Monday, 8 February 2016

Back Again

I am recently back to writing the blog – I’ve been busy doing essays all week, literally dawn (or about 11.00) until dusk, as I started them a little late. Curiously enough, what I was writing about then is a situation that many people reading this will be familiar with (OK, I flatter myself – I’m sure both of you will be familiar with it). I have essentially been examining the impact of what happened when a bunch of do-gooding (or imperialist, depending who you ask) neo-liberals from the Western world decided to impose their ideas on everyone else without asking them first.

This is not regarding Europe, but Africa – in the 1980s, the World Bank and various Western donor nations had it revealed to them, probably from on high, that they could not possibly be objectively wrong about anything, ever, and so decided to foist a load of Structural Adjustment Programmes on backwards countries in Africa to help them develop – because otherwise they would obviously breed themselves into starvation. Structural Adjustment Programmes essentially set policies for African countries in return for money – shrinking the size of the state, expanding the private sector and letting the free market take control.

Such was their belief in their own ideas that they overrode almost all prior research to enforce this worldview (e.g. a UNECA report published in 1980 whose findings suggested that a higher population would actually benefit Africa by providing more labour for agriculture).

A prominent venture capitalist living the Ugandan dream
After 15 years of this chemotherapy, Africa had become a capitalist powerhouse – if you count rapacious warlords employing child soldiers as budding entrepreneurs. From Freetown to Monrovia, Kinshasa to Mogadishu, the continent decided to engage in commercial activity, exchanging diamonds and oil for AK47s. Governments also increasingly saw the advantages of ‘capitalism’, sometimes even collaborating with the aforementioned entrepreneurs to bring ‘capitalism’ to their servile populaces in tandem (Sierra Leone and the Congo especially).

But seriously, after exporting death and corruption to an entire continent in exchange for loans which could never be repaid because of other clauses in the agreements (which guaranteed floating exchange rates), the international community came to an inevitable conclusion: they had been right all along.


The rash of warfare that was now sweeping Africa was the Malthusian crisis that they had been warning against for so long, caused inevitably by overpopulation and climate change. So, obviously the Structural Adjustment Programmes had just been too little, too late, and it was time to start all over again – with more structural adjustment (although they were not stupid enough to call it the same thing this time, as their representatives would have been lynched in the streets of any African city they tried to sell it to).

A report that the World Bank commissioned in the mid-1990s to evaluate the effects of Structural Adjustment was noticeably upbeat on the subject, noting what a success structural adjustment had been in Tanzania (while neglecting to mention what had happened pretty much everywhere else).

I digress, but this episode does have a serious point. The governments, economists and policy-makers that gave the gift of their knowledge to Africa are exactly the same people that we are dealing with now (or the same type of person – the actual protagonists from the 1980s are probably mostly dead by now). These people are so arrogant and so imbibed on the stagnant air of their own elitist bubbles that they have lost touch with reality – it simply would not occur to them that they might be wrong – and if it did, they would do exactly the same thing anyway, because to do otherwise would involve losing face and prestige.

The tepid feedback loops of SW1 have been running this country for decades now, and nothing has got noticeably better. They are so sure of their own group-think fed opinions that they are willing to impose them unilaterally on entire nations (hell, entire continents) – and it does not matter what anyone says against them. One African negotiator, on leaving a discussion room in Nairobi to the settle the terms of aid to his country, summed it up to a journalist – trying to get the opinions, thoughts and research of people in his country (including various Western expert academics and anthropologists who had done much more detailed work than the broad-brush approach of the World Bank) across to these people was impossible. It was like trying to win a shoot-out where your gun clicks and theirs fires.

It is this pure dogmatism that we have to fight during this referendum – the establishment decided that Europe was right several decades ago. Changing their minds would literally require an act of God.

In a way, you could even say that our democracy has become Africanised, in that our establishment will say or do anything at election times to drag themselves past the post – and then try to rule as dictators as much as possible afterwards. The centralisation of political parties, the use data analysis techniques and the degradation/co-option of the media have definitely been a bad thing for democracy.

So what are we to make of Cameron’s new deal? I’m not going to bother going through it – plenty of other bloggers have savaged it better than I ever could. Three things do stand out, however. Firstly, it is pretty pathetic, even as far as blank white pieces of paper with ‘peace in our time’ go. This particular piece of paper is particularly blank and particularly white - more of a strand of grass than a fig leaf. Secondly, it is not legally binding, whatever Cameron says (lies) – exactly the same sort of guarantee was given to the Czechs to make them sign the Treaty of Lisbon, and the European parliament rejected it. Thirdly, though, and far more interestingly for me, is why did he bring this back? What the hell was he thinking? What is his game plan? Does he even have a game plan?

Sir Lynton Crosby - I'd ask for at least a Lordship for this one, personally
I am genuinely tempted to speculate that this is an instance of David Cameron actually trying to do something himself. Like a toddler trying to help with the washing up, he has totally cocked up everything, and now mummy is going to have to come in and put everything right. I can almost picture him walking out of the negotiations and getting straight on the phone: ‘Hello, is that Lynton?… ok, sorry, Sir Lynton… well, yes, I’ve done something terrible. You’re going to have to help me.’ [Lynton has been contacted already according to Sky News]

The trouble is that you cannot negotiate something once you have already made out to the other side that you will want the outcome that they want at any cost – that is simply not how bluffing works. This is what the Africans discovered with the Structural Adjustment Programmes. They needed the Western money regardless – and so they were forced to accept the Western conditions. Similarly, Cameron wanted to stay in the EU regardless – and so was forced to accept whatever the EU gave him.

Now, to me, I don’t really care what he could have got if he had driven a harder line (I’ll leave that line of reasoning to Vote.Leave, provided they still exist at time of writing) – I want to leave regardless. But these negotiations are undoubtedly important for those of us trying to exit. The ‘Leave’ campaign now has a lead of 9 points according to a recent poll, and I highly doubt that it was the repetitive immigration rhetoric from Farage that gave them this. I don’t want to argue about numbers, but clearly, the deal or lack thereof, is important to people.

If this is the final deal, that would imply that Cameron wants an early referendum. That he is willing to offer the electorate a pile of crap instead of something that even pretends to give us some of what was meant to ask for says a lot. Of course, he could bend to popular pressure and go fighting for Britain again, or manufacture a hitch in the deal (but how is he going to get a better deal out of the EU after he has already backed this one?) – but what he delivered was so mediocre that any further battling for Britain will not convince anyone, because even in the eyes of the media, it will look like ants scrapping over a dung hill.

It is extremely different for the media to portray the situation otherwise because the material he has given them is simply that weak. The media are prolific spinners, but there are limits – if Michelangelo had been given a single blue crayon to decorate the Sistine Chapel, I doubt we would have heard of him today.

Of course, there might be a much more subtle, devious play in the offing. It is possible, but I am tempted to remember the utter disarray during the Scottish Referendum, which totally caught Westminster napping. That, and if Lynton is only going to be hired now, it suggests a change in plan, not the implementation of pre-arranged one.

So, assuming for the moment that the referendum is early (pure speculation), then why has Cameron decided to cut his losses?

Firstly, the treaty negotiations, supposedly to be heralded in 2017 (which would have allowed him to get an actually binding deal) might be off. Europe is facing its first two serious crises (2011 and all that might very well quickly be forgotten in the light of what could be coming around the corner): the migration crisis, which is mainstreaming anti-European, anti-establishment parties – if one genuinely anti-European party takes control of any sizeable parliament, it will cause a lot of trouble, and the financial troubles that are now spreading out across the globe faster than the Zika virus at the ongoing Carnival in Rio De Janeiro.

Especially worrying for EU politicians is that the first dominos to fall could be the European mega-banks. Deutschebank’s exposure to derivatives is more than twenty times the entire value of the German economy. I don’t actually know what that means, but it’s probably bad. I do feel a little twinge of savage satisfaction, however, as they were some of the most prominent people warning that we should remain. Signs of imminent treaty change are thin on the ground, and may very well have been postponed because of the various crises which look like they could hit.


If there is no treaty change coming, then Cameron loses most advantages gained by waiting until 2017, unless the EU can sort out the refugee crisis (unlikely given that even more people want to come over this year than last) and transcend basic economics to sort out economic problems not just in the EU but in the entire developed world – I don’t know, maybe stick Structural Adjustment Programmes everywhere? Seemed to work last time…

Secondly, if the looming financial storm does transpire soon, it will hit Britain like a freight train. We haven’t even really recovered from the last one – interest rates are already near enough zero (the only advantage of going lower at this point is to attract money from other financial centres) and QE simply will not work for very long without making it painfully obvious to even five year-olds that the central bankers have lost the plot when the numbers they will have to conjure up will start to look distinctively Zimbabwean. Short of locking up everyone who invests the wrong way (a la Chinois), there really is not much the government/Bank of England can do to avert this.

The Harare school of economics - we don't really want to go there

There are two reasons why Cameron would hold the referendum early because of potential financial meltdown (no one knows if/when it will happen – but it is likely, and Cameron is going to have to factor that into his plans). One is simply to clear the decks. Much like the EU, Cameron doesn't want to have to deal with British euroscepticism in the midst of a monetary shitstorm because he simply will not have the time. Hence, it is possible he wants it out of the way simply because it is not that important to him relative to larger events (explaining the rubbish deal), even at the cost of losing. The second reason, which is entirely synergistic with the first, is that Cameron thinks that he can win better with a relatively stable economy than with one that is plummeting. This is plausible given the amount of trouble that the Eurozone will almost certainly find itself in – naturally, people are not going to vote to remain if Europe looks anything like what it did in 2011.

Obviously it is impossible to predict whether any of this will actually happen, or if people will react in this way – but David Cameron will be speculating against the same backdrop that I am. He doesn't know what the situation will look like in 12 months and so might not want to take chances, or he wants this vote out of the way, for fear the worst might happen.

Globally, central bankers will be trying to delay any crashes as much as possible. Far more important than a petty vote on Britain’s political future for them (or at least the all-important American ones) will be the American presidential election. The Democrat incumbents and the big money that follows them will be desperate that nothing goes wrong with the economy until the election is over, in the same way that employment figures miraculously tend to rise in election years – that happened here and is happening in America, because it would completely damage Hillary’s chances. Although, this is provided she isn’t indicted before then, as she almost certainly should have been – ‘Granny doesn’t understand computers’ simply isn’t a good enough excuse when you running to be the leader of the free world and the scourge of Russia.

A major Wall St. crash might even lead to a President Trump, or even worse for them, a President Sanders. Purely speculating, I would expect the Federal Reserve and the Treasury (the establishment) to do everything possible to prevent that unhappy eventuality – Cameron might possibly have made the same calculation and hence might seek to benefit from this more stable financial period by slotting the referendum in it.

Also globally, other events do not bode well for the long term. Having an ascendant ISIS in Libya is hardly going to cause less refugees or less terrorist attacks. Moreover, the Syrian war itself is on a knife-edge between attrition and escalation. Assad’s forces are content to siege urban population centres to starve them into submission, but there is an ever-increasing risk of Saudi or Turkish intervention.

There have been reports recently (and also late last year) about Saudi Arabia assembling a coalition of like-minded Gulf States to invade the country. I doubt that many people outside the highest echelons of the intelligence circuit (and those with access to Hillary’s emails) know how true this is, but it is highly plausible, given that Saudi Arabia is becoming increasingly assertive/aggressive as a reaction to heightened Iranian influence – i.e. Yemen.

There are also rising tensions between Turkey and Russia because Russia’s no fly zone has stopped Turkish jets bombing the Kurds into oblivion, and is allowing Kurds on the Turkish side of the border to cause problems again (presumably revenge for the jet that Turkey shot down). Turkey has already sent soldiers into Iraq and could plausibly do the same in Syria. No one in the West wants this kind of brinkmanship, but Middle Eastern countries live for it.

The Middle Eastern situation probably will not mean an awful lot to the EU referendum – apart from the fact that the Middle East is going to furnish ample refugees between now and then. This necessarily means that the migration crisis can only really get worse, on all fronts, which in turn implies that an early referendum is better. The only thing that could stop this would be concerted, decisive, comprehensive EU action - which although possible is made much more unlikely by the disagreements between countries over what that action should be.

But then again, what would I know. I am only speculating, but if I were David Cameron attempting a referendum and I saw a looming financial crisis and a continued refugee crisis coupled with a lack of any promised treaty, I would definitely at least consider sooner rather than later.

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