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.

How we knew Boris Johnson’s days were numbered

There is a hypocrisy to my profession that I find especially galling; the rush to protect at all costs the feelings of mediocrity. All too often, those who are analytically on the money are pressured into somehow not mentioning this salient fact, if only to spare the feelings of the legions of inept snake-oil salesmen out there. On the other hand, the third rate disappear into a sea of one another, a school of fish of the overrated, who as quickly as possible change the subject from their egregious errors.

This is a terrible way to get better at anything. Political risk analysis resembles nothing so much as method acting. At the height of his powers, even the great Marlon Brando knew that he could continue to get better only if he dispassionately addressed what he did right in his performances, as well as what he had gotten wrong. In our case, as regular readers of this column well know, in getting “partygate” right months ago, there is much to be learned.

This past week’s Conservative Party leadership vote in Britain greatly favored the incumbent. First, with only a few hours between the referendum on Boris Johnson’s leadership being announced and the vote itself, rebels had almost no time to organize. Second, the prime minister started with the support of the 140 Tory MPs who were already on his government’s payroll — members of the Cabinet, junior ministers and parliamentary private secretaries. As Johnson needed only half of the MPs plus one to side with him (180), this was a monumental advantage. Third, the rebellion was largely leaderless and without focus, so there was no single person or idea to rally around.

Despite these awesome advantages, the result was a disaster for the PM. In the end, fully 41 percent of Tory MPs (148) voted to remove him. To put this in the proper historical context, his Pyrrhic victory came by the exact same percentage as that of Margaret Thatcher in 1990; two days later, she was unceremoniously turfed out of No. 10. Strikingly, it appears that fully three-quarters of Tory backbench MPs, who were free to vote as they chose, opted to rebel. As we have said for months, and again just last week, the prime minister was always likely to win the vote “ugly,” and be mortally wounded while carrying on. All of this has come to pass.

What did we see that so many missed? A real understanding of Greek classics, Johnson’s personal biography and the history of the British Conservative Party were essential. As the Greek philosopher Heraclitus put it so well: “Character is destiny.” A person making it to the top of politics in any country does not change their spots upon getting there. More often, overconfident in their abilities, they instead double down on seeing their character as an essential advantage that explains their worldly success.

In the case of Johnson, this classical way of looking at the world is confirmed regarding partygate, when he was on the one hand urging people not to visit their dying loved ones, while on the other he treated No. 10 as a nightclub. Yet, speaking just before the vote was called, the prime minister astonishingly said: “I’d do it again,” in reference to a drinks party he attended for a leaving colleague while the rest of the country was locked down. The gloomy Greek notion that people tend to learn nothing about their failings gave us a unique insight into how Johnson would react to partygate.

Second, the prime minister’s biography made it crystal clear that partygate was merely the foreground — Johnson was always overwhelmingly likely to get himself into some sort of moral difficulty. Whether being fired for lying while a high-flying journalist, his famously chaotic private life or his breezy, well-documented unconcern for the details of governing, his track record showed this was a train wreck always waiting to happen. In the end, Johnson’s present difficulties come down to the fact that the world changed, while he stayed the same. A cavalier disregard for the rules seemed interestingly eccentric in quieter days. During the mass tragedy of the pandemic, it instead seemed elitist, hypocritical and almost diabolical.

Third, knowledge of how the Tory party works is essential. It has been the most successful political party in modern history for one quality above all: A ruthless unsentimentality. Johnson’s ties to the Conservative Party have always been transactional. He did not work his way up through the ranks, but (as ever) jumped to the head of the line for the simple reason that he brought them electoral success in leftist London and broke the parliamentary logjam over Brexit in 2019. Now, with his winning ways deserting him, as Labour has an average eight to 10-point lead over the Tories in opinion polls, look for the party to defenestrate him within a year.

We cannot count on Johnson to do the decent thing and resign because, all his life, he has never done the decent thing. Instead, an enervating war of attrition is likely to follow, which could well gift the Labour Party victory in the next general election. All of this has been clear for a while, but only if we look at political risk through the right lenses.

This post was originally published by Arab News.

Due to ‘partygate,’ Johnson is about to run the gauntlet

As a form of military punishment during the Thirty Years’ War of 1618 to 1648, soldiers fighting for the Protestant cause were condemned to “run the gauntlet.” Forced to scamper for their lives between two rows of their colleagues who were armed with clubs and sticks, the punishment only came to an end after they had sustained myriad blows and somehow made it the length of the murderous line. The metaphor that developed from this punishment now accurately describes the state of Boris Johnson’s world.

Sue Gray’s recently published report on “partygate,” even in its muted, bureaucratic language, confirmed what we all knew before: The UK prime minister and his senior staff treated No. 10 Downing Street as a sort of nightclub, all the while hypocritically telling the long-suffering British public to stay away from loved ones, even if they were dying. Johnson’s lifelong, habitual disregard for the rules looked very different from the prism of the pandemic: Narcissistic, elitist and, worst of all, unserious.

Now Johnson’s real punishment (as well as his only chance at political redemption) actually begins. Step one is the looming vote of confidence that Johnson’s partygate follies are about to trigger, possibly as soon as next week, and at the latest at the end of June. The numbers to keep in mind are 54 and 180. If 15 percent of sitting Tory MPs (or 54 members) submit letters of no-confidence in Johnson to the head of the 1922 Committee of backbenchers, an internal leadership challenge is automatically lodged. Given that 30 have already announced they have done so, this hurdle will be easy for Johnson’s enemies to vault.

However, the 180 MPs (or half the parliamentary party) needed to throw Johnson out of office is a much more difficult proposition altogether. For one thing, fully 140 Conservative MPs are already “on the payroll,” serving the prime minister either in Cabinet or in more junior positions as parliamentary private secretaries. While surely not all of them will vote for Johnson, they have a great incentive to do so, in order to keep their present jobs. As such, reaching the magic 180 number seems highly unlikely. One needs only to remember the 2018 example of the hapless Theresa May, who — despite her obvious ineptitude — managed to survive a confidence vote, winning the backing of 63 percent of her MPs.

Step two in Johnson running the gauntlet is surviving the impending very bad news that is likely to follow the two by-elections of June 23. These electoral contests, which are called to fill vacant parliamentary seats, are often used both to test the national mood and to protest against the present government — two factors working mightily against the PM.

The Wakefield by-election in West Yorkshire tests the proposition that Johnson can hold onto the “red wall” of formerly safe Labour seats that have been attracted by Johnson personally, even as they were repelled by the leftward lurch of the Labour Party under its former leader, Jeremy Corbyn. At present, polling seems to show that the Tories are very likely to lose.

The Tiverton and Honiton by-election in Devon on the same day could amount to another stake in Johnson’s heart. Normally the safest of Tory seats (in 2019, the Conservative candidate had an almighty 24,000-vote majority), here it is the resurgent Liberal Democrats who are mounting a serious electoral challenge. If the Tories shockingly lose both, Johnson is not long for the premiership, though he will have a year’s grace to any further leadership challenge if he sees off the present one.

By far the best argument Johnson has left in the face of his many detractors is that he, and he alone, has the electoral magic to deliver victory for the party, as he did twice in leftist London and momentously in 2019, when his election win delivered Brexit, breaking the deadlock in parliament. If Johnson no longer has the electoral pixie dust — instead dragging the party down in the general disgust at his antics — look for the unsentimental Tories to ditch him.

The most likely outcome from Johnson’s running of the gauntlet is precisely what this devilish punishment was initially devised to provide: A bloodied, bruised victim, staggering on from the leadership contest, further bludgeoned by by-election disasters, wounded, but not quite dead.

And still ahead of the PM would be the latest in the interminable investigations into his obviously lamentable behavior: In this case, the Commons Privileges Committee investigating whether he intentionally misled parliament. As this is almost impossible to prove (even though it is highly likely) and as the punishment is so draconian (he would have to resign immediately), Johnson will scrape this, too, wounded as he is.

But at a certain point in running the gauntlet, it is not the individual blows that tell, but their collective force. May did indeed survive the initial leadership challenge against her, just like Margaret Thatcher “won” the first round of her Tory leadership contest in 1990. But both were dead on their feet, soon removed from power. Once again, this is what will happen. For all intents and purposes, Johnson’s premiership is at an effective end. It is only a matter of the blows and of time.

This post was originally published in Arab News.

Western establishment will pay a political price for inflation

Easily the best part of being managing partner at a major political risk firm is the life it has given me, the fascinating places I have seen and the people I have met. One of the most interesting was the late Paul Volcker, legendary chairman of the US Federal Reserve from 1979 until 1987. It was Volcker, along with Ronald Reagan, who tamed the beast of endemically high inflation in America in the early 1980s, setting the country on a course for unprecedented prosperity in the two generations since.

While on a trip to give a keynote speech in Zurich for a Swiss bank, I found myself caught in a snowstorm, and spent a day in a glorious Swiss chalet entirely alone with the former Fed chief. It was a day I will never forget. We had a lovely lunch and talked for hours about the world, philosophy, history and our shared love-hate relationship with the Republican Party.

After some gentle prodding on my part, Volcker told me about how he came to Reagan about America’s last inflation crisis. He said he told the president that he could crush the monster, but it would take double-digit interest rates, inevitably lead to a deep recession and surely cost Reagan the midterms and possibly even his reelection. According to the Fed chief, Reagan amiably patted him on the knee and said: “You leave the politics to me, Paul; just destroy inflation.”

Of course, everything came to pass just as Volcker had predicted. The country endured the worst recession since the Great Depression and the Republican Party was punished in the 1982 midterms. But Volcker and Reagan succeeded in taming the inflationary beast. By the time the 1984 presidential campaign began, America again had the wind at its back and Reagan was overwhelmingly reelected, winning 49 of the 50 states.

What I love about this story is that neither man sidestepped the political risk that was hanging over them as they did the right thing in policy terms. Double-digit interest rates could cripple the economy and certainly do not make any political figure popular, at least in the short term. However, it is far worse in political risk terms to either actively ignore endemically high inflation or passively fail to do much about it, so scared are leaders of raising interest rates and slowing growth.

Yet, in the late 1970s, the anemic Western establishment did not do much of anything, for a combination of these two reasons. The year 1979 is instructive. Then, Valery Giscard d’Estaing’s France suffered through 10.7 percent inflation, Jim Callaghan’s Britain 13.4 percent and Jimmy Carter’s America 11.3 percent. By haplessly failing to tame the beast, all three found themselves out of power by mid-1981. In their place came a very different set of leaders (Francois Mitterrand, Margaret Thatcher and Reagan), who cemented their more successful administrations not by running away from or ignoring the inflationary problem, but by coming to grips with it.

At present, our mediocre establishment in the West looks more like Carter than Reagan. Joe Biden insisted for months (as though magical thinking did away with economic realities) that persistently higher American inflation was “transitory” — an error the American people are unlikely to forget. At the same time, he was nonsensically pushing his highly inflationary “Build Back Better” program through Congress. The neutral Congressional Budget Office said this would cost more than a gargantuan $5 trillion in real terms. In the end, Biden was saved from his folly by Democratic Sen. Joe Manchin of West Virginia, who sensibly enough was against the program as it was highly inflationary. Biden was stopped from pouring more gasoline on a roaring fire, but the damage to his status as a responsible steward of the economy has been monumental.

While Biden has been channeling his inner Carter, British Prime Minister Boris Johnson is behaving more like Callaghan than Thatcher. Instinctively, the PM’s response to almost any economic obstacle is to open the British checkbook. Although up until now somewhat restrained by his seemingly more Thatcherite Chancellor Rishi Sunak, Johnson has personally shown little interest in the cost-of-living crisis increasingly bedevilling his people, being more involved in the heroic plight of the Ukrainians. But in this week’s highly inflationary giveaway to help the British people with their out-of-control energy bills, Johnson’s spendthrift instincts have become dominant — just as the Bank of England has horrifyingly admitted that inflation will crest at more than 10 percent in the near term.

There is a political risk price to be paid for such incompetence and that is at the ballot box. Much as the inconsequential Carter and Callaghan administrations are now trivia questions, look for both Biden and Johnson to rather quickly end up on the ash heap of history. For there is one final thing Volcker told me, as my car at last came to take me away from our shared chalet to the train station. “Remember that inflation affects literally everyone, hitting the working poor hardest as a tax they just cannot bear,” he said. “They will rightly vote to save themselves from people who do not realize this.”

This post was originally published in Arab News.

Germany’s bellwether regional election lays bare the coming post-Merkel political order

As the pioneering psychologist Carl Jung put it: “There is no birth of consciousness without pain.” Thus, lost in the jumble of the recent North Rhine-Westphalia regional election, clear, indelible patterns emerge that are likely to shape German politics for the next generation.

It is hard to overstate how important NRW is to Germany as a whole, amounting to the country’s California. Traditionally the economic powerhouse of Germany and the birthplace of its heavy industry, it is also the country’s most populous state. If NRW were a separate country, its €733 billion GDP would make its economy Europe’s sixth-largest, bigger than that of Sweden, Turkey, or Switzerland. So it is entirely safe to call the state’s regional election a mini-national referendum on the state of German politics.

Traditionally, NRW has been a Social Democratic Party stronghold, as the party has run the place for much of its 77-year postwar existence. However, with the general decline of heavy industry, NRW has become more competitive politically, with the center-right Christian Democratic Union, the other “volkspartei” (the two dominant post-1945 political parties) currently running the region. Thus, given its size, economic importance, and political competitiveness, NRW is as close as we are likely to get to a national litmus test of the state of play in German politics.

The results of last weekend’s regional election are singular in that they underscore and further the seismic political trends that are already slowly remaking post-1945 German politics.

First, the results continued the trend of Germany moving away from the old two-party SPD-CDU system toward a multiparty free-for-all. Together, the two old volkspartei managed only 63 percent of the vote, forcing either into coalition with the kingmaker Greens, who tripled their regional vote to 18 percent. Along with the current federal “traffic-light” coalition (red for the SPD, yellow for the economically liberal Free Democratic Party, and the Greens), the new era is bound to be one of intricate coalition politics, moving away from the old system of two-party domination. In other words, Germany is becoming more like the Netherlands and less like the US in terms of its politics.

Second, the historically dominant CDU continues to recover from its near-death experience after being led by the hapless chancellor-candidate Armin Laschet during the last national election in September last year. With the able and energetic Friedrich Merz now at the helm, the CDU have righted the ship in both the NRW contest and in an earlier regional election in Schleswig-Holstein, Germany’s most northerly state. Taking a leading 36 percent of the NRW vote, CDU state premier Hendrik Wuest is likely to continue in power, in coalition with the Greens (also the ruling political configuration that came out of the Schleswig-Holstein vote).

Third, the Greens continue their rise, on course over time to supplant the old SPD itself as the dominant center-left party in the German political landscape. Dynamically led by two of the country’s most popular politicians, Foreign Minister Annalena Baerbock and (especially) Economics Minister Robert Habeck, the Greens are the only member of the national traffic-light coalition having any regional political success.

Fourth, it increasingly looks as if Chancellor Olaf Scholz’s September 2021 win was a fluke. The German media had (rightly) eviscerated both Laschet and Baerbock, the other two leading chancellor-candidates, and had not yet gotten around to really scrutinizing Scholz. As the last man standing, and despite the SPD’s general downward trajectory, he managed to scrape together a victory that now seems merely an aberration, as the SPD’s decades-long slide in the polls has resumed. Despite Scholz personally campaigning, the SPD’s 27 percent vote share in NRW was its worst showing there in postwar history, as had also been the case in the Schleswig-Holstein election.

The issue that is lifting the Greens and deflating the SPD is one and the same: Germany’s conduct regarding the war in Ukraine. While Scholz was given good marks for his decisive if abrupt moves to end Angela Merkel’s ruinous almost two-decade holiday from history (by significantly agreeing to raise German defense spending to non-laughable levels, to diversify its energy imports and to spend an extra €100 billion on modernizing its decrepit ammunition stocks), he has been lambasted for his hesitancy since. While the core Anglosphere countries (US, UK, Canada, Australia) have decisively come to the aid of Kyiv, Germany has only grudgingly gone along with heavy arms transfers, and gained none of the policy credit.

Instead, Scholz’s hesitancy has started a broader strategic postmortem in the German and international press on Ostpolitik, the SPD’s failed signature postwar policy based on the belief that increased trade with Russia would over time cool the fires of revanchism. As a leading proponent of Ostpolitik right up to February, Scholz is on the back foot politically, even as he was finance minister in the last sleepy Merkel government.

The contrast with the forceful, Wilsonian liberal internationalism of the Greens is stark, and is greatly playing to the younger party’s advantage. The failure of German foreign policy over the past generation is a millstone likely to sink Scholz over time, as well as hasten the birth of a new German politics. 

This post was originally published in Arab News.