Category Archives: Politics

Britain, Economic, Energy, Government, Politics, Society

The naivety of our leaders on energy policy

ENERGY

WITH Russia playing hardball with natural gas supplies to Europe, and the power links between France and Britain temporarily disabled due to a fire, it should finally be dawning on our politicians that as worthy as Britain’s dash to be the G7’s greenest economy may be, our current system of energy supply is woefully ill-equipped to cope with the transformation.

The UK Business Secretary, Kwasi Kwarteng, is trying to cobble together a temporary rescue plan for the food supply chain and gas supplies.

What is certain is that consumers – both ordinary households and big energy users such as the steel industry – face horrendous price increases which could trigger a catastrophic rise in inflation.

The greatest paradox in the present energy crisis is that it has set off a chain reaction: there is a shortage of cheap gas to fire up fertiliser plants which, in turn, produce the carbon dioxide needed to keep food supplies plentiful.

In other words, the UK’s determination to become carbon neutral has drawn attention to the important role of CO2 – vital for the food and drinks industry – actually plays in our day-to-day lives. What is potentially really humiliating for Boris Johnson’s government is that this debilitating episode comes on the eve of the COP26 climate change conference in Glasgow that starts on October 31.

What the crisis reveals is the shocking geo-political naivety over the years of this country’s leaders when it comes to energy policy. The current policy is still highly dependent on natural gas. And it assumes that natural gas, which globally is in plentiful supply, will always be available as a backup when wind turbines fail to turn, and our aged fleet of nuclear plants are shut down for maintenance.

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BUT it is an energy policy that assumes there is a benign regime in Moscow, open shipping lanes in the Middle East and that interconnectors – or power links – between the UK and France and the UK and Norway are in fine fettle.

Yet if just one these assumptions proves mistaken, gas supplies are reduced and the price of the natural gas that does arrive soars.

Among the reasons that German Chancellor Angela Merkel has been so fawning towards President Putin is that she recognises he holds the whip-hand on gas supplies.

That is because Gazprom, the Russian energy behemoth, controls the flow of gas from deep in the Urals into Germany as well as much of the rest of Europe, including eventually Britain.

The fact is that the UK is at the end of a very long pipeline, with supplies pretty much dependent on what Putin decides. And yet we have an eco-minded government that, because of its determination to meet strict carbon targets, is determined to end our use of coal and reluctant to grant new oil-drilling licences, for instance, to firms wishing to further develop the Cambo oilfield near Shetland.

Other European nations, such as the Netherlands, have dealt with the Moscow threat by building huge storage capacity which can withstand months of disruption. In the UK, our biggest storage site at Rough off the coast of East Yorkshire was shut down in 2017 because of safety and leakage concerns.

The belief was that secure liquid natural gas supplies, arriving from Qatar would ensure constant availability.

That judgment has proved flawed. The surge in gas prices in August and September has been truly alarming and is why the fertiliser processor CF Industries – American owned and quoted on the Nasdaq stock market – closed-down its operations, strangling supplies of carbon dioxide for the food industry.

Carbon dioxide is used in the nation’s abattoirs for stunning livestock before slaughter and has led to protests from the pig producers and turkey specialists. In frozen form carbon dioxide is used to produce the dry ice required to deliver fresh meat and poultry supplies to supermarket shelves safely.

In much smaller quantities, and no less important, dry ice is used to keep the Pfizer Covid jabs fresh on their way to vaccination centres. Even if new supplies of natural gas are secured, there will be the impact on inflation.

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AND the numbers are startling, with the price of wholesale natural gas climbing by a staggering 800 per cent in August. That alone could add up to £400 to energy bills this autumn – particularly for those customers of small energy companies that have collapsed – leaving those least able to pay without heating in their homes.

The great breakthrough of a competitive energy market, where consumers can change suppliers at a click of a mouse on price comparison sites, is vanishing before our eyes.

The new players are falling like ninepins with four going into liquidation in recent weeks and many more on the danger list.

OFGEM, the regulator, will likely have to raise the cap, the highest average price for households, to a much steeper level.

The point is that energy prices do not stand alone.

They form a large part of the costs of every domestic manufacturing process including steel, cars and food. The UK’s consumer price index soared to 3.1 per cent in August, in a development which the Bank of England describes as transitory (temporary).

That increasingly looks far too optimistic. The inflation genie has been released and getting it back in the bottle could be hugely disruptive.

INSIGHT

. How has this energy crisis come about?

The reawakening of the global economy following the Covid pandemic has driven the demand for gas, both to heat homes and fuel power stations producing electricity. This has caused prices to surge. The UK is reliant on expensive gas imports in the winter via connector pipes from the continent, Norway and Russia, which has capped supplies. Wind levels have also been below expectations, making us more reliant on gas, nuclear and coal.

. What about energy bills?

Wholesale gas prices for winter are up 68 per cent in the past five weeks, and the price cap for household utilities from watchdog OFGEM is rising too. Some 15 million will see annual increases of £139, with more pain expected from next April.

. Why are small suppliers failing?

They offered cheap long-term tariffs to millions of households when wholesale prices were low, but then faced huge losses. Larger suppliers protected themselves – to an extent – by purchasing energy long in advance.

. What about their customers?

OFGEM transfers customers of collapsed firms to a new supplier. There is no risk people will lose power – but they will find themselves on much higher tariffs, likely to cost at least £400 a year more.

. What is the Government doing?

Ministers have held talks with their Norwegian counterparts in the hope of securing strong gas supplies through the winter. They insist there is no risk the lights will go out.

. What’s the link to food supplies?

A US company running fertiliser plants in Teesside and Cheshire shut down as the high cost of energy meant they were no longer economically viable. The sites produced CO2 gas which is vital to the entire food industry.

Business Secretary Kwasi Kwarteng has held talks with the US firm, CF Industries, in the hope production will restart. The Department for Food and Rural Affairs is also holding meetings with industry chiefs. It is likely that a taxpayer-funded solution will be found to minimise food shortages.

Thursday, 23 September

FEARS that Russia will starve Europe of vital supplies have been heightened following concerns from financial markets that British wholesale gas prices for October have shot up 16 per cent at the start of this week. The compounding effect on restricting supplies is starting to hit hard.

Moscow is restricting the amount of gas supplied to the Continent via Ukraine next month, according to market results of a key gas auction.

The decision will exasperate fears that Russia is rigging prices to undermine the UK and the EU’s economic recovery from Covid-19.

There are also signs that Moscow could send less gas in through another pipeline, the Yamal-Europe. Russia is thought to be withholding gas to pile pressure on European leaders to switch on a controversial pipeline, Nord Stream 2, which is built but still needs final approvals.

The squeeze on Europe next month will compound a mounting energy crisis in Britain that threatens to bankrupt dozens of small suppliers, bringing the meat industry to a halt and leave beer taps running dry.

At the same time, the National Grid is turning to “dirty coal” to help keep the lights on.

The UK’s three remaining coalfired power stations are on standby – or already being used – to fill gaps in the energy supply system. In September last year, coal was responsible for 0.5 per cent of UK electricity supply, but at the beginning of this week it was running six times higher at 3 per cent.

UK gas prices for October surged by 16 per cent to reach 188.1p a therm, while benchmark European gas prices rose by 16 per cent to 75.33 euros per megawatt hour.

The energy crisis has been brewing for several months, with low European supplies being a key part of this.

A long winter last year meant there was less stored gas going into summer, but Russia providing less also means countries have not built-up critical stores ahead of this winter.

Russia’s decision to cap additional supplies to Europe next month means time is running out. Storage facilities are around 72 per cent full – a level not seen at this time of year for around a decade.

The UK does not have any of its own gas storage sites, and a cold winter could force EU nations to send less power to the country.

Britain’s three coal-fired power stations are West Burton A in Lincolnshire, run by EDF, Ratcliffe-on-Soar, Nottinghamshire, owned by Uniper, and the Drax power station near Selby, North Yorkshire.

West Burton A has been fired up on several occasions in recent days in response to requests from the National Grid. And it now seems likely the country will be more reliant on coal-fired electricity this winter.

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

We must do deals with the Taliban

AFGHANISTAN

THE retreat from Afghanistan is over, the humiliation complete. The question facing Western leaders now is something that would have been inconceivable just a few months ago: Can we do deals with the Taliban?

Many will still find it unimaginable that the West could even consider negotiating with the heirs of the barbarians who facilitated the 9/11 atrocity.

Because of the Taliban’s record of supporting al-Qaeda’s terrorism in the past – and, in the last few days, their brutal repression out of sight of the Western media – it seems utterly immoral to have anything to do with the new government in Afghanistan.

Yet, unpopular though it may be in the traumatic aftermath of the West’s debacle, we must try to rescue what we can from the disaster.

We have to negotiate with them to try to save the lives of those poor souls we left behind, as well as doing all we can to prevent the country from again becoming a haven and training ground for terrorists’ intent on attacking the West. Of course, after our humiliating retreat, our leverage is very weak. Threats of sanctions and other financial strangleholds could simply encourage the Taliban to deal with the Chinese and Russians who would happily take advantage of any new influence they could secure. And the fact is the Taliban might not want to deal with us at all.

Yet there are incentives for the new regime in Kabul to be less brutally blinkered in its approach to dealing with the West than its predecessors 20 years ago.

One of the things that led to a flow of popular support from the corrupt former government to the Taliban was the economic plight of so many Afghans.

Drought has left millions dependent on international food aid. Keeping that aid flowing from the West and the prospect of getting Afghanistan’s money held in foreign banks gives the Taliban an incentive to restrain hardliners wanting to confront the world.

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WE also have an enemy in common. The Taliban loathe the even more hard-line Islamic State – or Isis-K – group. Taliban fighters executed the local Isis-K leader when they captured him in Bagram prison, and they are only too aware that the attack on Kabul airport was aimed at destabilising the Taliban as well as murdering the US soldiers and departing Afghans there. Certainly, there are hideous dogmas shared by both the Taliban and Isis-K, but the new Taliban leaders seem anxious to avoid the mistakes of their predecessors in 2001. Whereas Isis-K wants to re-use Afghanistan as a base to attack the West, the Taliban want to avoid provoking another Western intervention.

The Taliban are well aware of what has changed since 2001. More than half the population has been born since then. The younger generation grew up loathing the corrupt Ghani regime and did not want to fight for it. These young people have also been socialised by mobile phones and social media rather than in rigid Islamic madrassas.

Keeping hordes of discontented, jobless young people from becoming a problem is a priority. Letting some of these unhappy people emigrate is one way to keep a lid on things while appeasing Western concerns.

Kabul is already mindful of a massive refugee crisis on its borders, particularly with Pakistan – a country that helped foster the Taliban – which has said that the West must engage with the new Afghan government to ensure it “remains moderate.”

The fact is that the West must engage. We should make best use of the few carrots we have – like aid money and diplomatic recognition – to reduce the terrorist threat.

Since our diplomats have long dealt with fundamentalist regimes like Saudi Arabia, the Foreign Office should be able to adapt to the Taliban’s new norms. It is depressing to admit defeat but swallowing our pride could still rescue something from the horror.

. Appendage

– A Boeing C-17A Globemaster III left Kabul (KBL) for the final time on Monday for Qatar. Shortly after taking off, an orbiting KC-135R tanker refuelled the aircraft.
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Afghanistan, Britain, Government, Politics, Society, United States

The failure in Afghanistan has been a military and political disaster

AFGHANISTAN

LET’S be in no doubt. The UK’s latest Afghan war – the fourth since 1839 – has ended in abject failure. The shameful retreat was down to a bungled withdrawal of US forces by Joe Biden, who’s lacklustre approach leaves his leadership open to criticism of weakness and inadequacy. What extraordinary and pitiful scenes the world has witnessed in recent days: bodies falling from the sky, the Taliban cheering in Kabul and the mighty America humbled. The Taliban on the ground is operating akin to the Nazis as they go door-to-door in neighbourhoods seeking retribution against those that supported the West. There is a growing sense of unease, and rightly too, as the West awaits what might come next.

Britain scuttled out at the same time, the prime minister telling MPs on the day of Mr Biden’s announcement that there can be no military victory in Afghanistan. What a shameful assessment given all that has been sacrificed in terms of blood and treasure plundered. The world is witnessing the extent of the military and political catastrophe after twenty years of miscalculation and misadventure.  

The UK is currently driven by a desire to stay close to the US. But America is a superpower, able to shrug off defeats and move on. The blow of losing Kabul is felt more deeply in Britain shorn itself of substantial global influence. And, yet, this has led the UK to take Washington’s lead in military affairs. In Afghanistan, the US judgment that a combination of special forces, local proxies and air power would wipe out domestic resistance to a military occupation was flawed. The Afghan security forces that NATO trained were exposed as a shell and collapsed at a time when it was most needed. In 20 years of relentless fighting, more than 170,000 Afghans have lost their lives. The death toll continues to rise as the barbarism of the Taliban metes out savage reprisals against local Afghans and interpreters who helped western intelligence services and the British Army in a quest for democracy and more moderate living. In June, almost 1,000 Afghans were killed in the simmering civil war. A few weeks later half the country was under Taliban control.

Western politicians prefer to tell a story of progress in Afghanistan. But that could all be unravelled now the Taliban are in control. Since 2001, the US has spent nearly $145bn (£106bn) trying to rebuild Afghanistan. By 2019, the average Afghan student received four years of schooling (twenty years ago it was just two). As prosperity was building, Afghans were known to have lived healthier and longer lives and the country is certainly wealthier than it was in 2001. But as many will soon realise the state can only function with international aid. Aid funds three-quarters of total public expenditure.

Elections were held in Afghanistan but the institutions that support democracy were not allowed to take root. One elected president, Hamid Karzai, fell out with the Americans so badly he threatened to join the Taliban himself. The other, Ashraf Ghani, fled as the Taliban advanced. Almost every other Afghan ruler in the 20th century was assassinated, lynched or deposed. A western-made “liberal democracy” has fallen into the hands of religious fanatics with close links to al-Qaeda. It must be clear by now that nations cannot be hustled at the barrel of an American gun into the postmodern age, especially when they have not been allowed to come to terms with modernity.

In Afghanistan, the battle for hearts and minds was lost long ago. Without hearts and minds, one cannot obtain intelligence, and without intelligence, the insurgents will remain undefeated.

The Royal United Services Institute, a security thinktank, describes the outcome in Afghanistan as “strategically worse than the situation prior to the 9/11 attacks – a Taliban state, with terror groups already baked into it, with nowhere else to turn for major support other than Beijing”.

The collapse of the Taliban in 2001 encouraged the US to adopt a similar strategy in Iraq and Libya. After 20 years of disastrous results, British ministers should reach for a new approach. After all, relations between London and Washington have historically never been entirely unconditional. Yet, whilst the government speaks of creating new special forces regiments and naval “littoral strike groups” for international interventions, Britain needs to learn its own history. It used to station military forces around the world to maintain its empire. It should think again before doing so for someone else.

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