Issue 208: 2019 06 27: Lens on the Week

27 June 2019

Lens on the Week

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UK

BASHFUL BORIS:  Now you see him, now you don’t.  Just as a top rabbiter uses his ferret to flush his quarry out of their burrow into his net, so Jeremy Hunt needs to pull Boris into the limelight of open debate.  Otherwise his carefully thought through strategies will not help him.  As we discovered to our cost in the hundred years war, it is no good being the better side if you cannot bring your opponents to battle.

So that is the tussle.  Jeremy trying to lure Boris into open discussion by shouting “Bottler Boris”, “Man Up” etc.  Boris, presumably advised by the apostles of the great De Guesclin, avoiding battle, skulking behind his walls and trying to appease the mob with hustings for party members, interviews on TV and the like.  In mathematical terms his strategy makes sense because he is much more popular with party members than with the public as a whole.  If an open debate swung public opinion heavily behind Jeremy, the Tory party membership would read the polls and then take the hint.  If the debate is kept close the result is likely to follow the Tory membership’s initial instincts.

So what are Jeremy’s ferrets?  First the public is uneasy at not seeing a debate, even if they have no vote and that unease will only grow if Boris is seen to duck.  That could move the polls to an extent which the Tory members would find it hard to ignore.  Second, Boris’s high risk strategy of threatening no deal needs a tough leader to deliver it.  Tough leaders do not hide from their opponents.  Third, Boris’s messy little domestic quarrel may not matter much in the scheme of things but makes him look accident prone.  Napoleon’s question:  “I know he is a good general but is he lucky?” is as applicable to politics as it is to war.  Boris needs exposure to keep momentum.  Finally, plotting by Tory remainers could unseat Boris if he does not have sufficient popular support.

Tactically interesting, but at the moment of national crisis, much of the media decided that the big question was whether Jeremy Hunt was wrong to use the expression “man up”.  In these days, when we all face extinction, it is some small compensation to think the pedants who worry about this sort of thing will perish too.

SPLASHING OUT:  Neither leadership candidate being prepared to sign up to Philip Hammond’s strategy of reducing the national debt, the usual spending-promise-fest is getting under way.  Hunt wants to spend an extra £15 bn pa on defence, taking expenditure from the NATO requirement of 2% of GDP to 2.5%.  That would “show the world a self-confident country ready to defend its interests and values as we embark on an exciting post-Brexit future”.  Much of the expenditure would be on the navy and, apart from helping us combat threats to ourselves, might help to cement our place in the Western alliance.  Johnson wants to increase the higher rate tax threshold from £50000 to £80000.  That too has a clear political dimension.  Either way it must be upsetting for Hammond to see the candidates so profligate with the savings he has made.

CARBON:  It must be annoying for the Royal family to see headlines suggesting that their carbon emissions have increased because reduced emissions at home have been exceeded by those resulting from extra air travel at the Foreign Office’s request.  Still, they have clearly done well in the UK and it is a good thing that attention has been drawn to it.  To succeed, the environmental struggle will have to engage fashion and change public behaviour.  Their position gives them the opportunity to make a real contribution here.

ANGER MANAGEMENT:  What a pity.  For a moment I thought we had caught a glimpse of someone just a little better.  Janet Barker, the Greenpeace campaigner who was bundled out of the Lord Mayor’s dinner by Tory minister Mark Field, said that she did not think it amounted to an assault and would be making no complaint.  Fair, decent and generous you might think, but alas she couldn’t help adding in a sneering reference to anger management, which spoiled it.

International

IRAN:  The crisis continues, with Iran shooting down a US military drone this week.  President Trump’s handling of the situation is beginning to look (dare we say it?) rather impressive.  He’s refusing to rise to Tehran’s provocation: last week he played down the significance of the attacks on merchant shipping; this week he vetoed the retaliatory attack planned by his military because he didn’t want to kill Iranians (fatalities might have numbered over 100), thus robbing Tehran of the propaganda coup for which they were probably angling all along.  This, with his repeated assertions that he doesn’t want war and his repeated invitations to Tehran to pick up the phone and talk to him, makes him look humane and restrained, in contrast to Tehran which is looking increasingly belligerent with its escalating violence and increasingly mean-spirited with its refusal to talk.

But he is retaliating.  The US hit back with a cyber-attack on the Iranian units thought to be responsible for downing the drone.  New sanctions were introduced against individuals in the very highest levels of the regime.  He continues to issue stern warnings and even graphic threats against any attacks on the US.  Washington’s good-cop bad-cop front (the humane and restrained Trump on the one hand, the aggressively anti-Iran hawks national security adviser John Bolton and secretary of state Mike Pompeo on the other) must be very unsettling for Tehran.  The regime must find Washington confusing and unpredictable, and find itself ever in danger of being wrong-footed (how to reconcile Trump’s insistence on talks, for instance, with the fact that the new sanctions against Iran’s spokesman and foreign minister now make it impossible for the White House to listen to him?).  This could be a happy but accidental consequence of Trump’s style – or it could be quite deliberate and calculated.

PEACE TO PROSPERITY:  Jared Kushner is to unveil the White House’s new peace initiative for the Middle East this week, with a “Peace to Prosperity Workshop” in Bahrain.  The proposal doesn’t appear to offer any kind of political solution to the Palestine/Israel conflict; instead, it offers Palestinians financial and economic incentives to abandon armed conflict and to build businesses to overcome poverty and deprivation.  $50 billion will be made available: $28 billion to be invested in Palestinian territory and $22 billion in Lebanon and Jordan (both currently hosting millions of Palestinian refugees) and Egypt. Palestinian officials have criticised the plan as a scheme to buy off their claims to statehood; no members of the Palestinian leadership – neither Hamas from Gaza nor Fatah from the West Bank – will be attending.

TURKEY:  Local elections last March saw President Erdogan’s party, the AKP, lose Istanbul, the country’s most important city culturally and economically (it contains a quarter of Turkey’s population and a third of its wealth) and where the foundations of his and the AKP’s power had been built. Opposition leader Ekrem Imamoglu became the new mayor, winning the election with a narrow margin of 13,000 votes.  Erdogan protested, however, and the supreme court overturned the result and demanded a re-run.

Last weekend saw the re-run – and Ekrem Imamoglu won again, this time with a convincing margin of 806,000 votes (9.2 percent).  Resentment at what was widely seen as an over-reach by Erdogan on triggering the re-run, concern at his recent increase of presidential power and a deepening economic crisis all fuelled the AKP’s defeat.  The significance and consequences of this for Erdogan are considerable; some commentators even think that this could possibly be the beginning of the end of Erdogan’s grip on power.

Financial

FACEBOOK:  On the surface, Sir Nick Clegg’s assertion that Facebook wants to be regulated sounds surprising. After all he is their head of global affairs so you might have thought that the less regulation the better.  The world becomes yet more topsy-turvy when Damien Collins, the chairman of the House of Commons Digital, Culture, Media and Sports Committee says that this would allow Facebook to evade their responsibilities because they could rely on regulation rather than exercising their judgement.  That is clearly nonsense.  Of course a regulatory regime should be flexible enough to allow regulators to come down on new and varied unethical practices.  Still it is for society to decide what is permissible and what is not and that has to be done by way of regulation.  Leaving matters to the consciences of participants in the market will, by the basic laws of economics, result in a rush to the bottom and no one wants that.  Nor would it make any sense for such a global business to be differently treated in different jurisdictions.  A global approach to regulating is badly needed.

SOUTHERN WATER:  The story between the £126 million (£123 million to its customers and £3 million by way of fine) to be paid by Southern Water is a sorry one.  Overspills of sewage into rivers and failure to invest in plant are bad enough but worse still is the fact that mistakes had been covered up by deliberate distortion of sampling.  Little wonder that Ian McAulay, who came in as chief executive two years ago, says the company is “profoundly sorry”.  One area which will be examined at the post-mortem is the ownership structure.  Did the gearing associated with a private equity model exert too much pressure to save costs?  Would those pressures have been more or less had the company been in the public sector throughout the recent austerity?  Would the problems have come to light earlier in the public sector or would they have been covered up more effectively?

ACTIVISM:  Attacks on management at the First Group and de la Rue by shareholders have created sound and fury.  At de la Rue the chairman and also non executive director Andy Stevens follow its chief executive Martin Sutherland out of the door following a one third drop in value.  Crystal Amber, one of the shareholders called the board “clueless” and said that the damage to value was self inflicted.  Meanwhile at First Group, activist investor Coast has said that the board do not know how to run the business and seeks a change in strategy.

Just the market doing what it should you may think, but the strategists in the environmental movement will be wondering how they can lever shareholder power for their purposes and will be watching all this carefully.

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