Category Archives: Economic

Britain, China, Economic, Foreign Affairs, Hong Kong

China should honour its promise of free and democratic elections in Hong Kong…

HONG KONG

For more than two decades, China’s Communist Party rulers have relied on the rapidly rising prosperity of the masses in an economic boom that has been effective in marginalising any dissent there may have been over their dictatorial rule. Given this rising affluence, the Chinese people have appeared content to do without the need to fight for democracy and liberty.

But the tide has changed, as events in Hong Kong have shown. Sustained protest is being made against the determined approach of the Beijing government to control elections to Hong Kong’s 70-seat legislature by screening and vetting all candidates. This implies it will merely reject those candidates it does not like.

The disruption caused by the tens of thousands of protestors – who have blocked main roads and shut down parts of the business district – presents a challenging if not severe dilemma to Beijing.

The Chinese government could suppress the protests, but if it does so in the violent and intemperate way it suppressed the 1989 Tiananmen Square protests, it will not only draw worldwide condemnation but severely damage Hong Kong’s economy. Through trade and commerce Beijing earns a lot of money from Hong Kong and will be determined that this position is maintained.

If it allows the protests to continue, it risks the same pro-democracy movement spreading to its mainland and cities, a fear which has been countered by the government’s shutting down of social media networks.

For the moment, Beijing seems to be relying on Hong Kong’s police to contain the demonstrations and to gradually reduce them with mass arrests, while keeping the People’s Liberation Army and its tanks in their barracks.

This is an opportunity for the Chinese government to show that it is a mature country fit to play a leading role on the world stage. It can demonstrate this by treating the protestors with respect. The agreement signed when Britain handed the colony to China promised democratic and free elections. That pledge should be honoured.

Standard
Britain, Economic, Europe, European Union, Government, National Security, NATO, Politics, Society

NATO, its purpose and the wider meaning of ‘security’…

QUESTION OF ‘SECURITY’

NATO’s main role during the Cold War was to counter Soviet expansionism. That stand-off ended 25 years ago. As military budgets started falling following the end of the Cold War, and with less political and public appetite for military confrontation, the organisation was beginning to look irrelevant in today’s world. Questions have been continually asked of its modern-day role and purpose.

NATO certainly faces a renewed challenge on its eastern European border from an increasingly hostile and belligerent Russia. In the long-term this may even herald a reboot in Russian expansionism. Further afield, the insidious threats of Islamic State terrorists and continuing instability in the Middle East cannot be ignored either.

Related:

When NATO talks in terms of security, it should be imperative that also includes the security of energy supplies. Currently, we depend on both Russia and the Middle East for much of our energy. Recent events serve to highlight the vulnerability of our energy supplies and the political constraints that results from our wholesale dependence on fuel imports from these volatile regions. Without political stability in those regions, there can be no energy security at home.

One immediate question that should come to mind is whether Russia might choose to use its energy exports to the EU as a political bargaining tool. The threat that it could happen is starting to be taken seriously. Reports that the EU is drafting emergency plans that would impose rationing on industry this winter, has serious economic repercussions.

Secure, sustainable and predictable supplies of energy are essential for economic growth and prosperity. A $20 rise in the price of oil for two economic quarters is likely to reduce global GDP by 0.5 per cent.

Stability in the price of oil is also important. Price volatility is an ongoing risk for all sectors of the economy. The armed forces, for example, consume large amounts of fuel. Rapid and unexpected increases in the price of oil can disrupt the capacity of our forces’ to operate effectively, be it through less time at sea for training or fewer hours flown in helicopters and jets.

The economic and supply disruption risks are especially acute in those countries with a high dependency on imported energy. The EU, for instance, imports 53 per cent of the energy that it consumes. The UK sources about 40 per cent of its coal imports from Russia.

The political corollary of dependence on energy from unstable and unsavoury regimes is that it constrains the response that the UK, Europe and NATO are able to give when faced with aggression. Whilst Germany has been more active of late in calling for sanctions, its stance towards Russia is partly determined by the continuing need to keep Russian gas flowing.

More troubling, though, and looking further ahead, how would we deal with a situation in which the Islamic State became established as a permanent presence, including control of oil and gas exports?

****

The quickest and most effective form of energy security is to use less.

Lessons learned in Iraq and Afghanistan suggests that energy efficiency is embedded in military thinking on both sides of the Atlantic. Not only does it improve military effectiveness but it reduces risk and saves money.

The same needs to happen with national energy strategies. There needs to be a comprehensive programme of energy efficiency measures across all sectors – particularly across utility companies, transportation and the need to improve energy usage in both domestic and commercial buildings. The programme should be demanding, for only when the full benefits have been delivered can we be sure of relying less on energy imports. The wider gains from improved air quality and reduced greenhouse emissions would be presumptive in any such programme.

More important still is that it makes economic sense for Europe to be at the forefront of energy efficiency measures as this will improve competitiveness with the US and China, both of whom enjoy the benefits of scale and low cost energy.

EU ministers are currently debating whether to approve a target of improving energy efficiency by 30 per cent (from 2005 levels) by 2030. The Ukraine crisis has indicated that this has to happen. Some analysts believe that 40 per cent energy efficiency targets could be met without incurring any unnecessary economic penalties.

Alongside this, continuing to invest in domestic sources of energy, particularly established ones such as wind, solar and nuclear, and new entrants such as wave and tidal power, is crucial. We cannot always rely on imported energy, but the tide will always flow and ebb twice a day.

NATO should become a powerful platform for promoting this change, by explicitly articulating the threat that we face. Efficiency and diversity in domestic energy generation are not issues that should be seen as just part of the ‘green’ agenda. They are vital to our national and regional security.

The challenges posed by increasing geopolitical instability and the threats to our energy security are only like to grow. Reducing energy consumption and investing in new forms of energy is a strategy that simultaneously defends against international volatility, improves our economy and liberates our response to aggression from the stranglehold of dependency.

NATO has a role to play in reducing our vulnerability.

Standard
Britain, Defence, Economic, European Union, Government, Military, National Security, NATO, Politics

Defence spending and the ‘peace dividend’…

DEFENCE SPENDING

Throughout history, defence spending has always gone up and down, and has responded largely to the perceived level of threat at the time.

Following the fall of the Berlin Wall and the end of the Cold War expectations were high for a so-called ‘peace dividend’. This led to the British military, along with its NATO partners, assuming they would no longer have to maintain a massive defence capability in central Europe as a bulwark against the Russians. Tank squadrons, for example, on the German plain were drastically reduced as the threat from the Russian bear showing its claws no longer existed.

This, it was generally agreed, was a good thing. There was never any shortage of other priorities on which politicians could spend otherwise huge sums of money that had previously been spent on defence.

However, the question now, according to General Sir Richard Shirreff, who recently stepped down as NATO deputy supreme commander, is whether a new and heightened level of threat should now require an increase in defence capability, and therefore defence spending.

General Shirreff is eminently qualified to make such a judgment, of that few will doubt. He has said that the dismantling of the West’s presence in mainland Europe has gone too far, leaving us vulnerable and exposed in the face of a renewed Russian threat.

The facts tend to support his case. A recent defence analyst’s report, for instance, revealed that Britain now had fewer tanks than Switzerland.

And there can be little doubt that the threat level facing mainland Europe is now significantly different to what it was a decade ago. Russia has annexed Crimea and the Kremlin is making less pretence about the fact that it is at war with Ukraine.

NATO’s primary role is to defend its members from military threat and attack. Shirreff questions whether NATO is able to perform that key function, at current strength.

Highlighting ‘the reality’, Shirreff says that NATO would be very hard-pressed and they would find it very difficult to put into the field the means required, particularly on land, to counter any form of ‘Russian adventurism’.

Undoubtedly, the signal General Shirreff gives amounts to a stark warning, and one that deserves to be the start of a serious debate.

At a time of continuing financial and economic austerity, this will be the last thing that many European political leaders will want to hear. The ‘peace dividend’ has been taken for granted for a quarter of a century. Even in Britain, following recent bloody wars in Afghanistan and Iraq, have not led to a reversal in political thinking that says Britain needs fewer soldiers and fewer sophisticated weapons.

The focus of efforts in keeping the UK safe has moved away from hard power and more towards intelligence and security led measures in tackling jihadist terror groups – at home and abroad.

While this is bound to remain the key priority, the challenges being posed elsewhere by an expansionist President Putin can no longer be ignored. Putin’s threat to eastern Ukraine as well as to Western concerns over Russian interests in the Baltic States are proof enough that NATO requires and needs an adequate defence capability in dealing with challenges it could be called upon in dealing with. The security of the wider world surely depends on it.

Standard