Category Archives: Business

Business, Government, Politics

The West’s hypocrisy on corruption is amoral

DUPLICITOUS STANDARDS

Intro: Westerners have no right to feel morally superior over those in developing nations

The West likes to believe corruption is something that happens elsewhere. It is presented as a pathology of poorer countries, weak institutions, and unstable governments. In much of Africa, corruption is routinely cited by Western politicians, the media, and international organisations as evidence of failed governance. It is used to justify conditions on aid, scepticism towards investment and, increasingly, a broader sense of moral superiority.

Yet the uncomfortable truth is that many of the same behaviours exist in Britain, Europe, and the United States. The difference is not always the conduct itself. The difference is often the language we use to describe it. In Western democracies, power rarely operates through crude bribery or overt illegality.

Instead, it works through relationships, access, networks, and privileged information. Outcomes are shaped quietly, informally, and often entirely within the rules. Those closest to political and financial power gain opportunities, protection, and influence that others do not. We prefer to call this lobbying, networking, or simply “how things get done”. But if similar systems operated elsewhere, we would often call them corruption.

The global pandemic exposed this contradiction particularly clearly. Between February and November 2020, more than £3.7bn of UK PPE contracts were channelled through a “VIP lane” for companies with political connections. Those firms were significantly more likely to secure government contracts, even where they had limited relevant experience.

Had a similar process emerged in an African country – where politically connected individuals were fast-tracked for lucrative state contracts during a national emergency – Western governments and media outlets would almost certainly have described it as corruption. In Britain, however, the language was notably softer: “urgency”, “extraordinary circumstances”, “procurement challenges”. The same behaviour, but a different use of language and vocabulary. What increasingly troubles the public is not simply individual scandals, but the perception that elite networks operate by different rules altogether.

The Epstein affair reinforced that suspicion powerfully. It exposed the extraordinary proximity between convicted offenders and some of the most influential political, financial, and social figures in the Western world.

The main focus of accountability for the sexual abuse was rightly directed at Jeffrey Epstein himself and later Ghislaine Maxwell. But many others associated with Epstein – some of whom knowingly enabled, tolerated, or benefited from the network of influence and privilege surrounding him – have emerged largely untouched.

For many people, this reinforced the belief that wealth, influence, and proximity to power can create a form of informal immunity. Not necessarily from the law itself, but from the level of scrutiny and accountability that would apply to ordinary people – or indeed to public figures in other countries.

When access, relationships, and privileged information determine outcomes, public trust is inevitably eroded – regardless of whether formal rules have been technically breached.

If confidence in democratic institutions is to be rebuilt, it will require more than compliance processes and carefully managed optics. It demands a far more honest recognition of how power actually operates within Western systems.

Because the real danger is not simply that corruption exists elsewhere. It is that the West has become extraordinarily skilled at defining its own behaviour in ways that prevent it from recognising corruption when it is closest to home.

Standard
Artificial Intelligence, Business, Digital Economy, Technology

The next casualty of the Iran War has arrived

GLOBAL DIGITAL ECONOMY

Intro: The Iran War has led to shortage of helium, vital for AI but also for many of Britain’s smaller businesses. If the Strait of Hormuz blockade continues, a chip shortage could well be on the cards

The world has lost 40pc of its helium supply since the start of the latest war in the Gulf, first from Qatar and then from Russia.

We will soon find out whether the global digital economy can shrug off losses of such a critical gas on this scale and whether our political leaders will allow the AI boom to keep gobbling up an ever-greater share.

Industry cannot make advanced AI chips or semiconductors below 10 nanometres without ultra-high purity helium to cool the wafers and stabilise the plasma for etching. Even workhorse chips for cars and computers require lower-grade helium at 99.999pc purity.

But we also need helium for other high priorities: in nuclear power, advanced weaponry, aerospace, fibre-optic cables, quantum computing, chromatography, or to cool superconducting magnets in MRI machines. There are no easy substitutes. Liquid helium is the coldest known substance on Earth, with a boiling point of -269°C. Hence, why everybody is scrambling around trying to scoop up whatever they can find in the world.

It cannot be synthesised artificially – it comes from the radioactive decay of thorium and uranium – and is hard to store. China has strategic stockpiles of everything but not for this one vital input.

Helium is a small cost for digital behemoths with the deepest pockets, relying on “fabs” or foundries that cost $20bn (£15bn) a shot. Wafer fabs are not going to close, so with supply shortages, the larger conglomerates will be prepared to pay more than anybody else.

Another insidious process is at work. The semiconductor industry is in effect hoarding its scarce supply for the most lucrative AI fabs while rationing helium for routine “mature-node” chips that play a far bigger role in the day-to-day economy.

Triaging has taken hold. The industry reserves what they have for AI accelerators, high-bandwidth memory, and advanced logic chips for data centres.

There is less left for chips in cars, laptops, and the consumer electronics that we all rely on. Everybody is talking about petrol prices but nobody is talking about helium.

The fear is that there could be a repeat of the chip shortage that shut down European car factories during the pandemic. A Covid lockdown at a plant in Malaysia caused crippling losses on the other side of the globe. If a semiconductor factory anywhere in the world says that it won’t be able to supply more chips, then implicitly, the car industry is going to have big problems in the third and fourth quarters.

Qatar normally supplies a third of the world’s helium, a by-product of natural gas production at its giant North Field. Not a single shipment has moved through the Strait of Hormuz since the war began.

Some 200 cryogenic containers are stranded in the Persian Gulf and are slowly heating up, causing gas to leak out through the pressure valves to avert a lethal explosion.

Vladimir Putin has compounded the shortage by imposing what amounts to a ban on helium exports outside the Eurasian Economic Union, purportedly to secure supply for Russia’s domestic economy and fibre-optic industry. This endangers another 9pc until the end of 2027.

For once, it is China that is taking the immediate brunt of the supply chain shock. It produces barely 15pc of its own helium needs. All the rest comes from Qatar and Russia.

America is sitting pretty in one sense. It is the world’s biggest helium producer with two-fifths of the market.

But that does not shield the US from the larger supply-chain consequences any more than US oil supremacy spares it from rising crude prices and mounting shortages of jet fuel and diesel, leaving aside fertilisers, sulphur, and aluminium.

The US subcontracts most of its chip production to Asia. Its share of global semiconductor output has collapsed to 10pc from 37pc in the 1990s. It will be years before the US chips act and manufacturing rearmament turn this around.

More than 75pc of the world’s semiconductors are made in the Far East. Nvidia either makes or finishes all of its most advanced Blackwell chips at TSMC plants in Taiwan, while Samsung makes high-bandwidth AI chips for Google in South Korea. Both countries normally rely on Qatar for two-thirds of their helium.

Large volumes of workhorse chips for just about everything else are made in Vietnam, Malaysia and Thailand, often at arms-length operations for China.

Analysts say the world had plenty of helium before the war broke out and can probably cover half the loss from Qatar at a pinch.

The industry has an informal system for allocating scarce supply to the most critical needs. The top of the food chain are MRI machines, chip manufacturing, aerospace, and nuclear power. At the bottom end are things like welding. There is no doubt that some people are going to get badly hurt.

One thing we should have learnt from Covid is that once the world’s just-in-time (J-I-T) supply chain goes into convulsions, with ships scattered to the four winds and stuck in the wrong place, the effects can be drastic, long-lasting, and out of all proportion to the nominal value of the goods.

If the war drags on for a few more weeks – as it may do so since both Donald Trump and Iran’s Revolutionary Guards think they are winning – there are only two solutions. Either the market destroys demand in its own ruthless way or governments step in with emergency measures and make hard choices, something that Britain seems incapable of under Sir Keir Starmer.

For aviation fuel, diesel, or naphtha, it may mean a taste of wartime rationing. For helium, it may soon be a question of whether liberal democracies allow billionaire tech giants to outbid everybody and hoard scarce gas for unpopular AI expansion.

Do politicians finally face down the hyper-scalers and redirect helium supplies to the urgent priorities of military and energy rearmament, as well as to sustain routine sectors that employ infinitely more people?

Just days ago, Marco Rubio, the US secretary of state, more or less, admitted that Iran’s regime now has enormous power to do harm and that Washington has no coherent plan to restore the status quo ante, let alone to reach a better outcome that vindicates the war. “The Strait of Hormuz is basically an economic nuclear weapon that they’re trying to use against the world,” he said.

But what is to be done about it?

Standard
Britain, Business, Economic, Financial Markets, Government, International trade, United States

The US dollar: down but not out

ECONOMIC

Intro: Reports of the declining status of the US currency have been greatly exaggerated

For economists, the impact of a falling US dollar and how that impacts Britain will be observed and monitored closely. Of interest will be why the dollar has fallen of late, what President Trump’s attitude is towards the US currency, and how that impact will be felt.

The dollar lost around 2pc during January against a basket of major currencies (as measured by the DXY index). At the time of writing, the DXY is close to a four-year low of 96.79 – a staggering 10.7pc lower than this time last year. This significant weakening of the dollar has been driven by US policy shifts, tariff uncertainties, and geopolitical tensions. It also, to a lesser extent, reflects global effort to “de-dollarise” led by China and other large emerging markets.

Just days ago, the Federal Reserve held its main policy rate at 3.5-3.75pc. But the US central bank previously cut rates by 25 basis points at three consecutive meetings – in September, October, and December 2025. Lower rates typically weaken the dollar by reducing its appeal to yield-seeking investors, prompting capital flight to higher-return assets elsewhere. Financial markets are anticipating one or two more US rate cuts in 2026, putting further downward pressure on the dollar.

Since Trump took office last January, Fed boss Jerome Powell has come under intense pressure to cut rates faster and further, with the President eager to stimulate investment.

Nominated by Trump during his first term and reappointed four years later by President Biden, Powell has resisted. He has warned of the dangers of US inflation – 3pc as recently as September and still up at 2.7pc, above the 2pc target. Trump’s announcement that he wants Kevin Warsh as the next Fed boss when Powell’s term ends in May has seen the dollar strengthen, given Warsh’s reputation as an inflation-fighting hawk. Warsh, however, is also son-in-law of Trump’s long-standing friend and billionaire donor Ron Lauder. It is doubtful whether he’d be the president’s pick without having pledged to nudge the Fed’s policy committee towards lower borrowing costs – so the pace of rate cuts could quicken, putting more pressure on the dollar.

In theory, Trump’s tariffs should have bolstered the US currency by reducing imports and improving the US trade balance. But the scale of the measures announced on “Liberation Day” in April 2025 instead contributed heavily to the dollar’s fall in value.

The president’s measures – initially hiking average effective tariffs from 2.5pc to 27pc within a month – sparked market turmoil, including an asset sell-off that pressured the US currency. Direct retaliation from major trading powers including China and the EU further eroded investor confidence and prompted US capital outflows. Trump’s tariffs, while they are less punitive than first announced, have combined with broader macroeconomic concerns – including the rise of America’s debt from 100pc to 125pc of GDP over the last decade – to drive considerable “sell America” outflows to other major currencies.

While the related dollar weakening has aggravated US inflation, a cheaper currency helps US exporters, not least “rust belt” manufacturers that are a priority among Trump’s “Make America Great Again” (MAGA) movement. That’s why many are inclined to think the president wants the dollar to keep on falling.

Trump has fuelled these concerns, pointing to the “great valuation” of the sharply depreciated US currency. There are suspicions the White House initially made its maximalist tariff demands not only as a bargaining ploy, but to strategically devalue the currency. The president’s dollar stance is nuanced – and often contradictory. He values “reserve currency status”, which sees the dollar demanded around the world both for payment transactions and a store of value. That supports the US currency, allowing America to run looser monetary policy without the inflationary impact of a dangerously weak dollar. Nonetheless, Trump has also shown willingness to tolerate and even encourage dollar depreciation for export gains (given his emphasis on appealing to blue-collar workers). Talk of the dollar’s demise, and its loss of reserve currency status, is, without doubt, overdone. The US currency still accounts for about 60pc of global foreign exchange reserves and almost 90pc of global transactions by value, underscoring its entrenched role.

Quite clearly, as the dollar has weakened, certain “safe haven” currencies have gained, with the Swiss franc up 13pc against the dollar during 2025. And despite its recent volatility, gold has soared from around $3,100 to over $4,900 an ounce since April 2025, such has been the impact of Trump’s “shock and awe” tariff announcement and the escalation of geopolitical tensions ever since.

When it comes to pound sterling, and the broader UK economy, a weaker dollar delivers a mixed offering. Benefits in lower import costs and inflation are offset by challenges for exporters, investors, and multinational firms. Since Trump’s second term, the pound has strengthened around 12pc against the dollar, from roughly $1.23 to $1.37. This makes dollar-denominated imports cheaper, reducing costs for US goods and dollar-priced commodities like oil.

And while the UK remains an inflation outlier, with a headline rate of 3.4pc in December, up from 3.2pc the previous month and higher than other G7 nations, domestic price pressure would have been even worse were it not for a falling US currency. Tourists and businesses travelling to, or dealing with, the US have also gained, with pounds stretching further abroad.

Yet the downsides are significant, particularly for UK-based companies with substantial US exposure. British-based exporters to the US have found their goods more expensive in dollar terms, undermining competitiveness and demand – especially amid US tariffs that add further barriers.

Overall, while a weaker dollar has flattered the value of sterling, and helped keep a lid on UK inflation, it has also exposed many of the UK’s structural weaknesses – a trend that looks set to continue.

Standard