Truss bets on radicalism to save the Tories, and she’s right

Despite (or perhaps because of) the Conservative establishment having lined up squarely behind her opponent, former Chancellor of the Exchequer Rishi Sunak, Foreign Secretary Liz Truss is in pole position to emerge as the new Tory leader and next prime minister of Great Britain.

The only poll since the run-off began between these final two candidates found Truss miles ahead, with 49 percent support among the party membership who will determine the winner, while Sunak languished on only 31 percent.

How has Truss upended the desires of the Tory establishment? She has adroitly grasped the fundamental desire of the UK for change, and not merely another spell being led by an affable Tory grandee. For while the Conservatives at Westminster have been engaged in a very public civil war over the defenestration of the feckless Boris Johnson, it has not been a “good look” for the party out in the country, where people are grappling with the far more serious problems of a cost-of-living crisis, rampant inflation (allowed to get out of hand by an increasingly discredited Bank of England), and a possible coming recession, even as an energy crisis threatens the whole of the Western world. While the Tories are fiddling, Rome is burning.

All of this explains the latest Politico polling on July 24, which finds the opposition Labour Party well ahead of the Tories by 41-32 percent, with the perennial third-party Liberal Democrats on 11 percent. Such an outcome would enable Labour and the Lib Dems to form a government, one of whose first acts is likely to be changing Britain’s first-past-the-post voting system to that of proportional representation. Such a change — since both Labour and the Lib Dems are left-of-center parties — would consign the Tories to opposition status for the foreseeable future.

Unlike Sunak, a steady-as-she-goes chap if ever there was one, Truss seems to sense this larger political danger. She has an answer to the basic Tory problem: How do you appear to provide fresh solutions to problems that, having been in government since May 2010, you yourself can justifiably be accused of having created? Truss, despite faithfully serving David Cameron, Theresa May, and Johnson, has adopted the mantle of a radical reformer (especially in the economic sphere) to galvanize support not only among the vital Tory grassroots who will choose the next prime minister, but also in the larger population who will determine the outcome of the next general election.

While there is little difference between Truss and the outgoing Boris Johnson over foreign policy — both are hawkish (perhaps overly hawkish) supporters of Ukraine, both are card-carrying members of the Anglosphere and its close ties with the US, and both see China as the greatest looming threat to the world’s status quo powers — over economic matters, canyons separate them.

At the highest macro-economic level Boris Johnson and his administration have been garden-variety followers of the late 1950s Prime Minister Harold Macmillan and his ministers — politicians who have no desire to dismantle the big state/high tax machinery but merely purport to run it better than their leftist opponents. In contrast, Truss is nailing her colors to the mast of Thatcherism, that other strain of Tory thinking on policy, pushing for lower taxes, and the freeing of the animal spirits of capitalism to realize the country’s economic potential at the micro-economic level.

Karl Marx, so wrong about so much at the practical policy level, was right in his definition of radicalism: “To be radical is to grasp things by the root.” If the Tories were to choose Truss’s rival Sunak, whose competent go-along approach may well mitigate the worst of the coming economic crisis without ever mastering it, her belief is that this would doom the Tories to nothing better than a respectable defeat at the next general election, and the political oblivion that may well follow. Instead, in pushing a radical Thatcherite agenda of tax cuts, she is radically trying to master the economic crisis itself.

Truss founded the laissez-faire Free Enterprise Group of Conservative MPs in 2011 and seems intent on governing in this more radical spirit. While the Johnson premiership disastrously planned to increase corporate taxes from 19-25 percent over the next few years, and with overall British taxes at a 50-year high, Truss intends to reverse this slide into Macmillanism.

But there is no doubt Truss is gambling. For while she is squarely behind tax cuts, she disdains the spending cuts and austerity (think Cameron) that would make such an economic policy revenue neutral. Instead, she plans to go along with Johnson’s plans to throw dollops of cash at the horribly run (but much loved) National Health Service. Truss also plans to increase British defense spending significantly, to fully 3 percent of GDP, even beyond Johnson’s increases. She is betting that tax cuts pay for themselves in terms of increased economic activity, and that the Bank of England gets its act together and aggressively raises interest rates so the inflationary effects of her spending plans are masked.

This amounts to quite a policy and political gamble, but Truss is right about one big thing. To fail to be radical at this stage would surely lead to a Tory election defeat. To avert that, radicalism is the only plan she has.

This post was originally published in Arab News

Don’t let Venezuela walk between the raindrops

As best I can tell, the American novelist W.E.B. Griffin popularized the phrase “walk between the raindrops” that means a person (or country) is not held accountable for nefarious actions. It is one of my favorite political risk quotes, since all too often in this mediocre age — and in defiance of how republics are supposed to work — the mediocre and even the evil prosper, despite their horrendous “call record” in life.

Presently, the distracted, confused Biden administration is letting the thuggish, inept Venezuelan administration of Nicolas Maduro walk between raindrops. The White House has allowed the gradual removal of sanctions on Caracas to give America’s enemies real hope that they can withstand the economic pressure the U.S. heretofore has brought to bear. At literally every level, this amounts to a disastrous policy. As Edmund Burke is (wrongly) supposed to have said, “All that it takes for evil to triumph is for enough good men to do nothing.”

The Trump administration, and many other Western countries, withdrew diplomatic recognition of Maduro’s socialist, anti-American regime after his obvious rigging of Venezuela’s 2018 presidential campaign. For the past five years, the U.S. instead has recognized Juan Guaido as president and put in place punishing financial and personal sanctions directed against the country’s criminal elite, all the while supporting the domestic democratic opposition, in an effort to topple the former bus driver turned dictator.

However, in March, the Biden administration began to lose its nerve. U.S. officials traveled to Caracas to meet with Maduro and his team. The trigger for change was the Russian invasion of Ukraine and the energy crisis that followed. Venezuela, for all its economic problems, sits atop the world’s largest supply of oil. For the desperate Biden administration, being politically destroyed by its tone-deaf response to the energy and cost-of-living crises, and facing an uphill battle in the November midterms, the temptation to try to bring pariah Venezuela back on line to pump more oil is proving too great to pass up.

After the meeting, as a gesture of goodwill, Maduro freed two U.S. prisoners held in his country’s overflowing jails and promised to restart the perennially fruitless talks he has held with the opposition (he uses the negotiations as a diplomatic weapon to forestall any meaningful political change in the country). President Biden predictably fell for these token gestures, entranced by the fool’s gold of bringing energy-rich Venezuela back into the community of nations. Duly, the U.S. lifted some minor sanctions on Caracas, but the larger message is clear: The White House is open to letting Maduro walk between the raindrops, if the price is right.

There is no doubt the anti-American chavista president is a menace to his own people and the wider world. Despite Venezuela’s oil reserves, Maduro’s socialists have so mismanaged the country’s economy that three-quarters of its people live in extreme poverty — that is, on less than $1.90 a day. It is little wonder that 6 million Venezuelans have voted with their feet, fleeing the economic Dumpster fire in the past few years.

At the international level, Maduro has been similarly vicious and inept. He has been accused by U.S. officials of conspiring to flood the U.S. with cocaine, using the drug trade as a blunt instrument against America. Geopolitically, in line with his mentor, the populist leftist Hugo Chavez, Maduro has aligned himself with America’s rivals, China and Russia — an obvious strategic no-no in the Western Hemisphere.

What has transpired at the country level has been mirrored by peculiar goings-on at the individual level by chavista criminals. For example, Roberto Enrique Rincon-Fernandez, a Venezuelan chavista who improbably now lives in opulence in Houston — with his $5.8 million estate, a Ferrari and a Lamborghini, a private jet, and other houses in Aruba and Spain — was arrested in 2015, with the Department of Justice (DOJ) bringing 13 bribery charges against him.

The centerpiece of the DOJ’s broader investigation into corruption in Venezuela, Rincon has pleaded guilty to “oil bribery,” masterminding and participating in bribery schemes involving three high officials with the country’s national oil company, Petróleos de Venezuela (PDVSA). This malfeasance led to rigging bids in order for Rincon to win contracts supplying energy equipment to PDVSA, according to U.S. officials.

In 2016, Rincon accepted a plea bargain wherein he pled guilty to three of the DOJ cases against him. This ridiculously lenient deal took his estimated jail time down from a maximum of 100 years to 13. Better still for Rincon, he was released on $5 million bail and has had his sentencing postponed 20 times, most recently to August 2022. If this is not walking between the raindrops, it is hard to think of what is.

The moral problem of letting countries and individuals off the hook for their bad behavior is that they are likely to be encouraged in following their anti-American ideology, come hell or high water. The U.S. was right to impose some sanctions on Russia, which is a second-order U.S. problem in terms of its national interests. Why should it do less with Venezuela, sitting as it does in the Western Hemisphere, which, since the Monroe Doctrine, is the definition of a primary American interest? 

No, the Biden administration letting Venezuela walk between the raindrops corrodes an American foreign policy desperately in need of clarity. 

This post was originally published in The Hill.

Germany unprepared for new era due to Merkelism’s failures

By far the biggest blight on my political risk industry is the notion of elite capture. As analysts and firms meet with success, becoming more famous and recognized, they are invited to the same gatherings as the political decision-makers they analyze. All too often, losing perspective, they soon become part of the elite that they are supposed to study — cheerleaders rather than analysts.

This process explains why so many of my competitors were so wrong about Iraq, Afghanistan, Brexit and the rise of Donald Trump. They had long since ceased to objectively view empirical facts and instead became mouthpieces for the conventional wisdom of the global governing class.

A final, preeminent example of elite capture must be the chattering classes’ wrongheaded embrace of Angela Merkel, who just a year ago was lauded by the commentariat as the world’s greatest statesman. Luminaries such as The Economist, Chatham House and the Eurasia Foundation saw in the German chancellor a bastion of the Western-dominated, rules-based established order.

Even at the time, as a historian this struck me as a highly dubious political risk call, being more an example of elite capture cheerleading, rather than being based on empirical facts. When I would press other members of the commentariat as to why Merkel was the greatest thing since sliced bread, they would invariably speak in generalities, never giving me concrete examples of her historical accomplishments that could be assessed. This greatly aroused my suspicions.

A year on from her retirement, the historical reputation of the former German chancellor lies in ruins, as does the analytical reputation of those that unthinkingly, and in variance with the facts, championed her. Nowadays, Merkel looks a lot like 1930s British Prime Minister Stanley Baldwin, the leader who fiddled even as his country drifted into the greatest of dangers. At the time of her departure, polls showed that a stratospheric 80 percent of Germans approved of Merkel’s long 16-year reign. A year on, it is safe to say that the number is unlikely to be half of that peak.

The failure of Merkelism, as ever, comes down to major philosophical errors that informed her ultimately disastrous policies. First, Merkel — in line with standard Wilsonian and EU ideology — believed in the limitless power of dialogue. This terribly off-base view harks back to French philosopher Jean-Jacques Rousseau’s philosophy of the “general will,” the notion that, if well-meaning people talk for long enough, they will all eventually come to the same conclusion.

This is, of course, utter nonsense — a fairy tale that does away with the notion of countries and leaders having differing national interests that do not simply dissolve because of dialogue. Diplomacy is not an action verb; treaties and agreements, as all good realists know, merely codify power relations that are already established. To put it practically, Merkel’s 16-year dialogue with Russian President Vladimir Putin did not change his mind about the need to dominate his strategic near abroad.

Second, Merkel and Germany championed the notion that trading with other great powers had an inherently civilizing impact upon them; that economically linked countries did not geostrategically over time fundamentally oppose one another; and that revisionist powers could be transformed through trade into status quo powers. That every man is a conservative after dinner. Invariably, this was Germany’s excuse for its energy policy with Russia, as though trading with Moscow would do away with its very different national interests.

Third, Merkelism jibed with Germany’s inherently wrongheaded pacifism. The country’s governing establishment proudly (if naively) described themselves as a postmodern, post-national, even post-strategic power, as though mankind had somehow magically evolved and that “war was impossible on the European continent” (a terrible political risk call I heard all too often).

Fourth, Merkel’s Germany took a holiday from history, smugly believing it could somehow opt out of the larger global scene. In essence, Merkel outsourced Germany’s energy policy to Russia, its trade policy to China and its security policy to the US. This lack of agency has proven to be a catastrophic error.

All of these basic philosophical errors shaped Germany’s overall increasingly neutralist geostrategic orientation. Whereas the country had been firmly pro-Atlanticist and pro-American before the advent of Merkel, during her time in office it morphed into a mercantilist, commercial-first state, as its growing ties to Russia and China militated against its long-standing links with the US. As Germany drifted into neutralism, a strategic intellectual black hole opened over the whole of this past generation in Europe.

To put it mildly, all of these fundamental mistakes left Berlin horribly unready for the onset of the new era. During the Second World War, Winston Churchill was reportedly forced to send a security detail to defend his predecessor, Baldwin — a formerly popular appeasement premier — who needed protection from children who were throwing rocks at him. But the children were right; Baldwin was a major part of the cause of his country’s woeful state of unpreparedness. Today, Germany finds itself in a similar position in our new era due to Merkel’s disastrous tenure. The commentariat who celebrated her now need to explain why they were so wrong.

This post was originally published in Arab News.

How the global technocracy brought Sri Lanka to ruin

One of my favorite “angry young man” books is former New York Times correspondent David Halberstam’s “The Best and the Brightest,” a devastating portrayal of the American elite who set in motion the tragedy of the Vietnam War.

I once met the late writer, and he told me that the key to the story — and the cause of the American debacle in Indochina — was that again and again policy decisions were made to suit the needs and views of the Washington foreign policy elite — that the real negotiations went on in the White House, the Congress and the tasteful confines of tony elite gatherings at the Council on Foreign Relations.

The problem was that, while these policy deals made sense in this rarefied atmosphere, they had almost nothing to do with the facts on the ground in the faraway jungles of Vietnam. As Lawrence of Arabia believed, the world and its political and cultural conditions are specific; to miss this basic reality is to fail at political risk.

I was thinking of Halberstam and Lawrence this past week, as the crisis in Sri Lanka unfolded in all its ghastly aspects. Three months of economic chaos led thousands of protesters to dramatically storm the presidential palace, as scenes emerged of boys in T-shirts swimming in the opulent presidential pool. Reportedly, $50,000-worth of cash was found under disgraced President Gotabaya Rajapaksa’s bed.

So far, all this sounds like the standard emerging market crisis — a simple tale of domestic corruption and mismanagement, the negative effects of the pandemic crisis (which derailed Sri Lanka’s booming tourist industry) and hyperinflation (which hit a stratospheric 55 percent in June). But, upon closer inspection, this crisis is a lot more about global elite dysfunction, far more similar to the intellectual rot Halberstam so beautifully chronicled, than merely a garden variety emerging market hiccup.

For the political risk trigger event that sent Sri Lanka into a tailspin was not these usual problems, common to countries as far afield as Lebanon and Venezuela. No, what brought the crisis to a boil was the desire of the long-ruling Rajapaksa dynasty to curry favor with the international technocracy, making “Davos Man” happy by overnight transforming the island into a net-zero nation, doing away at a stroke with all the chemical fertilizers and pesticides absolutely necessary to make the country function economically.

In order for European greens to feel happy about the organic stamp likely to then be placed on Sri Lankan food exports, the Rajapaksas were prepared to wager the health of their entire economy. Anyone with a specific knowledge of the island would have known better, but as Halberstam would recognize, that is precisely the point.

The fertilizer ban came into effect in April 2021, only to be rescinded due to overwhelming nationwide protests in November of that year. But the damage had been done to the harvest. Only a trickle of chemical fertilizers made it to the paddy fields. The economic results were as predictable as they were devastating. Food prices in the country have risen by 80 percent. Over the past year, 500,000 Sri Lankans have been plunged into poverty. In 2019, the island produced 3.5 billion kilos of rice. In 2021, it is estimated that this yield plummeted by 43 percent.

But the gormless international technocracy is nothing if not unaware. While imposing its own radical green agenda on the island, bankrupting, impoverishing and nearly starving Sri Lanka, it is now busy at work on its next human-made disaster — placing fertilizer sanctions on Russia and Belarus, which between them produce 17 percent of the global total used for food (especially grain) exports. Just as natural gas is an exception to Western sanctions due to Europe’s obvious national interests, so food and fertilizer must not be denied to the developing world.

To counter this disaster, Sri Lanka called for a global conference to prevent famine. At it, Andrey Melnichenko, an owner of EuroChem, a leading fertilizer producer, called for the banning of such sanctions, which are “economic weapons of mass destruction” capable of causing the deaths of millions. Melnichenko was sanctioned despite leaving Russia 14 years ago and living since then in Switzerland. Does this make sense to anyone but the international technocracy?

The food disruption that fertilizer sanctions may cause could hit the Middle East and North Africa especially hard, causing national instabilities, a migration crisis (which ironically would devastate Europe) and radicalism in the region, the last thing anyone ought to want. These hare-brained Davos Man schemes — again, more about feeling good than actually doing good — may lead directly to chaos, famine and death; the humanitarian costs could be unbearable.

Tragically, Sri Lanka was indirectly a victim of an out-of-touch international technocracy’s failure to understand that what makes sense in a boardroom in Geneva or Frankfurt does not necessarily apply to the messiness of a complicated, heterogeneous world. One mistake is more than enough. Davos Man must not be allowed to sow chaos and famine in North Africa as well, merely to be seen to “do something” about the Russian invasion of Ukraine. The real world is simply too important to be left to such a discredited international elite.

This post was originally published in Arab News.

Boris Johnson’s fate awaits Joe Biden

On the face of it, President Biden and outgoing British Prime Minister Boris Johnson could not seem to be more different. The Oxford-educated Johnson, a former star journalist, has made a living due to his felicity with the English language, long an enemy of the syntax-mangling Biden. Whereas Biden is famously tribal and family-oriented — perhaps to his detriment in the case of his scandal-plagued son, Hunter — Johnson’s life has amounted to a series of romantic adventures. The American president, a lifelong politician, worked his way up the greasy pole of U.S. politics glacially, but Johnson shot to the top of the British political firmament like a supernova, only to crash just as spectacularly.

No, on the surface, it’s hard to think of two major Western leaders with such disparate biographies.

But this is to miss the dangerous commonalities between the two men regarding policy. The problems and dangers confronting their countries are frighteningly similar. For this structural, underlying reason, it is likely that Biden will be shown the door in two years’ time, just as Johnson was unedifyingly ousted this past week.

The policy similarities between the United States and the United Kingdom are striking. First, the two governments’ central banks — the Federal Reserve and the Bank of England — have both utterly lost the plot, printing more money than they ought to, setting free the beast of inflation. With double-digit inflation likely to occur in both countries soon, the consequent cost-of-living crisis that is brewing will be the bane of people’s lives, serving as a misery tax on the lower and middle classes. In both cases, given the banks’ independence, neither Biden nor Johnson, who remains as interim prime minister, could do much except haplessly cheerlead about their economies from the sidelines — even as everyone knows the governing establishments have ineptly driven the two economies into a ditch.

Second, compounding the first error, Biden and Johnson have chosen to increase government spending like a pair of drunken sailors. In Johnson’s case, ignoring the glorious fiscal record of Margaret Thatcher, he has championed ever-higher spending, while increasing the U.K.’s tax burden to levels not seen since the Labour governments of Harold Wilson in the 1960s and 1970s. Biden, in the damning verdict of former Clinton Treasury Secretary Larry Summers, has fiscally poured gasoline on a roaring fire, passing “emergency” spending bills totaling trillions of dollars as the U.S. economy bounced back from the pandemic. As such, this marked increase in federal spending was bound to spur inflation. If the Fed and the Bank of England are complicit in reigniting inflation, Biden and Johnson have served as willing accomplices.

Third, neither leader has used his mandate to increase productivity in his country by deregulating the economy. Given the policy gift of “Getting Brexit Done,” Johnson did not use his newfound policy freedom to make the U.K. a more competitive, deregulated country, able to better the regulatory practices of the next-door, sclerotic European Union. Instead, bored by economics, Johnson chose to swan around international conferences, far more interested in what was happening to Ukrainians than to his own hard-pressed people. Likewise, Biden often has seemed more worried about Kyiv than Kansas City. A captive of the far left of his Democratic Party, Biden has done his level best to increase U.S. government regulation, certainly never seeing a lighter touch as an answer to the brewing economic storm that confronts him. 

Fourth, both leaders have seemed clueless in grappling with the global energy crisis brought to a head by the Russo-Ukrainian war. In Biden’s case, he has nonsensically spurned the great gift of the U.S. shale revolution, wherein through a technical revolution (fracking), in terms of natural gas and oil, America had dramatically morphed from global energy mendicant to energy superpower. Instead, Biden has throttled the Keystone pipeline with Canada and forbidden the drilling for energy on federal land. Such energy self-harm has had obvious deleterious consequences, but the president has blamed energy companies for his basic misunderstanding of economics and the energy market.

Johnson, blithely thinking that the U.K.’s limited direct dependence on Russian energy would shield his country from the coming energy crisis, forgot to factor in the basic fact that the energy market is global in nature and that if prices in nearby Europe were to stratospherically rise (as they have), energy prices in Britain inevitably would follow. While Biden’s energy policy has made things immeasurably worse for America, Johnson’s non-policy has put his country behind the energy eight ball.

There is a final, gratifying, political commonality between the two. As happened in the stagflation-ridden 1970s — when President Jimmy Carter and Prime Minister James Callaghan were swept from power for failing to deal with these very same problems — it is overwhelmingly likely that both Johnson and Biden will soon find themselves out the door. Because of their failure to come to grips with the problems of their people, both will end up on the ash heap of history.

This post was originally published in The Hill.

The Day of the Narcissist: how Boris brought himself down

In The Day of the Jackal, the gripping thriller in which the far-right paramilitary Organization Armée Secrète hires an assassin to shoot French President Charles de Gaulle, author Frederick Forsyth says of his English gentleman killer: “Like all men created by systems and procedures, he did not like the unpredictable and therefore the uncontrollable.” In real life, it was precisely these qualities that did for British Prime Minister Boris Johnson. Rather than being laid low by a cabal of others, Johnson has been brought down by his worst enemy: himself.

As regular readers of this column know, we have scented blood in the water regarding Johnson’s political future for quite some time. The political risk key to understanding the outgoing prime minister, more than is true for most leaders, is a comprehensive study of his biography and psychology. For while many are in politics to further a particular ideology — the great British Prime Minister Margaret Thatcher and “Thatcherism” come to mind — Johnson, disturbingly in tune with this era of the selfie, seemed to revel in being in the arena only as a form of self-aggrandizement.

It was entirely predictable that, unlike the recent prime ministerial resignations of David Cameron, Theresa May, or indeed Thatcher herself — all of whom in the end went gracefully — Boris would cling on to power in Downing Street, his fingernail marks still on the walls as a torrent of over 50 Cabinet members, junior ministers and parliamentary private secretaries quit over his careless, sloppy, appointment of a government whip with a shady history of sexual harassment, only then to (predictably) lie about his knowledge of the man’s past.

A series of senior civil service figures, shocked into action, charged that not only had Johnson been well aware of this man’s murky proclivities, but that they had personally briefed him about the danger. Caught once again in a bare-faced lie, the great dissembler in the end simply couldn’t wriggle out of his predicament.

Even after the mortal damage of “Partygate,” when the prime minister had been caught prevaricating about attending lockdown parties while the rest of the country was sternly admonished to quarantine, Johnson had learned nothing and surely felt no genuine remorse —either for his baseline narcissistic view that the rules of life are for little people, or for his belief that it is always OK to lie when he is in a jam. Instead, in line with these ugly, egocentric days, the prime minister seemed to feel wronged in being held to any standards at all. For anyone who has followed Johnson’s career, analytically this was entirely predictable.

The most telling moment came when Michael Gove, the one truly able man in the Cabinet and its “big beast,” came to the prime minister in the time-honored manner of British political culture. The British constitution — not written down, but rather a series of centuries-old traditions, customs, and norms — dictates that a figure of such gravitas does precisely this. Gove, long a rival but lately an ally of Johnson, privately told him that the gig was up, that with the party in full revolt following his being caught in a lie yet again, he simply had to go.

As one dissenting Tory MP aptly it, placing the incident in the terms of a good Evelyn Waugh novel, Gove offered Johnson a metaphorical whisky and a revolver, and urged him to do the decent thing. But this was a ludicrous error: Boris has never done the decent thing in his entire life — why would he start now? Instead, he shamelessly drank the whisky and turned the revolver on Gove himself, accusing him of disloyalty.

Personally, I was unsure whether to laugh or to cry. I wanted to laugh, because over these past stormy months my firm has called the Johnson saga perfectly because of our forensic knowledge of his biography and his character (or lack of it). I wanted to cry because his brazenly selfish actions amount to another corrosion of the political norms that hold the West together. The very notion that there is anything beyond oneself — a cause, the people a leader serves, the country itself — seems increasingly to be a quaint anachronism. Yet without a higher belief, one is left only with the unedifying scene of Johnson pathetically clinging to office like a barnacle on the side of the ship of state, craving power for its own sake.

It is in this darker context that Johnson’s absolutely appalling resignation speech must be viewed. Devoid of any form of self-reflection, the outgoing leader (about to earn millions on the lecture circuit) blithely put his demise down to bad luck (“them’s the breaks”) and the “herd instinct” of his own party — who, like gazelles frightened by the wind, had turned on him for no understandable reason. Not once did he mention his double-standard view of a world in which he could turn No. 10 into a disco while the British public were unable to comfort family members dying of COVID, or his serial lying to cover his inept tracks.

No, an OAS assassin was not needed to bring Johnson down; by far his greatest enemy was himself. It truly was The Day of the Narcissist.

This post was originally published in Arab News.

Russia and the West. The world food system is imperilled by sanctions which owe more to feeling good than doing good

True to form, the G7, meeting in Bavaria, have just concluded with another sanctions-fest. A majority of the advanced industrialized countries curtailed all Russian gold purchases and are examining a cap on the price of Russian oil.

The previous sanctions on the Russian economy have led Moscow to default on its debt for the first time since the Russian Revolution. But the question remains, are these strictures hurting the rest of the world as much or more than the Kremlin?

During my Washington days, I always knew we had strayed from the serious when, flummoxed, my fellow decision-makers would look bleakly around the room at the Council on Foreign Relations, and then invariably recommend the same, one-size-fits-all policy; the great and the good would advocate sanctions as an all-purpose answer for dealing with any particularly knotty problem.

While such a policy suggestion almost never worked, it made political sense in a Washington sort of way. The beauty of such an outcome is that countries that enact sanctions are seen to be ‘doing something’ about an important foreign policy problem while at the same time what they were doing was sure not to basically alter the balance of forces involved in a particular crisis.

It was the best of all worlds for feeling good, rather than taking the risk of doing good. As a realist, I always hated when such an outcome (as it often did) came to pass.

Presently, you see a lot of this sort of posturing over the European response to the Russian invasion of Ukraine. It has triggered a virtual torrent of economic sanctions that have been imposed by Western countries against leading sectors of the Russian economy, as well as many specific officials and entrepreneurs.

Some of these sanctions have had an immediate effect on Russia’s economy, though none has of yet has caused Vladimir Putin to change his overall strategy in the country; only military facts on the ground have done that.

As such, it is fair to say that the sanctions have yet to ‘work’ in policy terms, though they still might over the long term.

However, what is not in doubt are that the unintended consequences to Europe’s sanctions-happy approach are growing with each new round of sanctions. In general, a policy problem is becoming more and more apparent: Profligate sanctions are beginning to boomerang, affecting the state of the European and world economy at least as much of that of Russia.

Sanctions, like all policy alternatives, must be judged on their specific policy merits; they are neither always useful nor always counter-productive. However, a Western Europe less keen than the US and others to help Ukraine in the armaments sphere must not substitute inaction in one policy area with hyperactivity in another.

For example, the prospects for a food crisis – caused by unthinking sanctions unwittingly damaging the fragile global food eco-system – are increasingly being discussed, caused by both a reduction in grain exports from Russia and Ukraine and even more so by an unprecedented increase in prices for fertilizers previously supplied from Russia and Belarus.

For the facts make it clear that present EU sanctions are exacerbating an already dire situation regarding ongoing threats to the global food ecosystem. Presently, global hunger levels are at a new high. In just the past two years, the number of severely food insecure people has doubled, from 135 million (pre-Covid) to 276 million.

More worryingly, more than one half of these live in famine conditions, an increase of an astonishing 500 percent since 2016.

Into all this real peril, mineral fertilizer has played a decisive role in alleviating disaster. In fact, its global use over the past sixty years has been a significant buttress for the global population increasing from three billion in the early 1960s to the eight billion of today.

A decisive 50-70 percent of the people on the planet are currently being fed as a result of mineral fertilizer use. There is no getting away from its importance, or from the fact that at present Russia and Belarus are both key players in the global fertiliser market, with a combined share of 16 percent of global pro-duction of mineral fertilizers and 22 percent of their export.

The EU’s feel-good sanctions have already heavily affected the global supply of mineral fertilizers. One example will suffice. Eurochem, is the world’s second largest (by sales) mineral fertiliser company. Headquartered in Switzerland, the company was founded by Russian businessman Andrey Melnichenko. Eurochem is one of only three companies in the world that presently produces fertilizer in all three nutrient groups: nitrogen, phosphate and potash.

European sanctions have hit the company at almost every conceivable level, in terms of finance, sales, logistics, production, and procurement, decimating this vital conduit for food production.

For, contrary to the EU’s insistence, all of these sanctions have obviously materially affected the company’s prospects. In fact, EU sanctions have led to a decrease in overall mineral fertiliser sales sufficient to feed 30 million people.

And this is only as of now. Overall, due to EU sanctions, more than 20 percent of the global fertilizer trade is under threat, potentially affecting an astounding 750 million people.

Of course, there is a distinct geopolitical component to such folly. Limiting the supply of the industry could lead to the threat of crop failures and famine in the most fragile countries in the Middle East and North Africa, with catastrophic consequences.

Refugees could well flood across the Mediterranean, leading to further political radicalization in an already politically shaky southern Europe. As for North Africa, anarchy and chaos worse than the 2011 Arab Spring could easily take place in famine-stricken countries if the food crisis gathers pace. Radical Islamists under the banner of jihad may well come to power there, a nightmare scenario for a world that presently has more than enough problems.

Beyond the horrendous human suffering, Europe may well come to reap the whirlwind of its sanctions-happy folly.

What should the UK do about all this?

First, it should encourage its European partners (and to do so itself) to look specifically at every sanctions plank and package from the common-sense, realist notion of whether it helps or hinders global stability.

In the case of indirectly sanctioning the mineral fertilizer industry, London should strongly encourage Brussels to look at fertilizer and food security as a humanitarian issue and remove such strictures from imperilling the global food ecosystem.

Second, if the EU fails to do so, the UK – freed from going along with the EU’s often nonsensical, Wilsonian foreign policy initiatives – should chart its own course, making it clear that it will not follow the folly of its allies in thinking that all sanctions are somehow inherently good, effective, and in the UK’s interests.

No one is doubting that the Putin regime must be checked, due to its tsarist revisionism. The question is one of policy, of how to do this in the best, most effective way, one which will not leave millions of people in danger of starvation.

This post was originally published in Conservative Home.

Goodbye globalization, welcome to the new age of insecurity

The Austrian psychoanalyst Theodor Reik put it best when he said that history never repeated itself, but it did often rhyme. This has become the unofficial mantra of my political risk firm. All of our competitors in the industry tend to assess the same three areas — macroeconomics, military strategy, and politics and geopolitics — but we add a critical fourth in that we also use the historical lens, applied historical experience, to make sense of the world.

As one era gives way to the next, such a broader view becomes absolutely central. For the current global data points of Ukraine, the Sino-American cold war and the rise of endemic inflation, important as they are on their own, make sense only in the larger context — that we are transitioning from one era (the Age of Globalization 1991-2022) to the next (the Age of Insecurity 2022-).

Every era has its truisms, intellectual rules that make sense in the present and seem eternal, but actually work only within a specific place and time. The just concluding Age of Globalization is no exception to this historical rule. Just days before the Russian invasion of Ukraine (which my political risk firm called correctly to happen in February months ahead of the fact), an old banker “frenemy” of mine from my St. Andrews University days, chokingly angry that I had had the effrontery to say war was imminent, laid out the truisms of the fading era as well as anyone could.

First, he told me I was all wet, and that there never would be an attack, as I had always overrated the military, cultural, political and geopolitical components of decision making, when in essence everything in the world came down to an economics-first basis.

Second, Russia would never endanger its lucrative energy trade with Europe by invading Ukraine, just as the Sino-American cold war competition could be managed as both sides just benefited too much from the one global supply chain to ever endanger it for paltry Taiwan. In essence, he was saying political risk in the world didn’t really matter, and certainly not compared with these towering economic incentives.

Third, he (by now shouting) went on to say that nobody really cared where things were made, that security of supply was an afterthought compared with the imperatives of economic rationality. Why should Germany buy oil and gas from more politically malleable Qatar and America, when next-door Russia would do nicely and more cheaply? He said I had never understood how globalization worked, would have egg on my face in days, and that he looked forward to laughing, and hung up.

The invasion started the next day. As you might guess, I have yet to hear back from him.

But my frenemy did me a huge analytical favor in laying out the shibboleths of his age, truisms that were becoming increasingly outmoded. For what he missed was that the age itself has been changing, rendering the verities of the old age intellectually irrelevant in the new one. For 30 years (1991-2022) the Age of Globalization was predicated upon the truisms that we lived in an economics-first world, where security of supply was an afterthought, where political risk concerns were peripheral.

In essence, the status quo powers of the West made a gigantic geostrategic bet that with the enrichment of the East and the developing world that globalization had wrought, those regions could be bought off, their non-economic concerns assuaged by their newfound riches. As the American philosopher Ralph Waldo Emerson put it: “Men are conservatives when they are … most luxurious.”

But the “every man being a conservative after dinner” theory does not explain the salient data points of our new era. Russian President Valdimir Putin made it crystal clear he had imperatives other than economics in mind when invading Ukraine. Germany’s energy plight after the invasion painfully refutes the false notion that security of supply is irrelevant, just as the ongoing jockeying for global primacy between Washington and Beijing makes a lie of the notion that political risk is peripheral to the world’s concerns.

Indeed, in making sense of the new age of insecurity we must start in the graveyard of the ruined shibboleths of the old, dying era. We now live in a time where there is a multiplicity of primary motives for a country’s action; economic imperatives matter, yes, but also political, national, cultural, historical, and ideological forces guide decision-making, often being of more importance than a crude analysis amounting to little more than Marxian economic determinism.

Security of supply is a great imperative of our new time; suddenly we care intensely where our pharmaceuticals come from, our rare earths are mined, our computer chips are made, and the origins of our energy supplies.

Lastly, the world has at last woken from its holiday from history, its deep intellectual slumber that political risk was somehow peripheral from governmental and commercial decision-making, rather than being a central component explaining how the world does (and does not) work. The historical lens makes it clear that the old era, and the old ways of looking at the world, no longer explain very much. The companies and countries that grasp the new truisms are going to have an overwhelming advantage in our new time.

This post was originally published in Arab News.

France’s parliamentary election ruins Macron’s coronation

As a historian, I have always found the end of Percy Shelley’s magnificent poem “Ozymandias” almost unbearably moving as it makes plain that even towering greatness has a finite shelf life. Shelley’s conclusion goes like this:

“And on the pedestal, these words appear:

‘My name is Ozymandias, King of Kings;

Look on my Works, ye Mighty, and despair!’

Nothing beside remains. Round the decay

Of that colossal Wreck, boundless and bare

The lone and level sands stretch far away.”

No one even vaguely remembers who the once-great Ozymandias was, and that is entirely the point: fame is fleeting.

It would do the recently re-elected French President Emmanuel Macron a world of good to take to the study of the fatalism that characterizes 19th-century Romantic poetry. It is a quality that the young, imperious Macron will have much need of in his second term. Ignoring the French electoral tradition that newly elected presidents are given a pliant, party-friendly parliament to work with, the French people once again confirmed the more general suspicion that they vote for Macron, but only due to a lack of alternatives.

The month’s second-round vote left Macron’s supporters with 245 seats in parliament, Jean-Luc Melenchon’s united leftist forces with 131, Marine Le Pen’s far-right group with 89 seats, and the old Gaullist Republicans bouncing back a bit from their disastrous presidential showing with 61 seats. As 289 are for required for a clear majority, Macron’s party has rather shockingly been denied an easy time of it in his second term.

Three major points arise from this fascinating outcome. First, the political horse-race aspects of what just happened must be taken into account. Macron, once again, was punished by the French people for his arrogance. Taking a majority for granted after his comfortable 59-41 percent victory over Le Pen in the presidential run-off, rather than getting into the trenches to campaign, Macron instead went swanning around the world, for instance meeting Ukrainian President Volodymyr Zelensky in Kyiv.

To put it mildly, this was not a good look for the “Jupiterean” (his word, not mine) leader, playing into the hands of the narrative of both the far-left and far-right that Macron cares far more about foreign policy glory than the needs of a French public increasingly besieged by the cost-of-living crisis that is bedeviling the West. Simply put, the French people wanted their vainglorious leader to be taken down a notch for his arrogance.

Remarkably, that old firebrand Melenchon managed to unite the historically fractious left in terms of a coherent parliamentary coalition. Interestingly, in percentage terms, the French left did about as well it always does. But because it did not this time suicidally run various leftist candidates against each other, its overall success rate in terms of members of parliament (which is of course the name of the game) was much better. While stopped short of his Utopian dream of winning the parliamentary election outright, Melenchon did prevent his nemesis Macron from winning an outright majority. The question ahead is can the left function as a disciplined, coherent opposition, or will it all fall apart once again, as it so often has since the days of Robespierre, Danton, and Desmoulins? Melenchon, flush with victory, has a Herculean task ahead of him.

However, and surprisingly, perhaps the biggest winner of the night was the far-right National Rally party of Le Pen. Altogether more disciplined and focused than her diametrically opposed far-left rivals, Le Pen’s share of MP’s geometrically rose from a negligible 8 to an impressive 89. Far from their being finished, both the recent presidential and parliamentary elections amount to the best electoral outcomes the far right has ever managed. It will remain a significant political force over the coming years.

Second, beyond the horse race, these seemingly seismic results will nevertheless mean little in policy terms in the short run. Again, France’s monarchical Fifth Republic leaves the president as the undisputed master of foreign affairs, whatever the parliamentary results. Even in terms of domestic policy, Macron is sending out peace feelers to the establishment, center-right Gaullists, who — while they are unlikely to join Macron’s centrists in a formal coalition —have said they will support the French administration when they agree with it in policy terms. Macron’s flagship domestic reform, which necessarily raises the retirement age from 62 to 65 in order to reflect demographic and economic reality, is therefore still likely to pass due to this informal arrangement.

However, there is a third and final, Ozymandian warning from all this that Macron would do well to heed. Already bleeding support just weeks after his re-election, the French president must batten down the hatches as a huge political risk storm is about to blow. Macron has little control over the ever-expanding inflation rate/cost of living crisis plaguing his people, what happens in Ukraine, or if the Germans will get their act together and help Paris forge a more effective EU.

In every case he is a bit player, just as in every case he will be blamed by his people if things go wrong. Macron’s days as the great Ozymandias are already coming to an end.

This post was originally published in Arab News.

New members will strengthen NATO’s raison d’etre

Asked what the purpose of NATO was, the Western military alliance’s first secretary-general Hastings Ismay came up with one of the greatest sound bites of all time: “To keep the Russians out, the Americans in, and the Germans down.” These days we would more politely say “integrated” of the Germans, but the British diplomat’s pithy strategic point still holds 70 years later.

That is why I have always been so furious with Utopians of both the left and the right who could not see the enduring realist value of NATO as outlined by Lord Ismay. Instead — like tech staff trying to push endless unnecessary computer upgrades on the rest of us to justify their useless positions — they fruitlessly spent their time trying to reinvent the wheel, the “new reasons” for NATO to exist. Over the past generation, too many analysts have urged the world’s most successful military alliance to expand willy-nilly, to the point of endangering its self-evident usefulness.

Instead, the central realist question must be asked: Does the proposed membership of Finland and Sweden add value and security to the most important military alliance in the world, or would they drain away its vital essence? For realists care little about any prospective member joining NATO; instead, they must care about the continued viability of NATO itself. It is for precisely this reason that taking in these two long-standing Baltic neutrals serves Western interests.

It is one of a series of Russian President Vladimir Putin’s strategic miscalculations that has made a gift to NATO of Swedish and Finnish accession. Sweden has been neutral since the days of Marshal Bernadotte turning on his former master Napoleon Bonaparte in the early 19th century. Likewise, Finnish neutrality, a strategic outcome of the Russo-Finnish war, has for decades been ensconced as a basic fact of life in Europe. Yet both countries’ long-standing neutralist orientation came undone in a matter of months, as the Kremlin’s invasion of Ukraine made Nordic neutrality seem an invitation to further Russian aggression, rather than a guarantor of Sweden and Finland’s security.

Public opinion, long strongly in favor of continued neutrality, shifted dramatically following the Russian invasion. A Yle poll in Finland in May found a decisive 76 percent in favor of the country’s accession to NATO, an increase from 60 percent in March. This mightily contrasts with the minority 20 to 30 percent of Finns who favored joining the alliance before the Russo-Ukrainian war. Likewise, in Sweden, a Demoskop poll in April found a majority of 57 percent of Swedes in favor of joining NATO, a marked increase from just 42 percent in January. The first hard-headed reason for the West to favor NATO’s expansion in this case is that public opinion (which will have to drive defense increases) is solidly in favor of the accession.

Second, the two Nordic countries pose no democratic or economic questions as to whether they fit into the Western alliance. Both are uncontroversially strong Western democracies with first-rate, advanced economies. Neither will need — as has shamefully happened in the recent past — nursing to join an alliance they are simply not ready for, in economic or democratic terms. Instead, both have the immediate economic capacity to increase their defense spending and meet NATO targets.

Third, both Sweden and Finland already have a strong history of working with the alliance, through their membership in the Partnership for Peace program since 1994 and as members of the EU since 1995. The two Nordic countries have extensive experience of coordinating with the alliance in the Balkans, Libya and Afghanistan, which will make the upcoming transition smooth.

Likewise, Finland is already spending 1.9 percent of its gross domestic product on defense and this is projected to increase above NATO’s required 2 percent threshold by 2023. Sweden is more of a problem child here, currently spending only 1.3 percent on defense, though it has projected meeting the 2 percent target by 2028. Given the leverage the alliance has, it must pressure Stockholm into making a commitment to meet that target now, rather than after its accession. The last thing NATO needs is even the hint of more strategic free-riders weighing it down.

Fourth, by merely looking at a map, it is at once obvious how the Nordics’ accession makes good geostrategic sense from the West’s point of view. These two countries’ accession will help NATO with greater access to the Baltic Sea, already an area of primary alliance interest due to members Estonia, Latvia and Lithuania. Sweden’s navy, Finland’s air force and both countries’ highly capable intelligence services (especially adept at gaming out Russia) are all strategic pluses for the alliance.

Finland also has a 1,340-km border with Russia, which will be forced to further dilute its waning overall troop numbers to defend a demarcation line that until now it has been able to take for granted. Further, Finland’s active duty troops are augmented by a whopping 900,000 capable reservists, as the country still maintains conscription.

For all these many practical strategic reasons, NATO accession for Sweden and Finland amounts to a strategic opportunity for the West and an own goal for Putin. Bless him, Lord Ismay would heartily approve.

This post was originally published in Arab News.