World Review: Netanyahu, G7, corporation tax and going green

In this week’s look at world news, LDV’s foreign affairs editor Tom Arms reviews the situation in Israel where Netanyahu looks set to be ousted by a coalition held together, for now at least, by their opposition to the country’s leader of 12 years.

Cornwall will host the G7 summit later this week. Boris Johnson could join his peers having been defeated in the Commons over cuts to overseas aid. Coronavirus, climate change and promotion of green industries are on the agenda.

Finance ministers are expected to agree a base rate for corporation tax today but it is not necessarily a done deal. The proposal must be approved at the G20 summit meeting in Venice in July and countries that benefit from a low corporation tax regime, such as Ireland, are bound to challenge the proposal.

Netanyahu is out—or is he? And what about the impact on the future of peace in the Middle East? Eight opposition parties of the left, right and middle—including an Arab nationalist party—have united to end Bibi’s 12-year rule. Their one common denominator is hatred of the ruthless, divisive, arrogant man who has sowed discord and division and alienated just about every Israeli politician. Can hate alone hold such a motley coalition together? It is a truism of coalition politics that the more parties required the shorter the government. And working against them is the overpowering figure of Netanyahu who has already called on right-wing politicians to refuse to confirm the new government in its first Knesset vote. This would make the proposed coalition government the shortest ever in a long line of short-lived Israeli governments.

Assuming that the coalition survives the Knesset vote, they are counting on the forthcoming corruption trial of Netanyahu to remove the Likud strongman from the political scene. It is a hope but not a certainty. But what about foreign policy and relations with the Palestinians. Expect no change. The coalition will have a two-man rotating premiership with Natali Bennett and Yair Lapid each serving two years. But the key figure is Bennett who has declared he is “further to the right than Netanyahu.” He is opposed to the two-state solution, the Iran Nuclear Accord, Hamas, or any accommodation with the Palestinians.

Cornwall is a long peninsula in southwest Britain separated into a northern and southern coast by a granite spine. It is best known as a holiday destination and for its pixies, fairies and rich history of smugglers, miners, packet ships, fishermen and cavaliers. Next week it will attempt to carve out a name for itself as host of a G7 summit. The actual meeting place is Corbis Bay which is located on the wild north coast facing the surf of the Atlantic Ocean. This will be the first chance world leaders have had to meet face to face in any numbers since the start of the pandemic.

In addition to the G7 leaders four others have been invited: Australia’s Scott Morrison, Cyril Ramaphosa from South Africa, South Korea’s Moon Jae-in and India’s Narendra Modi, who will attend via cyberspace due to India’s pandemic problems.

As expected, Coronavirus will be top of agenda. First is the problem of how to distribute the vaccine to developing countries, and secondly how to handle the rebooting of the world economy when the pandemic is under control. They agree that the pandemic cannot be beaten until it is beaten in every corner of the globe and that vaccine distribution is the key to victory. They disagree on the how. The US, India and South Africa are keen to set up manufacturing centres in the developing world and everyone else is against it.

Next on the agenda is climate change and promotion of green industries. Host Premier Boris Johnson is determined that money allocated for Covid recovery includes a big chunk for investment in green technology and industries. Climate change, he argues, should be seen as an investment opportunity. It is no coincidence that Corbis Bay is around the corner from Cornwall’s only geothermal energy plant. In the summit he will face opposition from at least three of the invited guests. Indian and South African industries are still heavily dependent on fossil fuels and Australia is a major exporter of coal.

Before the G7 heads of government meet in Cornwall, their finance ministers will gather in the ornate surroundings of Lancaster House a stone’s throw from Buckingham Palace. At the top of their agenda will be reaching an agreement for an international tax structure to deal with tax-dodging multinationals, especially the social media giants. Too many of these companies are basing their operations in countries with low corporate taxes. France and Germany, for instance, charge a 33 percent corporate tax. So Facebook—among others—bases its tax headquarters in Ireland where it paid 12.5 percent in tax on the $69.273 billion it earned in 2020. The richer countries have been trying to push Ireland into increasing its corporate taxes for years or devising a system whereby the multinationals pay taxes in countries in which they operate rather than in just where they are headquartered. The problem is that the Irish economy is heavily dependent on the multinationals. Last year they paid 80 percent of the country’s corporate tax and employed 25 percent of the workforce, who paid 50 percent of Ireland’s income tax. Whatever is agreed at Lancaster House will not be the final word. It will need the support of the wider G20 summit meeting in Venice in July. Ireland—and every other small company whose economic survival depends on their status as a tax haven—will be fighting tooth and nail against the big boys as they have been doing for years.

In the background, and not necessarily on the agenda, of the G7 Summit will be the decision of the Boris Johnson government to cut its foreign aid budget from 0.7 to 0.5 percent of GDP. The damage to humanitarian efforts and the harm to Britain’s position in the world is almost incalculable. Which is why there is a strong possibility that a group of Tory parliamentary rebels will join forces with the Labour Party and the Liberal Democrats to reverse the cuts on the eve of the G7 summit. This is great news for humanitarian efforts around the world as Britain is the third largest foreign aid donor and widely praised for both the efficiency and efficacy of its programmes. On the downside, it looks as if the prime minister does not have control of a key part of his foreign policy just as he is about to host the most important foreign policy event in years. It is an embarrassment for the prime minister, but I think he deserves it and it is worth it.

* 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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4 Comments

  • It is no coincidence that Corbis Bay is around the corner from Cornwall’s only geothermal energy plant.

    Carbis Bay near St. Ives. Wave Hub “the world’s most advanced offshore renewables test and evaluation facility” lies 16km offshore…just sold off by Cornwall Council to a Swedish wind turbine company after the £42m wave energy scheme had not produced a single kilowatt of electricity.

  • The G7 agreement on global corporate tax is a big step forward in creating cross border taxing rights. Much of the detail is yet to be worked out, but it may be the beginning of the end for some of the most egregious abuses of the tax havens.

  • With regard to the new government in Israel: “ But the key figure is Bennett who has declared he is “further to the right than Netanyahu.” He is opposed to the two-state solution, the Iran Nuclear Accord, Hamas, or any accommodation with the Palestinians.”

    I agree that, if this government takes office, it doesn’t look too promising. But one most hope for change. When De Klerk became leader of South Africa over 30 years ago he looked like just another racist Afrikaans leader who was dedicated to the pursuit of Apartheid. Within a very short time he realised that things had to change and had the courage to release Mandela from prison and persuade his fellow Afrikaners to accept that Apartheid had to end and the rights of the majority black population had to be respected. International pressure undoubtedly had a big impact on this change of heart.
    Bennett has robustly defended his decision to join a pact with the Islamist Party Leader and defended him personally as a good man. I’m not banking on it but I’m prepared to hope that Naftali Bennett will have his De Klerk moment and embrace change. The US and British governments have an important role to play in ramping up the pressure on the Israeli government to respect international law, end the illegal occupation, allow free elections in the occupied territories and negotiate with the new Palestinian government for a two-state solution based on the Green Line of 1967. Unless they do so, my hopes and those of many others will inevitably be dashed – again.

  • Peter Hirst 8th Jun '21 - 1:55pm

    Plenty for them to get their teeth into. Is it time for them to increase the pressure on Israel to improve their human rights record? Getting most of the world vaccinated must be their priority and combining that with the green agenda is a prize worth winning.

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