Category Archives: Economic

Afghanistan, Britain, Economic, Government, Politics, Society, United Nations, United States

Afghanistan is a booming narco-state…

Intro: Afghanistan is an affluent narcotic state despite the country being invaded to liberate it from the drugs trade

Prior to the war in Afghanistan, the then British prime minister, Tony Blair, said that one of the most compelling reasons for going to war was to curtail the trade in narcotic drugs such as heroin and opium. However, if one was to examine the facts it would be shown that the Taliban government had already started to deactivate Afghanistan’s drugs trade. In 2000, the Taleban were the ruling authority in the country and had declared the heroin trade as being ‘un-Islamic’. Following that decree the fundamentalist regime managed to reduce production by 99 per cent in the areas that it controlled. Yet, by contrast, the war with the West has witnessed a lucrative market for Afghan’s poppy farmers. After more than 12 years of fighting – which has cost Britain dear in terms of lost lives and resources expended – opium production in Afghanistan is at a record high. The United Nations drugs agency says that the area under cultivation rose by 36 per cent in 2013 and that Afghanistan now provides 90 per cent of the world’s heroin. The country Britain invaded partly to liberate it from the drugs trade has become a flourishing and affluent narcotic-state.

Was there a way in which this now booming trade could have been stopped? Arguably, if the West had put all its resources and efforts into eradication the likelihood of crushing the drugs trade in Afghanistan  would have been high. Unless that task is approached with the ruthless methods and barbarism of the Taliban, any other approach would likely falter. The planting of an alternative crop may have been another consideration but even that would have been troublesome because Afghanistan’s environment makes it perfect for poppy cultivation but inhospitable to almost anything else.

A genuine alternative, however, might be to turn the situation to the world’s advantage. Four years into the Afghan campaign, the Senlis Council, a think tank, suggested buying the crop and using it to manufacture palliative medicines for Western consumers – turning Afghanistan’s poppy farmers into legitimate businessmen.

If we consider that opium poppies are already grown under strict legal controls in India, and also in Britain, the idea is not as radical as it might sound. The world has a shortage of pharmaceutical painkillers, such as morphine and codeine, and the Afghan farmers could easily meet that demand. Whether the country has the ability to police such an ambitious programme, though, does raise doubts. One thing above all else is certain: the West has lost its war on the poppy.

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China, Economic, Environment, Government, Politics, Society, United Nations

United Nations: ‘Greenhouse gases have reached a record high’…

MORAL DUTY TO ACT ON CLIMATE CHANGE

It comes as a complete surprise to hear the United Nations announcing that greenhouse gases have reached a record high. This is nothing but disheartening given the increase in environmental awareness over the past decade when we consider the amount of effort that has been made by our own country and others to cut down on carbon emissions.

While strenuous and laborious efforts have been made by many developed countries in reducing their carbon footprints, these incremental shifts have not been enough to offset the vast industrialisation of emerging economies such as China, where growth is now so rapid that green and environmental considerations are far down the list of government priorities.

The Chinese, of course, want the amenity and luxury of what we in the West take for granted, but do not take kindly to being told by already developed nations that they must achieve this more ‘sustainably’. Veering away from the higher costs involved is perhaps understandable given the size of China – costs which would undoubtedly run into trillions if it were to rapidly convert to more sustainable programmes.

The net effect of the global greenhouse gas menace has led the Intergovernmental Panel on Climate Change (IPCC) to warn that, without further remedial action, global temperatures will rise by 1.1°C by the end of the century, and sea levels will rise.

A cynic’s response would be to urge the UK government to abandon what would seem to be a hopeless cause. Realistically, though, we cannot allow ourselves the pleasure of such cynicism. The UN report is hardly an excuse to do nothing.

The assertion made that efforts by developed countries is not having any tangible effect is impossible to prove, given the number of extraneous variables involved. If we can do something extra to reduce carbon emissions, then we should at least try. One of the most compelling arguments for refusing to be deflected from reducing our greenhouse gas emissions that we have embarked upon is a moral one. How will we ever persuade others to act on climate change unless we continue to act on our own convictions?

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Banking, Britain, Economic, Financial Markets, Government, Society

Statements by RBS are clear on two points…

ROYAL BANK OF SCOTLAND

A series of rash statements issued yesterday by the Royal Bank of Scotland is clear on two points. Firstly, the decision taken to create an internal ‘bad bank’ with toxic loans amounting to £38 billion will hardly provide an instant cure. It will take a further three years of write-downs and bank disposals before the institution will even be considered to have recovered from its 2008 financial collapse and taxpayer funded rescue.

The second relates to serious deficiencies in the day-to-day management of RBS – from its chronic failure to meet targets on lending to small and medium sized firms, through shortcomings in service to personal customers, and to the provision of £250 million made by the bank for mis-selling payment protection insurance.

It is extremely unlikely there will be any start to the sale of the bank back to the private sector until well after the General Election.

RBS has announced a bottom-line loss of £634m for the three months to September. Far from the internal ‘bad bank’ resolution being hailed as a panacea, it is little wonder that shares in RBS have slumped. Even in its darkest hour of 2008, few would have believed that the recovery of what was then the UK’s largest bank would have taken eight years and a massive restructuring and shrinkage of its business. RBS has suffered a major curtailment in much of its global business and activities, not just the unwinding of the vainglorious acquisitions of the Fred Goodwin era but is also shorn of the overseas expansion delivered by his predecessor, Sir George Mathewson.

The protracted period of indecision on whether the bank’s bad loans – much of them incurred in Ireland by Ulster Bank – should have been left with the government or treated as a separate entity, is a nettle that should have been grasped in 2009 rather than allowed to have festered for the length of time it has. Chancellor George Osborne had had to recognise that RBS’ problems – structural and cultural – will take far longer to resolve than the government first anticipated before a share sale can be undertaken.

The traumatic legacy of its near-collapse remains problematic today. This induced a deep reluctance within the bank to lend, in particular to small and medium-sized businesses. A highly critical report by Sir Andrew Large found RBS was performing so erroneously it was not even in a position to meet its own targets. In the meantime, a review by RBS into how it serves its personal customers is scheduled to report next year.

The bank still has a mountainous task ahead under its new chief executive, Ross McEwan. There is much to do to overhaul the bank’s lending practices; by moving away, for instance, from the sales target-driven excesses of the previous era and by making major improvements to its overall service to customers.

RBS will eventually revert to being a domestically focused retail bank, stripped down to those core banking competencies it should never have deserted in the first place. The biggest challenge ahead will be to rebuild customer and investor trust. The bank’s widespread loss of confidence makes that a daunting and difficult task.

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