Monthly Archives: October 2018

Britain, First World War, History, Society

Great War Centenary: Respect the decision of our forebears

WW1 AND ITS CENTENARY

THE First World War was the primal disaster of modern times. Debate rages over whether to mark its centenary next month as a victory or as a catastrophe that should have been avoided.

The war began four decades of violence, hatred and cruelty that the peoples of 1914 could not have foreseen in their darkest nightmares. Across Europe, nine million soldiers died. In Britain, one in three men aged 19 to 22 in 1914 were killed. The cost could have paid for thousands of hospitals and schools, and a university for every city.

The argument that Britain should have kept out of the war seems, therefore, insurmountable. Most people in July 1914 assumed it would: the prime minister, HH Asquith, thought there was “no reason why we should be anything more than spectators”. The Cabinet, Parliament and public opinion agreed, and the government tried hard to defuse the crisis.

So, what changed?

Germany launched a surprise invasion of Luxembourg, France and Belgium. The social reformer, Beatrice Webb, decided that “even staunch Liberals agree that we had to stand by Belgium”. They thought Britain had to resist a direct threat to its security and uphold international law and order against “militarism”. Wrote the diarist Ada Reece: “We must fight, but all are agreed that it will be more terrible than any previous war [and] the ultimate consequences… none can foresee.”

Given that she was right about the consequences, should they still have kept out? Three arguments are produced to say yes. First, that it was not our fight. Secondly, that the war was futile. Thirdly, that without British intervention, Germany would have won quickly, and Europe would soon have acquiesced in its domination – a lesser evil than the horrors to come.

All these arguments are founded on very optimistic guesses. More pessimistic scenarios are at least as plausible. As early as September 1914, the German government decided that Belgium would become a “vassal state”, with its ports “at our military disposal” to directly threaten Britain. To ensure “security for the German Reich in West and East for all imaginable time”, Germany planned to annex large parts of northern France, impose a crippling financial indemnity, make France “economically dependent on Germany” and exclude British commerce. Neutral Holland would become “dependent”. Vast territories would be taken from Russia to “thrust [it] back as far as possible” – precisely what happened in 1917.

Had Germany won, democracy and liberal government would have faced a bleak feature. Authoritarian regimes would have been in the driving seat. French democracy might well have collapsed, as it did in 1940. What German soldiers and governors actually did is telling – more than 6,000 civilians in Belgium and France were massacred in the first weeks of the war by invading troops, occupied territories were subjected to military rule, and they subsequently suffered semi-starvation, mass forced labour and systematic economic devastation.

In short, Britain faced a prospect in 1914 not so different from that in 1939. It could have survived, even as a cowed and impoverished satellite state, and it is possible to consider that this would have been a lesser evil than the brutal carnage of the trenches. But in 1914, government and people decided otherwise. For one thing, they feared being forced into a future war without allies against a German-dominated coalition. They were probably right to fear what a victorious Germany might do, but they underestimated – like everyone else – the cost of preventing it. Nevertheless, most of them always believed it was worth the sacrifice.

We can choose to disagree with our forebears, but theirs was not a senseless decision – they had no safe option. If tomorrow the Russian army marched through Poland, and we were faced with the prospect of hostile aircraft based just across the Channel, would we react any differently? Let us hope we never face such a choice as the people of 1914 did. Their determination gave democracy and freedom a chance, even though it took a second war to complete the victory.

Standard
Britain, Economic, Financial Markets, Government, Society

Brexit, oil prices and global trade: factors hindering economic recovery

ECONOMIC

DESPITE the uncertainties surrounding Brexit the range of expectations for UK growth for 2019 is relatively narrow – between 1 per cent and 2 per cent. A recent poll found that no economist expected an outright contraction next year; nor did any expect a boom. Rather, the most likely scenario is for growth of 1.5 per cent, which, the Bank of England believes, is around the UK’s new lower trend rate. The International Monetary Fund (IMF), which has also refreshed its global forecasts, expects roughly this same rate of growth in Britain to persist over the next five years.

The Brexit saga is probably the most obvious risk facing the economy. Whatever one’s view of the longer-term Brexit effect, a “no-deal” outcome could lead to the economy plunging into recession, while a “good deal” could boost confidence, investment and consumer spending and thereby economic growth. But Brexit is far from the only risk in town.

Indeed, there are plenty more global concerns that may yet scupper the recovery. After all, the British economy – unlike the United States and other relatively “closed” economies – is highly dependent on the outlook for global growth. And across much of the world forecasters see growth slowing over the coming years, even without some of the more disastrous risk scenarios crystallising.

What are the key global risks that might come back to bite the UK? First, there’s China. Many think of China as being a source of cheap imports but it is also Britain’s sixth largest goods export market. On one measure, published by the IMF, China overtook the US as the world’s largest economy in 2014, so attempts to reduce its debt pile after many years of spending could present a significant threat to global growth.

Fiscal largesse in the US is boosting growth there, but as President Trump’s splurge comes to an end the economic hangover could spread far beyond its shores. On this side of the Atlantic, the European Commission is likely to complain about the high budget deficits planned by Italy’s populist government, providing another source of market stress. Then there’s the issue of protectionism. Global tariffs have fallen significantly since the interwar period and remain low even after recent increases between the US and the EU/China. Even if these moves do not directly affect Britain, an escalation in trade disputes could yet be the precursor to weaker global confidence and exports, both to the UK’s detriment.

Oil prices could become a destabilising global force. Prices have fallen a little over the past few weeks but remain high at above $80 per barrel. Had strong global demand been the cause, that might have provided a counterbalance. But when prices rise because of supply constraints net oil importers such as the UK suffer increased costs with no improvement in demand conditions.

Higher energy prices also tend to leak into general price inflation. For now the inflation genie remains in the bottle, with rates of inflation across the G7 in a tight 1 per cent to 3 per cent range. But past above-trend rates of economic growth alongside unemployment rates at their lowest in a generation suggest upside risks to inflation. If not met with rising wages, that would reduce household spending power and could also prompt central banks to raise interest rates more quickly. Not only does that directly curtail domestic spending but for those countries that have taken out foreign currency loans (such as Turkey or Argentina) rising global interest rates push up their repayments and the risk of more widespread emerging market panic.

Recent moves in equity prices reflect all of these concerns; the FTSE 100 index fell to below 7,000 to a six-month low earlier this month. Investor concerns relate to the fact that neither central banks nor government exchequers can be sure their armoury is sufficient to deal with another crisis, should one arise. Banks may be more resilient now but they may not be the source of the next economic downturn.

Brexit is one of many global concerns that have increased the risks of another downturn in Britain and beyond. These risks will require careful navigation by policymakers if another downturn is to be avoided.

Standard
Britain, Europe, NATO, Nuclear Weapons, Russia, United States

The nuclear détente withdrawal makes the world far more dangerous

ARMS CONTROL TREATY

TENSIONS between the world’s two nuclear superpowers have reached a level not seen since the early 1980s.

During an election rally in Nevada, President Trump said that Russia was cheating on the 1987 arms control treaty. The treaty banned land-based cruise missiles in Europe.

An agreement had been made back in 1987 between Ronald Reagan and Mikhail Gorbachev – leaders who trusted each other enough to take a decisive step in ending the arms race which had been a key feature of the Cold War for the previous four decades.

Now Trump, in response to Putin’s cheating, is saying he will pull out of the treaty altogether. And the world is back to the hair-trigger situation faced before détente introduced arms control between East and West.

The fact is that the new highly-mobile missiles which Russia have developed undoubtedly make the world a far more dangerous place. And Donald Trump’s aggressive chest-beating response risks making an already fraught situation worse.

To understand why, we must look at how Putin has broken his treaty obligations.

The Intermediate Nuclear Forces (INF) treaty banned Russia from having any land-based intermediate nuclear missiles with a range of more than 300 miles. Sea-launched missiles were allowed, however – the theory being that they were more difficult for Russia to hide because the submarines and warships from which they were launched could be tracked and monitored by the West.

As a result, instead of the lumbering land-based SS20 missiles which worried the West so much in the 1980s, Russia has concentrated over the decades on developing much smaller missiles that can be launched from the sea. Such missiles, albeit without nuclear warheads, were used to devastating effect against rebels in Aleppo in Syria.

What Putin’s technicians have now done is to adapt these Kalibr sea-launched systems to make land-based cruise missiles capable of being transported by small trucks. They can be moved across country at 50mph and it would be impossible to track every one of them – making a surprise attack technically possible.

And the missiles, which fly under the radar, have been fitted with supersonic boosters which makes them practically impossible to intercept. This puts a vast swathe of NATO countries, including Britain, theoretically in the firing line.

 

WHY this is so disturbing is that it fits into Putin’s tactical strategy. Today’s Kremlin chief is ruthless, but worse he runs a Russia much less moribund than the wheezing Communist colossus of the 1980s. Putin’s armed forces are much leaner and meaner than in those days.

War in the 21st century has been practised already from Syria to Ukraine and in cyberspace. Putin knows he doesn’t need two million badly trained soldiers to be sacrificed in the trenches.

If it comes to war, he’ll need the best cyber-sabotage, the most effective special forces and, crucially, unstoppable medium-range nuclear missiles. Which he now seems to have acquired, despite the treaty.

This is why Trump has reacted so vigorously. Playing the tough guy also plays well to his core supporters, and he faces mid-term elections in two weeks’ times.

The trouble is that by dropping the Intermediate Nuclear Forces (INF) treaty now might suit Russia better in the coming years than the US. While for America the INF treaty has been a useful bulwark against nuclear escalation and proliferation, Putin’s strategists have chafed at the restrictions INF imposed on them.

By ripping it up, Trump will be criticised by European leaders – Germany was the first US ally to do so, with foreign minister Heiko Maas urging Washington to consider the consequences both for Europe and for future disarmament efforts.

All of this will delight Putin because it plays into his divide-and-rule approach to Europe.

More worryingly, if Trump does dump the INF agreement, there will be nothing to stop Putin’s generals from building and refining as many of these new faster-than-sound land-based nuclear missiles as possible.

Other nuclear powers, especially China and probably India and Pakistan, will want to buy them if they can’t build their own.

This technology is so easy to hide, swift to deploy and difficult to stop that it steeply increases the chances of a successful surprise nuclear attack. Worse still, without the trust between the US and Russian leaders that existed in Reagan and Gorbachev’s day, diplomacy is on a hair trigger – as in the worst days of the Cold War.

President Trump has declared he wants to make America safer, but we should fear he has made the world an even more dangerous and tense place. According to Mikhail Gorbachev, pulling out of the historic US-Russia arms treaty now “endangers life on Earth”.

Standard