Category Archives: Politics

European Union, Politics, Russia, Society, Ukraine

Ukraine, Russia and the wider issue of morality…

TUG OF WAR

Many Ukrainians are now so desperate to join the European Union that they are prepared to protest in ways not seen before in the country. They run the risk of brutality from President Viktor Yanukovych’s security forces, for whom the concept of community policing remains alien and an anathema. Mass anti-government protests in Ukraine have brought large swathes of the country to a standstill, largely prompted by Moscow’s strong-arm and bully-boy tactics aimed at halting Kiev’s attempts to improve the country’s trading ties with the EU. This fervour stems from a particular theory of Ukrainian nationhood, where many of its electorate believe the country should be an equal partner in the European Union, rather than remaining little more than a Russian satellite.

International opinion has, at times, questioned the morality of Russian decisions, such as that in 2009 when Moscow turned off the gas supplies to Ukraine in the middle of winter to dissuade it from forging closer ties with Brussels. The arrogance of Russian ambitions towards Ukraine could hardly have been laid barer. Continued threats over the continuity and supply of gas, as Russia continues to apply its power over Ukraine, underlies more cynical Russian ambitions. Mr Putin’s plan is for Ukraine to join Belarus and Kazakhstan in a political trading bloc to be known as the Eurasian Union.

For many Ukrainians, though, that is not only a poor substitute for the EU, but also an uncomfortable reminder of Ukraine’s position as a member of the Union of Soviet Socialist Republics.

Russia is seeking to capitalise on how Eurasian integration will likely generate increased interest from its other neighbours through the usual warm rhetoric of international diplomacy. But, in truth, the West would be right to assume a more menacing aspect to it. As Mr Putin is the dominant partner in this new Eurasian Union, it is worth examining and putting into perspective some of his recent comments and actions. For example, what of his attitude to the legitimate interests of other nations in the Arctic and his unnecessarily harsh treatment of those seeking to preserve the environment there? Russia is motivated by the rich new oil wells recently located in the Arctic and the huge benefits that exploration will bring to the Russian economy. Mr Putin’s rather indifferent attitude to human rights doesn’t bode well, either, for the Eurasian Union becoming a model template of tolerance and openness.

However, not all people in Ukraine are worried over Russia’s attempt to wrest control over its affairs. Many Ukrainians do support President Yanukovych’s decision to ditch his negotiations with the European Union and seem undisturbed about the record of human rights in their own country or in Russia.

The tragedy of Ukraine being forced to choose between traditions and that of regional power blocs is its nemesis. Geography dictates that fate, at least to some degree, is inevitable. Ethnic, economic and cultural ties do naturally tug in the opposite direction when a country is caught between two bigger powers. Yet, in all practicalities Ukraine should not have to make such a choice and would not need to if Russia would allow her to develop her links with Europe.

Conceivably, Ukraine could do that as well as being closely aligned to Russia. Ukraine should be allowed to maintain her trading and other relationships, but as part of a wider settlement between the EU on one hand and Russia, Kazakhstan and Belarus on the other.

Mr Putin’s stance between his own nation and that of his close neighbours is generally perceived and accepted as a zero-sum game – the EU’s gain, for instance, must be Russia’s loss. But persisting with such a position will leave Ukraine at best in a state of uncertainty or limbo, and at worst a target for permanent bullying.

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DURING last week’s annual state of the nation address, Vladimir Putin emphasised his belief that Russia takes a morally superior world-view to the West. It is hard to credit Mr Putin with that surprising claim considering the level of violence taking place on a daily basis in countries such as Syria and Ukraine.

Moscow’s staunch and unrelenting support for the dictatorial regime of Bashar al-Assad has been a prime reason why diplomatic efforts to stem the bloodshed have been thwarted in a raging civil war that has now claimed the lives of more than 100,000 people and displaced millions more.

Mr Putin claims that there is a clear moral compass behind his government’s domestic policies. But where is the evidence? Modern day Russia is a country where political opponents are killed or dispatched to Siberian labour camps, where gangsterism is rife, and where free speech is actively discouraged. Widespread and endemic corruption has persuaded Russian businessmen to flee the country in their droves to escape the constant threat of state-sponsored violence and extortion.

Mr Putin’s personal ambition of reviving Russia’s fortunes as a world power is a self-evident prophecy. He may well believe that, by resisting the tide of what he refers to as the West’s ‘non-traditional values’, his aspirations will be realised. In truth, so long as the Russian President remains intent on crushing political dissent at home and intimidating his enemies abroad, no one is going to be endeared to his sense of moral teaching.

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Britain, Economic, Finance, Government, Politics, Society

An alternative to the Chancellor’s plan to permanently shrink the state…

 ECONOMIC MANAGEMENT OF THE PUBLIC FINANCES

George Osborne’s plans delivered within his Autumn Statement last week lays bare the neoconservative strategy. Hidden amid the plethora of all the other numbers, the Treasury has announced a further year of austerity spending for 2018/19 – the ninth in a row. This Autumn Statement, however, was different, because it was the first where the Chancellor has called for a permanent, structural shrinking of the state.

Since 2009, the Treasury has sought to return the public finances to roughly where they were before the crash. Now, though, out of political choice, Mr Osborne is proposing that government spending should fall, as a share of national income, to far below its pre-crisis level.

In 2007, public expenditure equated to 40.5 per cent of national income. It increased rapidly to 47 per cent by 2009, mainly due to the economy shrinking, rather than rising spending. Since then, the Treasury has been clawing its way back towards Labour’s level of spending, and in March Mr Osborne’s plan was to reach the pre-crisis benchmark by 2017. Within this year’s Autumn Statement everything has changed – without any announcement, the Chancellor pencilled in a cut of 38 per cent of GDP for 2018.

Historically, when public spending slipped this low it was because the economy was extremely buoyant. In the late 1990s, for instance, Tony Blair’s government were caught off guard, with inherited Conservative spending plans and a booming economy. This time is different; despite a recovery that is helping to move the country out of recession the economic projections are far from impressive, and the strain of shrinking the state is to be borne solely by spending restraint.

Examining the detail will reveal that, in 2016 and 2017, the plan is ‘more of the same’ – total real spending is to fall at a similar pace to that from 2011 to 2015. Then, on top of seven years of cuts, spending in 2018 is to be frozen, even though economic growth is predicted to be 2.7 per cent.

If implemented, there is only one conclusion that may be drawn – the end of public services as we know them. By 2018 spending on services would be almost 20 per cent lower, and that’s on a comparison with today. And if the government remains adamant in protecting areas like the NHS, international development and schools, other government departments would face cuts of up to 40 per cent. In reality, this will mean many services spending less than half what they did a decade previously. The only option in limiting this damage would be more severe cuts to welfare. It is difficult not seeing pensioner benefits, which form the bulk of welfare spending, not being affected in some shape or form.

A shrinking state. Graphical variations between the Autumn Statement, the March Budget and proposals put forward by the Fabian Society post-2015.

A shrinking state. Graphical variations between the Autumn Statement, the March Budget and proposals put forward by the Fabian Society post-2015.

The Treasury plan is wilfully counterproductive in terms of the government’s proposals for public investment. Following the Autumn Statement, the Office for Budget Responsibility (OBR) revised down its expectations for business investment as a driver of recovery, but this suggests by implication that public investment is needed more than ever. Yet, for two years after the election it is to be flat in real terms. This can only amount to a further decline (as a share of GDP), and will become a further restraint on growth.

In October, the Fabian Society Commission proposed another way with its Future Spending Choices. It argued for a significant boost to public investment and for overall spending to rise after 2015 by one per cent a year for two years. This, the Commission says, would take spending as a share of national income to the pre-crash benchmark of around 41 per cent of GDP. After that, expenditure should return to trend and match annual rises in GDP.

The Fabian Society’s proposed spending path is compatible with sustainable public finances but diverges hugely from the government’s spending plans. By 2018, there would be almost £40bn more to spend, enough to turn the Chancellor’s massive cuts to public services into a freeze. This still assumes tough spending decisions to be made, but public service meltdown could be avoided. Mr Osborne’s plans should thus not be interpreted as inevitable or even necessary.

Labour should take the opportunity in delivering post-2015 plans. They should define an alternative, so that the Conservatives do not set the terms of the fiscal debate as the general election draws near.

George Osborne’s ideological cuts are just one route to sound public finances, but many others are also available. Many will say that we do not need to deliberately shrink the size of the state to such levels that the government now seeks. Overshooting pre-crisis spending should not be the objective of any future Labour government.

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Britain, Energy, Environment, Government, Politics, Society

Concern over energy firms refusing to pass on price cuts…

ENERGY BILLS

Intro: Millions of energy consumers on fixed deals will lose out

Millions of energy consumers with fixed price energy tariffs will not get a £50 reduction in utility bills as promised by David Cameron and George Osborne. A pledge was given this week in the Autumn Statement that electricity bills would be cut following the decision by the government to roll back some green levies.

The energy giant E.ON has announced that more than one million of its customers will get a reduction of only £12 – or 23p a week.

EDF is taking the same line with its one million fixed rate customers, who include many pensioners and families. Npower, SSE and Scottish Power may follow suit.

The Prime Minister, Chancellor George Osborne and Energy Secretary Ed Davey have made repeated pledges in their efforts to protect customers by rolling back environmental charges.

Mr Osborne said this week: ‘There’s going to be an average of £50 off people’s bills … We are absolutely insistent that this is going to be brought in.’

The smaller reduction of £12 covers the Government’s decision to switch funding of the Warm Homes Discount – a subsidy for poorer families – from energy bills to general taxation. The rest of the decrease was expected to come from changes to the Energy Companies’ Obligation Scheme, a levy applied to all bills to raise money for energy-saving measures for poorer households.

However, the element of the reduction is not being passed on to customers on fixed tariff deals by some companies.

In contrast, British Gas, the largest of the ‘big six’ suppliers, announced that all tariffs and payment methods will get a reduction of £53 from January 1.

A spokesperson for Consumer Futures, a campaign group, said: ‘The message has been that people were going to save £50 on their energy bill, but it seems a fair chunk of people will not get that. This sort of behaviour is not going to do anything to reassure customers … People feel confused and angry about their energy bills. This latest development just adds insult to injury.’

The spokesperson added: ‘I think in the current climate, bearing in mind how people are struggling, the right thing to do would be to apply the full reduction across the board. That is the expectation that the Government has created.’

Following the Autumn Statement, E.ON immediately announced a price rise of almost £60 a year for customers on standard tariffs. The changes will take effect from January 18.

The provider says that cutting the bills of fixed price customers by only £12 was justified because many of these people were already on relatively good price deals and tariffs.

EDF took a similar line and said its short-term fixed deal is some £90 a year cheaper than its new standard prices.

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