After the Queen: Charles has a tough act to follow. His weaknesses will make it harder

Even though Her Royal Majesty Queen Elizabeth II was 96 when she died Thursday, I find the news almost impossible to comprehend. 

Growing up as a college, and then graduate, student at the University of St. Andrews, where Will and Kate met, I found the Queen was a living part of every day. Her picture was ubiquitous, in every building. St. Andrews was a conservative place, with more than its share of the high-bred folks, all of whom were lesser planets orbiting around the sun that was the royal family. Even as I marched into the university’s fabled debate society to have at it with my competitors in front of thousands, a rousing “God save the Queen!” capped every Latin chant. Elizabeth II was everywhere.

However, like something so omnipresent, it is easy to lose sight of what the Queen managed to personally do for the monarchy. In political risk terms — and I’ve taught the history of the British monarchy to British students, some who couldn’t believe that a mere American could fathom 1,000 years of their history — she has been one of the best rulers the United Kingdom has ever had.

Three of Elizabeth’s characteristics stand out. First, and she learned this at the feet of her adored father, George VI: The Queen was a plodder, doggedly going ahead with her public relations duties, come hell or high water, whether she was happy or sad, fulfilled or neglected, popular or out of fashion. In her quiet, dutiful way, she followed in the footsteps of both her father and her grandfather, George V, two popular kings. The other branch of the Windsor family — typified by the callow Edward VIII, the Queen’s tragic sister, Margaret, and now by her grandson Harry, the Duke of Sussex — might be more fun to hang out with at a party, but none of them could be counted on to go the distance, serving their country day in and day out, whatever the social and political weather. Doing this over many decades rightfully made Elizabeth II a legend.

Second, Elizabeth understood that the magic of the monarchy meant that she carefully tended the distance between the rulers and the ruled. Prince Philip’s ill-advised foray into television in the late 1960s, ludicrously using a BBC documentary to feebly attempt to make the royal family look “ordinary,” flopped miserably, just as did the “It’s a Royal Knockout” game show in the 1980s, brainchild of Prince Edward, the Queen’s youngest son. In both cases, the Queen was outwardly loyal to her errant family, but must have inwardly cringed. Elizabeth understood that people do not want the monarchy to be “just like us.” For regal majesty to survive, there simply must be distance.

Third, Elizabeth was rightfully a conservative in this most conservative of institutions. I am not talking specifically about her politics — which may well have been centrist — but rather how little her politics mattered. She knew, to the marrow of her bones, that the last thing the country wanted was a political monarch. The tragedy of her early life was precisely that her soon-to-be Nazi sympathizing uncle, David (Edward VIII), was far too outspokenly political for his (or former prime minister Stanley Baldwin’s) good. When Edward’s forced abdication to marry Wallis Simpson came about, Elizabeth’s brave but untested father, suffering from an almost debilitating shyness that came from his pronounced stutter, assumed a throne that both his wife and daughters came to believe killed him prematurely, thus setting the young Elizabeth on the throne.

For all these reasons her son, now Charles III, has an almost impossible act to follow. But worse, Charles’s present weaknesses will be painfully illuminated by his mother’s great strengths. Where Elizabeth talked about general duty to “the firm’s” basic public relations calling, Charles is more interested in either specific idiosyncratic projects (his decided views about architecture, or organic food) rather than the slog of opening regional swimming pools in Swindon. Where Elizabeth understood the majesty of monarchical distance, Charles talks unknowingly about making the whole edifice more accessible. Where no one knew the Queen’s political views, Charles is on record for hectoring ministers of all parties about their duty, which he seems to believe is to be a rather odd Liberal Democrat in his own image. All of this is dangerous, both for Charles specifically and for the furtherance of the monarchy as a whole.

Elizabeth II played her part so perfectly that, as the decades passed, she as an individual seemed to merge with the very institution of the monarchy itself; remember her first premier in the faraway 1950s was the great Winston Churchill. The problem with this is that the monarchy, as with every other great man-made institution, must be bigger than the person themselves; even kings and queens are just passing through while the Crown is forever. 

In ruling so adroitly for so long, Elizabeth II’s success itself, and the ease with which she seemed to pull the whole thing off, makes following her little more than accepting a poisoned chalice. Her success will perhaps be Charles’s great problem.

This piece was originally published in The Hill.

Tough times ahead for Britain’s new PM

In the spring of 1945, after towering over the American political landscape for a generation, Franklin Delano Roosevelt died suddenly at his retreat in Warm Springs, Georgia. At the time, Vice President Harry Truman was up on Capitol Hill, sharing a customary drink with the Congressional leadership at the end of a hard week (yes, opposing leaders actually socialized with one another in those faraway days).

Abruptly summoned to the White House, Truman ran straight into the president’s wife, Eleanor, who told him the news. Shocked into his basic Midwestern decency, Truman asked if there was anything he could do for her. She wisely replied: “No, Harry, is there anything we can do for you? For you are the one in trouble now.”

I thought of this historical vignette last week as Liz Truss succeeded the shambolic Boris Johnson as prime minister of the UK. When Britain’s period of official mourning for Queen Elizabeth comes to an end and the business of government resumes, rarely will a new political leader have been confronted with such a bulging and dangerous in-tray.

Following the semi-criminal failure of Europe and the UK to worry much about their energy policies for the past few decades (indeed, just days before the Ukraine war began, Berlin was still pushing to get the Nord Stream 2 gas pipeline operational, which would have preposterously increased its energy dependence on Moscow), knock-on inflation marching in tune with stratospheric energy price rises has been the doleful result — both on the continent and in the UK.

The beast of inflation, now fully loosed from its cage in Britain, sits at an unhealthy 10.1 percent. The specter of stagflation, and a permanent cost-of-living crisis, beckons. Indeed, in political risk terms, if both Europe and the UK do not master (and quickly) the current economic crisis, the grim reality of overall absolute decline awaits them.

Calmly (a blessed relief from Johnson’s rollercoaster tenure), Truss has set out a four-pronged strategy for dealing with the calamity. First, her administration intends to freeze average annual household energy prices for the next two years at £2,100 ($2,400), including an already agreed-upon energy rebate, with equivalent support for businesses for at least six months. The cost will be a monumental £150 billion. This unprecedented bailout dwarfs the COVID-19 furlough bailout of £69 billion, and will be paid for entirely through new borrowing.

Unlike her Labour Party opponents, Truss refuses to implement a windfall tax on energy companies, on the ground that it would discourage their future investment in further energy projects. This massive spending gamble is designed to allow the Bank of England to more slowly raise interest rates (mitigating the coming recession) and to cap overall inflationary pressures themselves. On her very first day, Truss has wagered the overall success of her premiership on this one, overwhelming economic bet. She is all in.

Second, Truss wants to make sure the UK never again finds itself the prisoner of its energy supply. Fracking, outlawed under the Johnson premiership, will be allowed, in an effort to increase domestic energy production, as will further drilling for oil and natural gas in the waning but still profitable North Sea fields.

Third, the new prime minister is betting on aggressive growth as the ultimate way out of the crisis. Despite the mammoth new borrowing, Truss is pressing for large tax cuts amounting to £30 billion to free up the animal spirits of British business and extricate the UK from its parlous economic state. She has called upon Jacob Rees-Mogg, the new business and energy secretary, to drastically cut government regulation and further unshackle the British commercial sector.

Fourth, with rising Conservative Party star Kemi Badenoch the new trade secretary, Truss will try to bank the winnings from Brexit. I have long been exasperated by both sides of the Brexit debate, locked as they are in their deafening self-regarding theologies. In policy terms, the issue is simple. If, in the medium term, Britain manages to secure free trade deals with the parts of the world that are actually economically growing (India, the US, the Anglosphere countries), then Brexit will have been worth it as the UK looks beyond an economically sclerotic Europe for its economic future. If it does not manage to do so, then Brexit will have failed, and all Britain will have done is alienate its largest trading partner.

On these monumental policy issues, the Truss leadership will rise or fall. During her inaugural session at Prime Minister’s Question Time in the House of Commons, Truss’s tone was strikingly different from Johnson’s. Gone was the bombast, the showmanship, the sly humor, and the loose relationship to the facts. In their place were sobriety, a low-key confidence, a reassuring calmness. In both cases, the style of the two leaders belies reality. For all his gaudiness, Johnson’s actual policy agenda was incredibly boring; he was a vanilla, garden-variety Macmillanite. On the other hand, beneath Truss’s dullness lies a radical, updated, Thatcherite policy agenda that will either actually work or obviously fail. In terms of substance, as was true for Truman, stirring days lie ahead.

This piece was originally published in Arab News.

Europe lacks a captain for its drifting ship of state

One of the things I have learned from my decades in the political risk business is that experts usually ignore the fact that specific people truly make policy.

It is easy, and intellectually correct, to focus on the grand historical forces of analysis: to look at things like the global macroeconomic situation, the overall geopolitical state of global power, the abiding ideology of the times. All of this is absolutely necessary to get right, and almost never makes it into the facile and simplistic column inches of the mainstream media, whose lack of genuine depth is increasingly becoming a global problem.

But there is another, historical level of analysis that eludes most of my political risk competitors, and explains their dire records on predicting what will come next in the world; they simply do not understand that specific people, with their individual strengths and weaknesses, are in charge of the world. Really understanding these specific people, as well as comprehending the general state of the planet, is absolutely necessary for getting political risk right.

US Supreme Court Justice Oliver Wendell Holmes understood this perfectly when he said of Franklin Roosevelt that he had a second-class intellect but a first-class temperament. It is not that Holmes thought FDR was stupid; he did not, as Roosevelt was one of the smarter men ever to have been president. It is that Holmes correctly saw that the key to Roosevelt’s unparalleled political success lay instead in his character, his almost feline ability to sense, in any social situation, what others wanted, and to know what he was prepared to give. This specific attribute of a specific man is not studied by anyone other than historians (and not by enough of them, either) but it is a vital piece of the puzzle in making specific sense of perhaps the most important person of the 20th century.

All of which brings me to the present becalmed state of the declining great power that is Europe. Yes, there are a legion of structural reasons for the continent’s present malaise: It lacks a common army to matter in our increasingly rough-and-tumble geopolitical world (as well as, in its decadence, the will to have one); it lacks the economic dynamism to grow its way out of macroeconomic difficulties, with far too many entitlements and far too few working hours; it lacks an overarching country able to drive the European process forward, instead having a hodgepodge of great powers (Spain, Italy, France, and Germany) constantly vying for advantage.

All of this is true and all of this must be thought about far more often by a mainstream media that mindlessly cheerleads for Brussels, without wondering why the continent perpetually disappoints in great power terms. But there is also the historical, specific, personal level of assessing the continent’s present leaders that is hamstringing Europe, dooming it to decline even faster than all the more general factors would allow for.

Currently, perhaps only vainglorious, (overly) confident, bold French President Emmanuel Macron has the temperament to move the European project forward. However, his specific political problem is that the French people have just knobbled him in parliamentary elections, denying him a majority precisely because they feel he spends too much time swanning around the world making grand pronouncements and too little time governing France.

Nor is German Chancellor Olaf Scholz the answer. He won office precisely because he was inoffensive, cautious, and meek; in other words, he most resembled the suicidally beloved outgoing Angela Merkel. While having the qualities of your local branch bank manager might work in calmer times, in our age of perpetual crisis such attributes prove to be self-negating.

The other lesser European powers are also of little help. Prime Minister Pedro Sanchez leads a rickety coalition government in Madrid, behind in the polls to his center-right People’s Party rivals. For these specific political reasons, his famously insular country, never keen to take center stage in Europe, can be of little help, even if it wanted to dramatically move the European project forward.

The same is even more true for Italy, where outgoing premier Mario Draghi’s unelected administration — parachuted in to somehow govern an increasingly ungovernable country —failed to provide Rome with the stability that had been confidently expected; it fell in just a year and a half. Instead, Italy’s new (and at least elected) government will come from the right, with populist Giorgia Meloni the putative new premier. While she is unlikely to bite the EU hand that is feeding her (with Brussels set to provide Rome with a gargantuan €200 billion in post-COVID aid), her basic euroskeptic ideology means she is more likely to block Brussels having a common approach (over immigration above all) than to champion the European project.

For all these specific historical and political reasons, as well as grand world historical forces, the easiest bet in the political risk world is to see Europe as an idea whose time has passed. The only way this downward trajectory would be altered is if Europe produced a leader with a first-class temperament, and a decisive political majority to match. In the world we actually live in, that simply won’t happen.

This piece was originally published in Arab News.

Why Biden’s mid-term ‘comeback’ is just wishful thinking

Climate analyst Bjorn Lomborg put it perfectly when he said: “Wishful thinking is not sound public policy.”The vast majority of political risk mistakes are made for this one simple reason; most analysts confuse what they would like to happen with what is likely to happen.

This is a primary analytical lesson the in-the-tank leftist mainstream American media have yet to learn. Functioning as little more than the propaganda arm of the Democratic Party — while arrogantly professing to represent some sort of objective truth (i.e. all sane people agree with them) — the popularly derided press continually confuse what they would like to happen with the facts dancing in front of their eyes. This explains their excitement at Joe Biden’s political “comeback,” and what it means for the revival of Democratic hopes in the November mid-term election.

The standard media argument, backing up their favored Democratic Party, goes something like this: “The overturning of Roe vs. Wade is unpopular, as a majority of Americans support abortion rights, which plays to the White House’s advantage. The president has things moving again with finally passing a watered-down version of his grab-bag progressive spending bill, allocating $740 billion for climate change projects and to lower medical costs. The forgiveness of billions of dollars of student loan debts is immensely popular, particularly among young millennials who will now vote for the Democrats in droves. The FBI raid on Mar-a-Lago has exposed arch-enemy Donald Trump once again as a menace to society at large. All of this will allow us (er, I mean the Democrats) to overcome the historical odds and actually win the mid-terms.”

Let us pick this pathetic excuse for political risk analysis apart, line by line. First, it is true that protecting abortion rights of some kind (though not as expansively as Democrats advocate) is popular in the US. However, few people vote as a result of this issue. Abortion rights is about the fifth most important motivational issue for voters, nowhere near in the league of the dominant cost-of-living crisis as a concern. So, at best, this favors the White House only at the margins.

Second, in this time of rampant 8.5 percent inflation in July, hovering near a multidecade high, Biden’s stubborn insistence on ruinously spending money doesn’t just seem partisan, it seems dangerous. By a long way, voters are most concerned about inflation and the economy, and how the Federal Reserve and the Biden White House incompetently let the inflation genie out of the bottle, two generations after Fed chair Paul Volcker and Ronald Reagan tamed the savage beast. Instead, Biden first belittled the problem, then said inflation would be transitory, then said why don’t we focus on job creation numbers instead? Wrong, wrong, and wrong. The country blames the White House for the scourge of inflation simply because the economic illiterates in the administration have continued to spend money like drunken sailors, all reality to the contrary.

Third, the utterly unfair (I personally paid back a treasure trove of loans by working hard and am utterly mortified at being made of fool of by a White House shamefully looking to buy votes) student loan “forgiveness” policy is obviously mis-named. The loans don’t simply disappear like a magic trick, leftist fantasies to the contrary. No, they form part of the general government debt, to be paid down in taxes by non-college graduates and those of us who already paid their loans — while the millennials, whose work ethic collectively is appalling, take another “experiential holiday.” This desperate effort to buy the young’s electoral loyalty is unlikely to work, because statistically they tend to be too lazy to vote in decisive numbers, and the rest of us are furious at the unfairness of this latest progressive ploy.

Fourth, while it appears Trump has (yet again) behaved badly over keeping classified government documents, he is hardly alone. Former presidents are often at war with the government over which documents are theirs and which belong to the country. Former Clinton national security adviser Sandy Berger went so far as to stuff some unflattering documents in his pants and socks (you simply cannot make this stuff up) only to be found out as he attempted to slink away from the National Archives. And don’t get me started on the nauseatingly privileged treatment Hillary Clinton was given by the FBI over her illegal home-brew server. In these other cases, the FBI did not storm the homes of the guilty, as they did with Trump and Mar-a-Lago. Ironically, this double standard actually bolsters Trump’s standing, as his charge that there is one set of rules for Democrats and another for Republicans sadly looks all too true.

For all these reasons, don’t buy the hype about the Biden “comeback.” My firm, which called the 2020 outcome perfectly (down to the tie in the Senate) has the GOP still likely to take the House by 20-30 seats with the Senate still too close to call (today we have it at 50-50). When wishful thinking replaces genuine thinking, you get stories such as these.

This piece was originally published in Arab News.

At last Italy is about to return to democratic government

It is a remarkable, overlooked fact that Italy hasn’t governed itself in a democratic sense for quite some time. Incredibly, Silvio Berlusconi was the last prime minister who explicitly ran for the job at the head of a major political party, in 2008. Since then, Italy’s ramshackle governance has been a case study in the EU elite’s ruinous quasi-colonization of the country.

Most recently, this anti-democratic scenario reared its ugly head again. Following the failure of two governments led by the unelected Giuseppe Conte and supported by the out-of-their-depth Five Star movement, yet another unelected EU functionary was parachuted in to save the day. Mario Draghi, the former successful head of the European Central Bank, was summoned by his EU masters to take charge in Rome.

His government was designed to steer the country through the pandemic, and also to wisely allocate the more than 200 billion euros coming Italy’s way in terms of the EU’s massive aid package — the country’s last, best chance to drag itself out of its generations-long economic torpor. For the astounding reality is that Italygrew at average annual rate of zero percent between 1999-2016; this amounts to nothing less than a lost economic generation. Above all, the EU’s mandarins believed the highly respected Draghi would be able to provide stability until the next election, then scheduled for 2023.

But, as the Scottish poet Robert Burns put it, the best laid schemes of mice and men go oft awry. Like most Western governments, Draghi made monumental mistakes over the pandemic, opting for (unsurprisingly given his pedigree) a top-down, draconian approach that until recently has still forced Italians into the dinner-theater of wearing masks, long after the rest of Western Europe came to its senses. The economic losses have been immense, as has been the loss in the presumption of individual liberty.

But Draghi’s biggest failure is that the EU’s anti-democratic power play has failed in the most basic terms, in that he did not provide the stability that was the main point of his technocratic government in the first place. Having served only 17 months, on July 21 he was forced to resign as the populist Five Star movement, the rightist, populist Lega, and Berlusconi’s Forza Italia parties undermined him. Without a democratic mandate, Draghi’s government proved the opposite of what the almost-always-wrong Brussels elite had confidently predicted; it was fragile rather than strong, as it simply had no sort of popular mandate to sustain it when times got tough.

It is little wonder that the main beneficiary of the crisis, Giorgia Meloni and her rightist, populist Brothers of Italy Party, have risen in popularity as the only major party that shrewdly chose to stay outside Draghi’s technocratic government. She leads a surprisingly united Italian center-right alliance, also comprising Matteo Salvini’s populist Lega and Berlusconi’s centrist party.

An Aug. 12 Politico poll of polls has the Brothers of Italy with 24 percent of the prospective vote, the Lega at around 14 percent, and Forza Italia at seven percent. The fractured center and center-left (comprising five parties) together have only 45 percent of the vote between them. There is little doubt the Italian right are on course for a famous victory.

The deal welding them together is that the party in the alliance with the most votes will select the new prime minister, an eminently democratic point of view. Meloni therefore finds herself in the driver’s seat for the job, because she leads in terms of the democratic vote. The irony is that while Meloni is trying to quell fears about her party’s quasi-fascist lineage, it is she who has been the true democrat.

Meloni, who personally gets on quite well with the outgoing Draghi, intends to follow in his economic footsteps, carrying out Italy’s recovery plan in order to receive the cascade of promised EU funds. She is likely to also push for conservative policies such as curbing immigration and flattening the tax rate for lower earners, while increasing funding for child-friendly policies (nursery schools and child benefits).

On the foreign side, given her close ties to the global conservative movement, Meloni will find the progressive Biden administration a tough partner to deal with ideologically. Likewise, within boundaries the haughty Brussels functionaries will reap what they have sown, due to Meloni’s social conservatism, latent euro-skepticism, and plans to unilaterally curb immigration. However, given Italy’s monumental and growing public debt rate (an Olympian 152.6 percent in the first quarter of this year) there are limits to how far Rome can go in biting the hand that feeds it.

Nevertheless, for all the challenges ahead, the good news is that Italy has repudiated the notion that it is a quasi-colony of the EU. Now it is up to Meloni to govern more effectively than her hapless technocratic predecessors, and thus avoid the full colonization by Brussels that economic collapse would surely bring.

This post was originally published in Arab News.

Nothing can save Democrats from midterm drubbing

July 2022 was the moment when the American mainstream media finally became completely unhinged, wholly untethered from reality, being exposed as nothing more than the propaganda arm of the Democratic Party.

The tipping point came over the media urging the American people not to believe what their lying eyes were seeing. US gross domestic product numbers showed a 0.9 percent drop in growth for the second quarter of 2022; as this was the second consecutive quarter of negative growth, this meant that America was in recession.

But the mainstream media was having none of this, as such a poor economic outcome would shift Democratic prospects in the upcoming midterm elections from dire to apocalyptic. So, instead, despite many earlier clips existing of the very same reporters saying throughout their careers that two quarters of negative growth amounted to “the R word,” they blandly echoed the out-of-touch White House in arguing that somehow, this time, the two negative quarters did not amount to a recession, but something else. Of course, this fooled no one, merely proving that the leftist mainstream media has given up any pretense to objective reporting. All of this would be funny if it were not so depressingly Orwellian.

But the media was far from done. Instead of dwelling on the reality of the US being in recession, it wanted us to focus on “Joe Biden’s big political comeback.” For, this past week, Sen. Joe Manchin of West Virginia, the pivotal swing vote in the evenly divided Senate, finally agreed to vote with the rest of his colleagues in passing the White House’s Inflation Reduction Act, which is essentially a watered-down version of the earlier $1.75 trillion Build Back Better bill, a grab-bag of progressive programs.

The new bill aims to raise $739 billion in revenue, even as it adds spending of $433 billion over the next 10 years. The new revenue will come from a 15 percent corporate tax rate (not the greatest idea in a recession) and increasing the much-feared Internal Revenue Service funding by $80 billion in order to shake down the taxpayers for an estimated $124 billion. In turn, the White House will use the new money to pick winners and losers in terms of green industries — a corporatist boondoggle at which governments throughout the social democratic West have historically proven themselves to be absolutely awful at managing.

From the mainstream media’s cheerleading point of view, this amounts to a huge win for Biden’s floundering administration — a political comeback has begun and just in time. It never seems to dawn on the commentariat that taxing businesses is not a magic answer to raising more revenue; instead, they are retarding the very growth sources that the country presently desperately needs. Also, the big state/big spending model that the new bill is part of is precisely why the beast of inflation has loosed its chains and is now devouring the Western public’s standard of living across the board. If fiscal profligacy is the ultimate problem, more fiscal profligacy cannot be the answer.

And despite the mainstream media never being burdened by self-awareness (with New York Times columnist Paul Krugman, totally wrong about the rise of inflation in the first place, telling CNN, in true Marie Antionette style, that the people he is talking to are “doing pretty well” economically), the American people know better. The math is simply the math.

Beyond the recession, inflation hit a 40-year high of 9.1 percent in June, proving to be not as “transitory” as the White House had earlier assured us it would be. A June Newsmakers poll found that a dominant 76 percent of registered voters are very concerned by inflation’s rise, with 72 percent saying it amounts to the country’s largest problem (a whopping 62 points higher in concern than COVID-19).

Despite Biden changing his tune over inflation many times — including calling it transitory before blaming it on Vladimir Putin and then greedy energy companies — the American public has made up its mind. In the same Newsmakers poll, a plurality of 42 percent say Biden is the person most to blame for inflation getting out of hand. This tracks with a July RealClearPolitics poll that found that only 33 percent approve of Biden’s handling of the economy, while a decisive 64 percent disapprove.

It is little wonder that, as he is blamed for causing the biggest problem America is presently saddled with, Biden’s approval numbers — the single most important factor in the past generation in determining the outcome of midterm elections — are subterranean. The present RealClearPolitics average of polls finds the president with only a 40 percent rating, while 56 percent disapprove of his performance. Even worse, a July CNN poll found that a decisive 75 percent of Democratic-leaning voters want someone other than Biden to run in 2024, up dramatically from only 45 percent in February.

Ignore the present desperate cheerleading; wish fulfillment must not take the place of genuine, facts-driven political risk. Biden and the Democrats are set to lose the House by a hefty margin of about 30 seats. No amount of whistling past the graveyard can wish away the ghost of inflation.

This post was originally published in Arab News.

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.