Tag Archives: observations of an ex pat

The US Congress and the Biden Administration are playing a dangerous game of chicken with the world economy.

Failure to raise the government’s $31.4 trillion debt ceiling by early June would lead to a default on the US debt with car crash results for the US and world.

Respected economists Joseph Bruselas and Tuan Nguyen reckon that an “actual default” would lead to US unemployment soaring from 3.4 percent to 12 percent; inflation rising to over 10 percent and the American economy contracting by 11 percent.

Interest rates would rise affecting household and business borrowings. America’s credit rating would be downgraded which would hit the value of the dollar. And since 70 percent of the world’s trade is conducted in dollars, the cost of everything would increase everywhere.

The saying goes that when America sneezes the rest of the world catches cold. The US is the world’s biggest importer of foreign goods and many countries are heavily dependent on the US market for their economic survival.

America swallows 20.6 percent of British exports, 19.2 percent of the European Union; 18.2 percent of Japan’s; 17.9 percent of Indian exports and a whopping 73.25 percent of Canadian exported goods and services.

Any repercussions will almost also include less predictable political and security implications. Empty stomachs create political instability which in turn lead to simple solution promises from the far left or right. They also create openings for autocracies such as China, Russia and Iran.

On Wednesday Speaker of the House Kevin McCarthy said there could be “an agreement in principle” by this weekend to raise the “or suspend” the debt ceiling. He added that this could clear the way for a vote in the House next week. President Biden meanwhile is cutting short an Asia-Pacific tour to return for more talks.

McCarthy’s assurances, however, are suspect because of his lack of control of far-right Republican congressmen. To start negotiations, McCarthy required a vote on a proposal that would raise the debt ceiling by $1.5 trillion contingent on federal government savings of $4.8 trillion. It passed by the narrowest of margins: 217 to 215 votes. Four Republican congressmen voted against and have made it clear that if McCarthy tries to force through anything which does not include big cuts in welfare spending then they will vote him out of the Speaker’s chair and force a default.

When I was a young foreign affairs writer I foolishly suggested to my editor that the newspaper should print more foreign news. It was important, I argued, to educate our readers about the wider world.

His eyes literally bulged from his head as he slowly rose from behind his desk, to bellow: “Educate!? Educate!? Your job is to write stories that sell newspapers, thus making money for our owner. Now get out and do just that.”

He was right. A free and informative press is a cornerstone of our democracy. But to be free and provide accurate information it must be financially viable. To be financially viable it must produce stories that its readers/viewers/listeners want.

Today’s editors and publishers face major problems. As do the burgeoning army of podcasters, bloggers, vloggers and social influencers. The world of the internet and global communications has lowered the cost of entry into the publishing/broadcasting world while the size of the advertising pie which finances the media world has remained static.

Local newspapers have been particularly hard hit. Since 2005, Britain has lost about 300 titles. But this is nothing compared to the US where a staggering 2.514 local newspapers have either merged or disappeared over the same period. Those that survive cling to life with frustrated and underpaid skeleton newsrooms unable to adequately serve their communities.

History may well record the 2022 Chinese Communist Party Congress which starts next week as the Party’s peak.

It is certainly the apex for Xi Jinping who has climbed the greased pole to become the only Chinese leader since Mao to serve more than ten years in the top job.

China itself now has the second largest economy, army, air force and navy on the planet. It also has the largest population.

Beijing also has the world’s largest foreign aid budget and has invested trillions of dollars in foreign infrastructure projects for its belt/road initiative.

A third of the world’s goods are manufactured in China.

China is a super power and the Communist Party can claim credit for most of the country’s success. It united a country destroyed by ruthless colonialism, invasion and civil war and wiped out the stain of what the Chinese refer to as “the century of humiliation.”

But in the years to come the Chinese may well refer to the first quarter of the 21st century as the halcyon days for there are signs that the Communist Party is laying the foundations for serious problems for the future.

Xi Jinping, who will be crowned next week as China’s second “Great Helmsman” can claim both the success and the blame. He has substantially reduced corruption, boosted GDP, increased the military and turned China into a showcase alternative to Western democracy.

Editor’s Note: This was submitted on 9th September but held back because of the death of the Queen.

Britain’s new Conservative Prime Minister Liz Truss is doomed to failure because she has failed to correctly diagnose the cause of her country’s problems.

Any doctor will tell you that before you can successfully treat a patient you must first know what you are treating. In fact, the treatment is often the easiest part of the medical business.

The same rule applies to most aspects of life, especially politics. Before you can correct social and economic ills with new policies, laws or decrees you must correctly identify the cause of the problem. If you fail to do so the problem will fester and grow in much the same way as an untreated cancer.

Problems in political diagnosis often arise when the politician insists on examining the patient through a narrow ideological lens. Medieval Europe, for example, was a socially stagnant period because all social issues were addressed through the pages of the Bible. The Soviet Union collapsed because the ruling Politburo decreed that all of society had to be organised through the prism of Marxist-Leninism.

Liz Truss is attempting to solve Britain’s mounting problems through a narrow conservative, anti-European window.

I am an immigrant. I emigrated from the United States to the United Kingdom on the 12th December 1971.

I had studied for a year in Britain 18 months before and fell in love with the country and one of its citizens and moved back despite the dreary weather and traffic jams.

I did not flee a Middle Eastern, African, Central Asian or East European War. I did not turf up at Heathrow claiming political persecution or risk crossing the English Channel in an inflatable raft. Neither was I escaping a life of poverty in an African mud hut. In fact, if I had stayed in America I would probably be enjoying a comfortable country club existence.

Nevertheless, I feel an affinity with Africans, Asians, Hispanics, or any person from any race or country who left their homeland to seek a new life. It is not easy to leave the safety net of cultural familiarity, family and friends.

If you are born to a country your acceptance is automatic. As an immigrant you have to constantly prove your worth and justify your decision to uproot your entire life and start afresh.

I feel I have succeeded. I started an international news agency which launched the careers of well over a hundred journalists. My children are all a credit to me as are the 200 boys and girls—many of them now young men and women– who have passed through my scout group over the past 20 years.

I am not boasting. In fact, I don’t regard myself as particularly unusual. Immigrants in every country have outstanding records of contributing to their adopted homelands.

Think about it, by their very nature immigrants have proven through their actions that they are risk takers. They are adventurers. They are focused, determined and prepared to work hard to achieve their aims. Such people are assets to any community lucky enough to have them.

We are entering Ukraine Week. A series of meetings across Europe and at the highest level will probably determine whether 100,000 Russian troops will cross the border into Eastern Ukraine and ignite Europe’s greatest crisis since the end of the Cold War.

It started Friday with a Zoom meeting of NATO foreign ministers. On Monday Joe Biden and Vladimir Putin go head to head in Geneva. Next Wednesday NATO heads of government hold a summit in Brussels, and the following day, in Vienna, the 57 members of the Organisation of Security and Cooperation in Europe (OSCE) meet in Vienna. The last event includes Ukrainian President Volodmyr Zelensky who will discover just how far other countries will go to defend his nation’s sovereignty.

Conspicuous by its absence from these talks is the EU. The reason is that the issues are primarily security and military and the EU has no defence forces. It will, however, be heavily affected by any Putin-Biden pact and its diplomats will be flapping around the edges of Ukraine Week trying to make its collective voice heard.

So far Putin has done all the running. He annexed Crimea in 2014 and moved his “Green Men” into Eastern Ukraine. He has disrupted shipping in the Sea of Azov and Black Sea; threatened gas supplies to Western Europe and now has 100,000 troops camped out on the Ukrainian-Russian border.

G7 in Cornwall, NATO heads of government in Brussels and finally a Putin-Biden face-to-face on the shores of Lake Geneva in Switzerland. It is President Joe Biden’s first foreign trip and designed to show, in his words, that “America is back.”

Not with the unilateralist, like it or lump it foreign policy of the Trump years, but with a return to across the board multilateralist-driven leadership. One of the keys to this new policy will be US-Russian relations. And a big part of the meetings in Cornwall and Brussels is finalising tactics for the summit in Geneva.

The US president has a long list of grievances to present to Vladimir Putin: Belarus, Crimea, Ukraine, Syria, election meddling, cyber-attacks, intermediate nuclear weapons, human rights, corruption, sanctuary for ransomware criminals….

He will deliver the list and then move on. Biden did not ask for the summit to list grievances. He asked for it to forge a new and more pragmatic relationship with Moscow as a counter to the real threat—China. During the Cold War years, the US successfully played Beijing off against the Russians. Now it is time to play the reverse side of the diplomatic coin: Russia against China.

But to judge the success of such a strategy you have to first understand the Russian leader’s position. And to do that you have to start from the premise that Russia is a failing state. However, it is also an ambitious failing state with the world’s largest nuclear arsenal—6,257 warheads. Putin inherited an economy that was tanking. He stopped the precipitous decline by selling out to oligarchs and has ended up a prisoner of the corrupt system he created.

What a hoot. I mean, I nearly landed in hospital with laughter split sides. Did Russia actually believe that US and British intelligence would launch a major cyber-attack on the American government in order to cast blame on Moscow?

To be fair to Sergei Naryshkin, head of Russia’s Foreign Intelligence Service (SVR), he didn’t actually categorically blame the CIA, National Security Agency, MI6 and GCHQ for the December Solar Winds hack into US government departments and about 100 private companies. Naryshkin simply denied Russian culpability and claimed that the tactics were similar to those used by American and British intelligence. The careful intelligence-speak gives him wriggle room to deny the denial should that ever become necessary.

What we are talking about is what the intelligence world calls a “false flag” operation. The term dates back to at least the early days of European empire when marauding pirates would hoist the flag of a friendly nation in order to close quarters with their prey before raising the skull and bones and opening a broadside. The same tactic was used by the British and French navies with great effect during the Napoleonic Wars.

If evidence was required of shifting global goalposts then diplomatic observers didn’t need to look any further than the start of this year’s UN General Assembly.

For a start, the General Assembly Hall was sparsely populated with socially distanced diplomats. Coronavirus has kept away the heads of state, government and foreign ministers who normally gather in the UN building on the west bank of New York’s East River. Instead, the speeches have been pre-recorded and displayed on the giant screen.

No politicos means no chance for the usual annual flurry of bilaterals where the real diplomatic business is done. It also means fewer opportunities for world leaders to make the 214-mile plane journey to Washington for a photo-op and short chat with the US President.

But all of the above are relatively speaking cosmetic changes compared to the rapidly moving substantive global shifts pushing the world down uncertain paths.

This is a big anniversary for the United Nations. It is 75 years since the organisation’s founding in October 1945. Europe had been devastated by World War Two. Politically the world was still Euro-centric with the end of the colonial era yet to be confirmed. Asia was a backwater. China was riven by civil war. The Soviet Union was threatening and the United States had emerged as the number one military, political and economic power.

The formation of the UN formally ended the roughly 150 years of American isolationism and catapulted Washington into the position of world policeman and bastion of democracy, capitalism and free trade.

Elections are great. They are the cornerstone of liberal democracies. They ensure that the government has the support of the people so that the country can move forward.

Elections are great… IF (notice the capital letters) they are free and fair. Otherwise they are an exercise in political hypocrisy designed to sacrifice the national interest to special interest groups—a sad, bad and ultimately dangerous road for the guilty politicos and the country they claim to represent.

There are several elements that contribute to making elections free and fair, including: Multiple parties representing a variety of political views; a free press; open debate; secret ballots;  transparency in polling procedures; an absence of foreign interference and an inclusive structure which ensures participation by all members of society.

Of course, the absence of any or all of the above conditions doesn’t stop the less democratic rulers from staging polls and claiming the mantle of respectability that elections bestow. They are a sham; easily exposed as such and suffer the consequences accordingly. It would probably have been better for the rulers concerned to have not bothered with the vote in the first place.

The most recent dramatic example of a sham election is Belarus where Alexander Lukashenko claimed 80 percent of the vote. There is no free press in Belarus. Virtually all of Lukashenko’s political opponents were thrown into jail before the election. Anti-Lukashenko rallies were banned. The ballot boxes were almost certainly stuffed, that is if they even bothered to count them. The result has been national chaos as tens of thousands have risen up to demand the end to Lukashenko’s 26-year-old dictatorship. Thousands have been beaten, arrested and thrown into detention. The electoral crisis in Belarus has sparked a foreign policy crisis as The European Union supports the Belarussian opposition and Vladimir Putin warns Brussels to back off.

Putin’s electoral record is also heavily tarnished. The restrictions are nothing like those in Belarus but “Russia,” as Melbourne University reports, “does democracy differently.” For a start, freedom of press is a rapidly disappearing asset in the land of the Muscovites. But more importantly is the handling of opposition candidates. If they become too troublesome they are imprisoned on trumped-up charges or simply “eliminated.” Elimination was the fate of liberal politician Boris Nemtsov who was shot and killed on a Moscow bridge in 2015. This week we learned that the oft-arrested and imprisoned Alexei Navalny is in a coma in Siberia after drinking, what his family claim, was a poisoned cup of tea.

We are heading for Cold War Two. Some say we are in it. Either way, it will touch every corner of the globe—as did its predecessor— as the main protagonists’ battle against each other for the hearts, minds, military assets, trade deals, access to resources, political influence and strategic positioning of third countries.

Cold War I was the US v. the Soviet Union. Post- World War Two Europe was the initial cockpit and Western Europe were America’s junior partners. China was the Soviets subordinate for several key years, but the inflated national egos of the two countries and their joint occupancy of the Eurasian land mass led to the inevitable falling out.

Cold War II is different. The focus is now Asia where communist China threatens to replace America as the hegemonic power. Russia is now China’s junior partner and has dropped several places on Washington’s worry list. It is economically stunted but remains a belligerent military giant, which means it should be of greater concern than currently rated by Washington.

The biggest difference between Cold Wars One and Two is that China has succeeded economically far beyond the dreams of the old Soviet Union. This has enabled Beijing to use soft trade power while accumulating cash to build hard military muscle and buy allies around the world.

With a few exceptions, Beijing is not having much luck winning support in Asia. After all, that is the region that they seek to dominate as the Soviet Union sought dominance in Europe. Japan, India, South Korea, Singapore, Vietnam and Australia are all solidly in the American camp.  Their only real regional allies are pariah-like North Korea and Russia.

But elsewhere in the world they have gained friends and influence through a combination of investment, trade, loans, grants and infrastructure development.  Africa’s abundant natural resources have been successfully targeted with some $60 billion of investment compared to $16 billion from the US.

In Latin America, the Chinese have stood alongside the Russians in backing Venezuela’s Nicolas Maduro, a move which has helped keep Trump from intervening in the troubled South American oil giant.  In Cuba, Beijing, has replaced the old Soviet Union as the island’s main economic support. Beijing took the unusual step of writing off a $6 billion debt and is now Havana’s biggest trading partner.

The rest of the Western Hemisphere is in the American camp. But Europe is being lured by Chinese cash and cheap manufactured goods. It is not as compliant as Washington expects or would like. The Greeks have sold Beijing a 51 percent stake in the strategic of Piraeus, thus giving the China’s Belt/Road Initiative a foothold in the Mediterranean.  In 2019 the Chinese market was worth about $200 billion a year to the EU. Germany’s Chancellor Angela Merkel has led the way in forging closer links with Beijing, visiting China 12 times in the past 14 years.

The resounding defeat of Jeremy Corbyn’s Labour Party has revived the cries for “Responsible Capitalism.”

Corbyn is a not so thinly-disguised old style socialist. He and his supporters believe that the only route to a fair society is through socialism based on public ownership. The problem is that historical experience says otherwise. There have been successful mixed economies, but every attempt at full-blown socialism has ended in political, economic and social disaster.

In every instance they have hit the brick wall of human nature and its hand maiden the survival instinct. Humans are greedy. That greed has dragged us out of damp caves into centrally-heated bungalows. Conversely, the same greed has ignited wars, destroyed the environment and created social inequalities.

The bastion of world capitalism—the United States—is a shining example of these inherent contradictions. Its national entrepreneurial success has created the wealthiest country in the world. But that wealth is not equitably shared. Two-thirds of America’s wealth is owned by five percent of the population. Forty percent of Americans earn less than $15 an hour; five percent earn the minimum wage or less and 28 million Americans do not have medical insurance.

t’s that time of year again. No, I don’t mean the season of good will, holly, mistletoe, reindeer, white-bearded elves, and midnight mass. I mean the time to look back and forward at the world political scene. And there is so much to write and so little space.

Britain has just had its Christmas election. America has had its Christmas impeachment. Hong Kong is still in turmoil. Latin America is going through another of its political crises. The Chinese economy is shrinking. America’s Democratic Party cannot decide which way to go. Iran, Iraq and the Lebanon are rioting, so are the French. The Eurozone has had a terrible year. Putin is as belligerent as ever. Turkey is becoming more obstreperous and Israel can’t reach agreement on a coalition government.

Boris Johnson’s landslide victory has for the moment put paid to the Brexit debate. He claims that his historic 80-seat majority on the sound bite slogan “Get Brexit Done” is a massive mandate for leaving the EU. That is an over-simplified misrepresentation. Opinion polls report that the country continues to be split almost 50/50 between remain and leave. The election result was as much—it not more—of a reflection of distrust of an ideologically-driven Labour Party than it was a vote on Brexit.

So Brexit is likely to remain a big issue with the focus shifting to the prime minister’s renewed No Deal threat if free trade talks are not concluded by this time next year. They are other worrying messages coming out of 10 Downing Street: A review of the relationship between the government and the courts and the role of the media are two indications that Boris Johnson will use his enhanced power to stifle dissent and move Britain to a more presidential style of government.

Unfortunately, Boris won’t be facing much in the way of an official opposition. The Labour Party is set for a bitter civil war between the far-left ideologues of Momentum who blame Labour’s defeat on everyone but themselves, and the more pragmatic wing who want a return to the old New Labour. The current election rules as set down by the party constitution put the Corbynistas and Momentum in pole position. This means a longer and more vicious blood-letting than previous leadership battles and raises the spectre of a Labour split and an open goal for the conservative government.

On the other side of the Atlantic, Donald Trump has this week become the third president in American history to be impeached. Because voting in both houses of Congress has become totally partisan, it is highly unlikely that Trump will be found guilty by the Republican-controlled Senate. But has his 2020 re-election been hindered or helped by impeachment? That question cannot be accurately answered until all the evidence has been presented in the Senate trial. So far everything that the House of Representatives has heard is second or third hand. This is because the president has refused to allow any White House officials to testify. There will be a battle royal to force into the Senate witness box.

All politicians lie. That is what we are told anyway. If they told the truth, it is argued,  they would never be elected.

The problem with that belief is that it undermines the very foundations of democracy. If you cannot believe your elected representatives than what is the point in elections? They become no more than expensive political theatre.

It certainly seems that the 21^st century political arena is filled with more mendacity than previous years, and the instances of misinformation and disinformation appear to be multiplying. The question is: How to deal with the increasing number of lies before they damage our political institutions beyond repair.

Adam Price, leader of the Welsh Nationalist Party Plaid Cymru thinks he has the answer: Make intentional political lying a criminal offence. That is an interesting idea, but not the right answer.  Hit them where it really hurts–in their bank accounts– by extending the laws of libel to social media.

Winston Churchill is alleged to have said that “a lie travels halfway around the world before the truth has a chance to get its pants on.” In today’s social media world of the internet, trolls, hacks, cyber attacks and 24/7 news, a lie can be orbiting the North Star before truth even thinks of climbing out from under the duvet.

The Internet is the greatest boon to freedom of speech since the Gutenberg press. Billions of people now have access to the greatest body of information at any time in history. But every action has a reaction and they are not always good. Even the inventor of the World Wide Web, Sir Tim Berners-Lee has recognised that his digital offspring is a mixed blessing.

There has been talk of regulating social media. Facebook’s Mark Zuckerberg has been hauled before parliamentary committees on both sides of the Atlantic and told that he has to find a way of preventing his cash cow digital platform from becoming a vehicle for fake news. He has been told that he should employ tens of thousands of editors to plough through every posting – which run to the 1.62 billion accesses daily–and remove anything that smacks of lies and hate speech. On Twitter there are 500 million daily tweets. Their impact is multiplied by retweets and republication on traditional mainstream media.

It is an economic model called the Laffer Curve and it reeks of common sense and good economic stewardship. It is also being studiously ignored by the Labour and Conservative parties in their headlong race to buy votes with expensive election promises.

The Laffer Curve is basically a bell-shaped curve which starts at zero on the left , rises to an optimum figure in the middle and then drops back down to zero on the far right. The zero on the left is the expected tax revenue that would be raised if the tax rate was zero, which is fairly self-explanatory—no taxes, no revenue.  Halfway up the left side of the curves means taxes are too low and revenue is insufficient.

The zero on the far-right may appear at first glance to be counter-intuitive.  The higher the price (taxes) the higher the revenue. But if we use the shop analogy the fallacy of that argument is exposed.  If a shop charges more money than the customer can afford than they just go elsewhere. In the case of taxes they vote with their feet and move to another country and refuse to invest in an economy which fails to give them a return with the result that the pool of money from which taxes are drawn shrinks.

The key is to find the happy median. This is the highest point on the Laffer Curve where the tax rate—like Goldilocks’s porridge—is neither too high nor too low but set just right so that it draws in the maximum tax revenues.

The Laffer Curve is named after American economist Arthur Laffer from the Chicago School of Economics. Professor Laffer did not invent the theory. But he did popularise it during the Ford, Reagan and Bush Senior Administrations. The theory actually has its antecedents in 14^th century Tunisia; was popular in 19^th century American economic planning and a cornerstone of the policies of US Treasury Secretary Andrew Mellon during the Roaring Twenties.  Even John Maynard Keynes made some admiring references to it, but it was largely forgotten in the 30 years after World War II.