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.

As it defies Putin’s pressure, Britain should back Kazakhstan

Shrewd, knowing, screen legend Marelene Dietrich put it well when she said, “It’s the friends you can call up at 4m that matter.” Having just emerged from its own crisis, the government of Kazakhstan has – to the surprise of many – answered the world’s wake-up call.

Despite its close ties to Russia, it has steadfastly refused to align itself with Moscow over the Ukrainian war, instead neutrally offering its offices to broker a peace deal, even as it refuses to recognize the two breakaway Ukrainian provinces, Luhansk and Donetsk, as separate countries as the Kremlin desires. Instead, Kazakhstan has called for Russia to consider dialogue and peaceful settlement of the war, noting its close ties to both belligerents.

To put it mildly, this is not what Vladimir Putin expected to happen.

Going even further, Kassym-Jomart Tokayev, the Kazakh president, has decisively stated that he is cooperating with Volodymyr Zelensky of Ukraine in coordinating humanitarian programs, while at the same time urging Putin to consider an immediate cease-fire.

In wisely stating that “a bad peace is better than a good war”, Tokayev has somehow kept his country’s traditional, multi-vector foreign policy intact, stressing Kazakhstan’s strategic autonomy despite the immense pressures of a war next door.

However, in turn, Kazakhstan has recently sent London a middle-of-the-night wakeup call of its own. How it responds will condition the UK’s relationship with this pivotal, resource-rich state, and the whole of the strategic Central Asian region, for decades to come.

Kazakhstan has had many achievements over the first 30 years of its independence. With its first president, Nursultan Nazarbayev, at the helm, the country embarked on a programme of strong economic reform and (as a consequence) enjoyed sustained growth.

Equally importantly, Nazarbayev fashioned a true multi-vector foreign policy (with Kazakhstan keeping Russia, China, and the West at arm’s length) despite living in the rough and tumble geostrategic neighborhood of Central Asia. In so doing, he safeguarded Kazakhstan’s strategic autonomy, despite long odds.

Nevertheless, violent riots erupted in the country on 2 January, tragically claiming over 200 lives before they were quelled. While the immediate cause of the disturbance was a rise in fuel prices, the underlying reasons for the unrest also included income disparities, crime, and extremism. Obviously, there is a clear need for further economic reform (moving definitively toward a post-Soviet, market-based economic model) and tackling income disparity, while addressing poverty alleviation and battling corruption.

Yet, as so often is the case, the events of January 2022 are in danger of being grossly misunderstood by a British foreign policy establishment who would rather feel good than do good. In this case, two bastions of old-style, brain-dead, Wilsonian thinking, Chatham House and Dame Margaret Hodge, the Labour MP, have reflexively called for sanctions against Kazakhstan, willfully ignoring what is actually going on in the country.

In the case of Chatham House, in a recent report they admit that the chaotic events of January make it hard to justify specific sanctions on the country due to the violence that occurred. Instead, they confusingly and nonsensically base their preference for sanctions as a policy response on the very income disparity that the Tokayev administration has made it a priority to alleviate.

Disregarding the strategic opportunity that the reformist government of Kazakhstan represents, Chatham instead adopts the usual, dreary paint-by-numbers approach to its domestic upheaval.

As for the scandal-plagued Dame Margaret, the old adage about glass houses and stones would seem to apply.

Rather than discussing her own massive peccadilloes – ranging from making $100 million from the sale of her family’s industrial conglomerate, STEMCOR, in Belarus to China, or to address her horrendous disregard for the horrific abuse of children in Islington’s children’s houses while leader of its council from 1982-92 – somehow, some way, she has the nerve to find Kazakhstan worthy of her moral disapproval.

Instead of seeing further developing ties with Kazakhstan as Britain’s strategic partner in Central Asia, the serially tone-deaf Labour politician is looking for redemption in all the wrong places.

Yet beyond the immediate crisis and the unthinking, censorious comments of its detractors, there is significant, deceptively good political risk news emerging in Kazakhstan. First, despite 30 years’ worth of worries about the durability of the Kazakh state itself, it came through its trial by fire, with the country’s integrity and cohesion never in doubt even as the disturbances raged.

Kazakhstan as a political entity has proven itself to be a genuine, organic country, with a genuine sense of nation and nationhood.

Second, in acting decisively and resolutely in the crisis, Tokayev has made it absolutely clear that he will direct the country’s revived economic reform programme, tackling the very practical underlying issues that people in Kazakhstan most care about, regarding inequality, corruption, and fuel prices.

Moving beyond the first era of Kazakhstan’s independence, it behooves the UK to be part of the second chapter in the country’s ongoing saga. Proposed British sanctions take none of these political risk realities into account, and would only heedlessly damage the UK’s interests.

Kazakstan is doing precisely what every foreign investor has been dreaming of (given its tremendous economic potential and boundless resources of coal, uranium, cotton, and copper), by stabilizing the economy and society. It is committed to maintaining its multi-vector foreign policy, just as the West has great need for friends in Central Asia following the chaotic American pull-out in Afghanistan.

For instance, Kazakhstan has the world’s 12th largest proven oil reserves (approximately amounting to 30 billion barrels), with oil output trebling since 2001, to 1.8 million barrels per day, and going up. Given the grievous need for Europe to find new, safer sources of supply, Kazakhstan amounts to a vital future oil source for a West sorely in need of energy diversification.

Also, in energy terms, Kazakhstan’s uranium will be badly needed as the nuclear industry may experience a renaissance, given the need for clean energy and more, for energy coming from stable, pro-western countries.

Instead of ostracizing Kazakhstan, it is entirely in the UK’s interests to diplomatically ‘lean in’, supporting Kazakhstan’s government. It would seem obvious (though sadly it is not) that when a longstanding ally, through the pressure of overcoming internal crisis, is committed to doing precisely what London urges it to do, more strategic support is both the proper and the practical foreign policy response, not less. It is past time for London to answer Dietrich’s proverbial 4AM phone call.

This post was originally published in Convervative Home.