Category Archives: Europe

Britain, Economic, Europe, European Union, Financial Markets, Government, Politics, Society

The sanctions on Russia should not be borne solely by London…

EUROPE

Germany and the rest of the Eurozone trade far more with Russia than Britain does. Our European partners buy billions of pounds worth of oil and gas, hugely profitable cash-flows which props up the regime of Vladimir Putin.

Yet, Europe’s proposed sanctions on Russia have been carefully designed to inflict as much damage as possible on the City of London, while shielding other economies from collateral damage. The stench of hypocrisy fulminates through the corridors of power.

The aim of the European establishment is to punish Mr Putin, whose behaviour has been appalling. But the cost should not be borne solely by London. According to Europe’s plans, German companies will still be able to sell their wares with relative impunity; Italy will continue to receive their energy supplies courtesy of Moscow; and, France will deliver its warships to Russia as promised. The bulk of the cost will be paid for by British workers who will lose their jobs to satisfy Europe’s desire to be seen to be acting and doing the right thing.

This is the latest example of the European elites showing their expertise in turning every crisis to their advantage. The higher echelons of the European establishment are clearly seeking to use the need to punish Russia as an excuse to intensify their long-standing campaign against the City.

The EU often makes grandiose claims about being a global force for democracy and human rights. Splendid as those values are, time and time again the EU reveals itself as merely an alliance of competing national interests. On matters of global conflict, Brussels not only struggles to produce a united front, but also often ends up pursuing its own internal vendettas instead. This prejudice is seen within the corporatist view of the Eurozone elites when, for example, they are happy enough to sign massive energy deals with corrupt and authoritarian regimes, but don’t either like or understand the workings and mechanisations of genuine free markets. The creation of the single currency too saw much of the financial activity previously conducted in Frankfurt and Paris shift to London.

****

Effective sanctions should mean moving beyond the freezing of Russian assets in EU capitals and foreign travel bans on Mr Putin’s inner circle. Financial services, defence, and energy are some of the areas that should come under tighter sanction.

Financial sanctions operate in two ways. They restrict the access of Russian companies to working and investment capital, impeding not just their growth but their continuing activity, so hurting the Russian economy. They also make overseas investors much less likely to continue investing in Russia, with a similar effect. Defence sanctions, essentially the sale of Russian military equipment to other EU members, has the same consequence with the additional value of Russia becoming increasingly isolated. Sanctions on energy can range from tougher regulatory action to an effective blockade on the sales of oil and gas to the EU. Germany’s recent withholding from Gazprom of permission to use a pipeline is illustrative of the effectiveness of such action.

Further sanctions like these would, however, act like a two-edged sword. Certainly, they will injure Russia’s economy, but they will also wound Europe. Some parts of Europe could not get through a winter without severe difficulties if homes and offices were not heated by Russian gas. Some economies remain distinctly shaky and probably wouldn’t want to commit to a sanctioning agenda that would likely rebound on their own trading position.

Of course, it is only right that where Mr Putin’s regime can be targeted, given his ongoing refusal to face up to the consequences of his support for Ukraine’s separatists, such action be taken. Weaning Europe from its addiction to Russian gas is one real way to punish the Russian president and his cronies. Germany gets around a third of its gas and oil from Russia. Given that energy accounts for around 68 per cent of Russia’s exports, an opportunity to hit the regime hard should have been taken by now.

Standard
Britain, Defence, Europe, Foreign Affairs, Government, Military, National Security, NATO, Politics, Society, United States

Being prepared for war is essential, but war is not cheap…

ROYAL UNITED SERVICES INSTITUTE STUDY

A study released by the Royal United Services Institute (RUSI) shows that Britain’s involvement in Iraq and Afghanistan has cost the UK Treasury more than £29 billion. In the report, the think tank argues that the wars were “strategic blunders, spreading terrorism, drumming up resistance and increasing the opium trade”.

The conclusions, though, are controversial. For instance, the authors of the study assert that various terrorist groups would not be infiltrating Syria or threatening Britain had Saddam Hussein stayed in power. Yet, Hussein was a bloodthirsty tyrant and despot, who clearly acted as a state sponsor of terror. Tens of thousands of lives were lost, thousands more were gassed in ethnic style cleansing in northern Iraq, and Saddam Hussein would certainly have had vast stockpiles of nerve and chemical agents at his disposal left over from his 8-years war with Iran. Many of these stockpiles still remain unaccounted for. Had Hussein not been toppled he doubtless would have continued to persecute his own population. The tyrant’s bloody wars against the Kurds in the north and Arab populations of the south should never be forgotten.

Putting aside the arguments about Britain’s role in the ‘War on Terror’, one uncontroversial fact emerges from the report which is indisputable: war is not cheap. The Strategic Defence and Security Review (SDSR) has witnessed massive cuts to our Armed Forces budget. Army numbers have been drastically cut back, aircraft have been withdrawn, tank battalions diminished, and even our last aircraft carrier decommissioned. Further cuts are imminent. Many of these cuts are being justified by the theory that we would never have to engage in the variety of long-term overseas military adventures that typified our activities and engagements during the Cold War era.

Since 2001, however, we have actually been involved in two such operations at a significant cost. And within the last few days, President Barack Obama announced that he would like America to act more as part of an international coalition rather than taking unilateral action. This implies, at least, a continued British role in Western security.

The UK has to be prepared for all eventualities, and adequate contingencies should be in place. As relations with Russia continue to worsen, for example, it might prove necessary for the UK to play a part in the wider campaign of checking Vladimir Putin’s belligerence. Only last month, Britain sent four Typhoon fighter jets to the Baltics as part of a NATO deployment, a sign that the West is unwilling to allow Europe to disintegrate at the hands of the Russian president. Nobody wants a conflict, but the potential for a tough offence remains the best defence.

Standard
Europe, European Union, Foreign Affairs, Russia, Society, Ukraine, United States

Preventing dismemberment of Ukraine requires conciliatory compromise…

UKRAINE

In the aftermath of the Donetsk referendum on independence for the new ‘People’s Republic’, Roman Lyagin, the region’s self-styled electoral commissioner, has proclaimed a charade of an election result. The fact that the total of the yes, no and spoilt votes exceeded 100 per cent, Western observers – including the British Foreign Secretary William Hague – rightly concluded that this contest was ‘illegitimate’ and had ‘zero credibility’.

Despite the surreal nature of the plebiscite, the outcome is nothing other than deadly serious. The most populous regions of Ukraine, with 4.5 million people and the industrial powerhouse of the economy, now stands on the brink of merging with Russia. We should be under no illusion: the shadowy circle of kleptocratic pro-Kremlin leaders who organised this poll, with the resulting 89 per cent ‘yes’ vote, is leading the eastern regions of Donetsk and Luhansk along a road that seems certain to end in union with Russia.

Ukraine’s new post-revolutionary government has no answer to the challenge. In what was described as a military offensive by the Ukrainian army prior to Sunday’s vote in restoring control over Donetsk, that strategy can only be deemed a fiasco upon reflection. The city of Mariupol, with its half-a-million residents, has effectively been conceded to the pro-Russian movement.

A chink of light may, however, provide a way out of the crisis. One of the referendum’s absurdities was a vague and indiscreet question that asked voters to assent to ‘self-rule’, clearly something which should have been clarified as to meaning. If Kiev were now to open proper talks and dialogue with the pro-Russian movement and make a generous and specific offer of regional autonomy, that might allow both sides to step back from the brink. Those hardliners in Kiev will no-doubt have difficulty in negotiating with a motley collection of Russian allies, particularly as Moscow is once again ramping up the threats to turn off Ukraine’s gas supplies, but the alternative will only exasperate an already tense and bitterly volatile situation.

It seems certain now that, given the events in Ukraine over the past few months, unless a bold and conciliatory move is made by Kiev, the dismemberment of Ukraine looks inevitable.

Standard