying. The police are described as having been “wishy-washy” in their handling of protestors and one can well understand why, bearing in mind the sensitivity of the place and how many foreign dictators would love footage of Britain suppressing a demonstration by force. Still, there must clearly be public order offences and someone needs to go to prison.
ULEZ: Not something you shout at a bullfight but the ultra low-emissions zone coming into force on 8 April for pre-2016 diesels and pre-2006 petrol cars. Initially the zone will be confined to the congestion charge area where the amount payable will be £12.50 a day. The size of the zone will however be increased in 2021 at a rate to be announced. The surprise is an official estimate that some 2.5 million vehicles a day will be caught. Rather more than the 60,000 predicted by Sadiq Khan.
SCOTS: Alex Salmond won his action against the Scottish Government for their handling of sexual misconduct claims on the grounds that the investigation was carried out by those with a prior involvement in the case. The police investigation continues and, with sources close to Mr Salmond describing the whole thing as an incompetent stitch up and Mr Salmond proposing to rejoin the SNP, there is plenty of scope for further unpleasantness. About what you would expect, in fact.
International
SYRIA: President Trump’s announcement that he is about to pull US troops out of Syria leaves the Kurdish forces in northern Syria exposed just as Turkey is preparing to attack them. The war against Isis has enabled the Syrian Kurd’s YPG to establish a more or less autonomous Kurdish region along Syria’s border with Turkey, but Turkey will not tolerate an established YPG homeland on its border as the YPG’s Turkish outfit – the PKK – are fighting in Turkey for a breakaway homeland for the Turkish Kurds. The Syrian Kurds have been the USA’s best ally in the fight against Isis, but it seems that the USA will not be around to help them against Turkey, which after all is a member of Nato and an ally of the USA. The Syrian Kurds are now seeking help from the Assad regime (which means Russia and Iran) on the understanding that they are seeking not total independence but some sort of autonomy within a federal Syria. Meanwhile, diplomatic efforts by the USA to ensure some sort of protection for the Kurds they are leaving behind have been rebuffed by Ankara.
President Trump declared that the war against Isis in Syria has been won – that was his reason for bringing US forces home – but that war continues around Hajjin in eastern Syria. Defence secretary James Mattis resigned the day after the President’s apparently premature declaration. Hajjin is in fact the last pocket of Isis resistance in the country; it’s estimated that about 2000 Isis fighters are holding out against a force of Western-backed Kurdish and Arab fighters (supported by Western special forces) attacking from the east and an Assad regime force (including Iran-backed Shia militias and supported by Russia) attacking from the west.
AFGHANISTAN: Hints that President Trump is about to withdraw US troops from Afghanistan have apparently undermined the peace talks between the Taliban and the USA. Fragile dialogue between the two parties has been damaged after months of slow progress. It was due to resume this week in Saudi Arabia with demands to bring the Afghan government into the talks, but the Taliban – sensing their hand has been strengthened by the possibility of US soldiers leaving Afghanistan – has now refused any such demands, putting the talks in jeopardy. It is still hoped that they could result in a ceasefire before April, when presidential elections will take place in Afghanistan.
Financial
NEVER SATISFIED: Tesla, the California based electric car manufacturer certainly had its problems in 2018, with production consistently falling below forecasts, eccentric public behaviour by founder and chief executive Elon Musk, and (resulting from that) SEC censure of management and the imposition of a new chairman. But that concealed a success in the second half of the year, as the company finally seemed to have the show on the road, making big step-ups in production output (and, according to rumour, in quality of finish and reliability). In the last quarter Tesla produced and sold 63,700 of its midrange Model 3, right on forecast, together with 13,500 Model S’s and 14,000 Model X’s, the luxury offerings. That is 8% up for total output, and 15% for the X. Although the Federal government halved the tax credit available for electric car purchases, to US$3,750 per vehicle, Tesla compensated by cutting the prices of all models by $2,000, which it said was also proving attractive to buyers. But none of this seemed to cheer up investors, the share price falling by 7% after announcement of the results. That cuts the value of the company by $5bn; though commentators pointed out that it still values Tesla at significantly higher than any other American car maker.
EXACTLY ONE YEAR AGO…: Elon Musk, CEO of Tesla, announced that he was stepping down from his role at the car company to invest US$93m into a new operating system for Bitcoin trading. How did that go, Elon?
AND IN TOKYO: Carlos Ghosn finally managed to make a statement to a Tokyo court concerning his arrest and charges of false accounting relating to the amount of remuneration that he was receiving from Nissan, the giant car company of which he has chief executive. Ghosn has been held in jail since his arrest and has not been able to make any public statement or defence to the allegations. Although his appearance was not the beginning of a trial, nor is any date set for such a trial, his lawyer was finally able to persuade a court to allow him to make a statement on the charges, which he vigorously and forcefully refuted. The delay in the commencement of proceedings, and the odd nature of the charges are starting to cause concerns as to the Japanese justice system, especially in France where Ghosn remains chief executive of Renault, which is in a formal alliance with Nissan.
LACKING ENERGY: The distress among smaller energy suppliers continues; this week saw the failure of Economy Energy, which has, or had, 244,000 customers. The business was recently reviewed by its regulator Ofgem, which was concerned about customer service standards and Economy’s ability to buy and hedge supplies on the traded market. Last week Ofgem told Economy not to take on any new customers; not surprisingly the board decided that it had to cease trading shortly thereafter.
CHRISTMAS WINNERS: Perhaps not much of a Christmas surprise, but early indications are that Lidl and Aldi were the most successful supermarkets over the year end, with both reporting sales significantly up, and Tesco also enjoying a good end to what has been a year of recovery. Christmas turkeys were Sainsbury and Waitrose, although Marks and Spencer also indicated that its food division saw sales continue to fall. The upmarket supermarkets are seeing a loss of trade to the premium lines of the majors – even Aldi and Lidl have premium aisles now, and indeed reported those to be their strongest growth areas. The two now have about 13% of the UK food market.
