Tom Arms’ World Review – 9th May

The success of Brexit depends on a willingness to succeed and the desire to place the shared requirement for European stability before narrow political interests. This week’s Anglo-French dispute over English Channel fishing rights indicates that it ain’t gonna happen. British Prime Minister Boris Johnson has again demonstrated his disdain for international law by slipping in additional restrictions related to the licensing of French fishing boats and the French over-reacted by threatening to block electricity to the British Channel Island dependency of Jersey. President Emmanuel Macron then added fuel by giving his blessing to a French fishermen’s blockade of Jersey and Boris went over the top by dispatching Royal Navy ships to the scene. The reason for this diplomatic comedy of errors (although no one is laughing) is the fishing clauses in the EU-UK Trade and Cooperation Agreement. Both the British and French fishing industries demanded that their negotiators secure a win-lose agreement in their favour. Or, at the very least, the semblance of a win-win deal. Instead, both constituencies have suffered what they regard as a lose-lose deal. British fishing communities were a rich source of pro-Brexit and conservative votes. Now they feel cheated and are turning on their former hero Boris Johnson. His dispatch of the Royal Navy is meant to demonstrate his willingness to fight the fishermen’s corner. President Macron faces elections in 12 months. Jean-Marine Le Pen, leader of the right-wing National Rally, is edging ahead in the latest polls. She has a strong base of support in the French fishing community. Macron needs to erode that if he is stay in the Elysee Palace.  Both Boris and Macron backed down almost immediately as wiser heads in Brussels and Whitehall prevailed, but if their shoot-from-the hip reaction is a harbinger of things to come than expect a rocky road in post-Brexit Anglo-French and Anglo-EU relations.

China and Russia were the main focus of this week’s meeting of G7 foreign ministers in London. China was attacked for its lack of human rights and economic policies, and Russia was berated for using its military to destabilise Ukraine and upset the nuclear balance. The Western tactic (as far as China is concerned) appears to be to call on Beijing to recognise its obligations “under international and national law.” They are counting on China’s growing stake in the globalised economy to lead them towards reason. But that was not how President Xi Jin Ping saw the situation in a 12,000-word keynote speech reported this week in the Chinese Communist Party Journal Qishi. He told party cadres that in the midst of world turmoil their party and government had a development plan which made China “invincible.” It combined a secure place in the globalised international division of labour while at the same time, husbanding capital and safeguarding national security with restrictions on key industries. Russia is a slightly different and possibly more worrying concern. In the long-term it does not pose the same economic and political threat as China, and President Vladimir Putin is dropping in the opinion polls. But the paranoid Russian bear finds itself cornered and, many Russian-watchers fear, may lash out using its residual military might from Soviet days. Reinforcing fears of Russian intentions is their clear plan of building a fortress economy to withstand Western sanctions. At the end of 2020 it had $183 billion in its international reserves—equivalent to two years of imports. Some of the money has been spent on covid relief measures, but very little compared to Western efforts. The central bank has shifted holdings out of Americans banks and reduced investments in American businesses from 30 cent to seven percent.  In short, while the G7 countries are debating measures to increase the effectiveness of Western sanctions against China and Russia, both countries are taking actions to reduce the effectiveness of sanctions and increase their scope for political manoeuvre.

Also on the G7 foreign ministers’ agenda was the problem which refuses to go away—coronavirus. Two specific items were discussed: India and the problem of vaccinating the developing world. An Indian delegation was invited to the face to face summit in London, but at the last minute two members of the Indian delegation tested positive for covid-19 and so the delegation was forced to attend virtually while others gathered for a socially-distanced meeting in a London conference room. India was invited for four reasons: it is the world’s largest producer of vaccines; it has a proposal to extend the vaccination programme to developing countries, it is the new epicentre of the pandemic and Prime Minister Narendra Modi’s policy of politics before lives is a textbook case of how not to combat a pandemic. Ignoring scientific advice and the experience of the rest of the world, Modi allowed political rallies and Hindu festivals to go ahead. He has paid the price in humanitarian and political terms. This week daily new cases in the sub-continent reached the 400,000 mark. Largely as a result of the pandemic, Modi, the BJP and his vision of a Hindu nation was trounced in the recent elections in the key state of West Bengal. This was in spite of a full-on campaign by the Prime Minister. G7 foreign ministers, however, were more interested in an Indian proposal that the worldwide coronavirus vaccine programme be enhanced by increasing vaccine production in developing world countries. Immunisation programmes in the West are started to have a positive effect, but the current surge in India underscores the danger of a new vaccine-resistant variant evolving in the developing world and spreading back to the West. A proposal from India and South Africa is to allow the developing world countries to establish their own production lines which would significantly reduce costs and increase production. This has secured the delayed support of the Biden Administration, but is opposed by the UK and EU who are concerned about the financial impact this would have on the profit margins of pharmaceutical companies and the subsequent money available for re-investment in research. They prefer increasing contributions of cash and vaccines to the developing world through the World Health Organisation’s Covax scheme.  Lack of consensus in London has meant that a decision has been passed to the WHO to come up with a compromise solution.

* American expat journalist Tom Arms is LDV's foreign affairs editor, author of the forthcoming book “America: Made in Britain” and Campaigns Chair for Wandsworth Lib Dems

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6 Comments

  • Little Jackie Paper 9th May '21 - 1:28pm

    ‘They are counting on China’s growing stake in the globalised economy to lead them towards reason.’

    1993 called and asked for its mindset back.

  • Andrew Tampion 9th May '21 - 3:11pm

    “British Prime Minister Boris Johnson has again demonstrated his disdain for international law by slipping in additional restrictions related to the licensing of French fishing boats ”
    What is the evidence for this claim? Jersey is self governing and the UK is only responsible for Defemce and International Relation including trade so why do you assume that the decision to add restrictions to the fishing licences was Johnsons rather than the Jersey authorities. Also given that French fisherman has blockade harbours ijn the past in protest and threaten to do so in Jersey why should the UK shouldn’t the UK take them seriously and take steps to prevent that from happening?

  • Little Jackie Paper 9th May '21 - 3:49pm

    Andrew Tampion. Worth adding there that there was this (overheated) thing about the French cutting electricity to Jersey. If Johnson had talked about doing something similar one wonders how Mr Arms would have reacted.

  • Tom Arms writes “while the G7 countries are debating measures to increase the effectiveness of Western sanctions against China and Russia, both countries are taking actions to reduce the effectiveness of sanctions and increase their scope for political manoeuvre.”
    The economist this weeks gives an indication of what those actions might be https://www.economist.com/special-report/2021/05/06/will-the-dollar-stay-dominant
    “Digital money may pose a new threat to dollar hegemony. The dollar is pervasive because everyone uses it as their “unit of account”. Oil is invoiced in dollars. Most global trade is paid for in dollars. Most cross-border financial contracts are in dollars. Global travellers keep $100 bills in their socks. Financial markets and trade have grown faster than the global economy for decades, making the dollar ever more dominant. This gives America a clout it exploits through its use of sanctions, as well as unrivalled insight into global finance.”
    “Digital money could thus threaten dollar hegemony. But the motive of many places, including China, for issuing their own digital currencies are mainly defensive. China is resisting the disappearance of public money as cash falls out of use. It is also fighting the concentration of power in the hands of data-savvy tech firms. Perhaps digital money will be used to promote a currency, says Mr Landau, but it can also be a defence against competition from a digital dollar.
    A first reason to create a digital currency is “to protect or safeguard our monetary sovereignty,” said Mu Changchun, the Chinese central bank’s digital-currency boss, in March. He thinks most central banks are keen because they fear a digital dollar. “Digital currency supplied by one central bank should not impede another central bank’s ability to carry out its mandate for monetary and financial stability,” he said.
    The IMF called for a new Bretton Woods last year and the idea seems to a common global digital currency under the control of the IMF and Bank for International Settlements. It is sometimes referred to a the great reset. It doesn’t look like China and Russia will be on board although a Chinese minister did float the idea of Special drawing rights (SDR’s) replacing the dollar for international settlements a few years back.

  • My concern is that geopolitics will hinder or prevent measures by the global community to combat issues such as climate change, plastic pollution and biodiversity loss. A solution is strengthening international institutions such as the United Nations. Improving democracy would play a large part also.

  • @Little Jackie Paper. “there was this (overheated) thing about the French cutting electricity to Jersey. If Johnson had talked about doing something similar one wonders how Mr Arms would have reacted.” Mr. Arms would have said Boris overreacted. In fact, if you read the article again you will realise that I said that both Macron and Boris overreacted. I think that they did so for narrow domestic political purposes when they both should have taken a more statesmanlike approach.

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